[GIP-11] GoodDollar V3 - Protocol Enhancements

This vote refers to a range of updates to the GoodDollar protocol, summarized as GoodDollar V3.

All proposed changes are in seek of GoodDollar protocol’s ultimate goal, which is to issue a sustainable crypto universal basic income protocol that enables people to use G$ as a medium of exchange.

All proposed changes are designed to:

• encourage usage and engagement among active G$ holders and community members
• reduce the rate of leverage of the currency, to encourage sustainable growth with minimal price volatility
• Lay the groundwork for the GoodDollar protocol to begin to fund community-led initiatives
• Allocate 20% of the daily G$ UBI mint towards savings rewards and a community fund: savings rewards (10% of daily UBI mint) and a GoodDAO community fund (10%).
• These changes will impact the rate of GoodDollar minting. The number of GoodDollars minted and distributed daily will decrease; the daily G$ claim amount per user will also decrease; however, these modifications are in service of creating a more sustainable economic policy for GoodDollar for its long-term future
• These proposed changes will be developed, activated, and implemented over the period of November 2022 through Q1 2023, as per the larger V3 roadmap 13. The proposed code and protocol upgrades as part of this GIP will be voted on Snapshot and executed by the GoodDollar Guardians, per GIP 2 . 2

Proposed Protocol Changes

1. Eliminate Staking APY Rewards for Mainnet Stakers

-The current staking rewards rate: Compound: 36.03% Aave: 40.71%

• The original goal of the Staking Rewards was to encourage every day people to be able to use their crypto to fund for good, and source a sustainable source of staked capital. - Since V2, only 17 individual wallets have staked. The primary staker has been eToro, a corporate donor that has already donated their earned interest rates.

• Amount distributed as G$ rewards vs. value of UBI generated. Current staked: $1,207,488.11 (16 stakers)

• Rewards paid: G$ 438,388,608.00 $76,235.06 ( G$ price = 0.000173) Distributed out to all active stakers. eToro’s $1 million stake is not considered for the rewards calculation.

• UBI minted from yield: G$ 100,413,879.40 $ 17,461.81 ( G$ price = 0.000173)

• The original goal of the staking rewards have not yielded the intended effect of attracting a large volume of staked capital to fund sustainable UBI.

• Rather than continue to allocate GoodDollar rewards as a staking APY, we propose to mint and allocate GoodDollar rewards to community members who save in G$, and fortify the ecosystem. See “G$ Savings” below.

• G$ Stakers will receive entitled rewards upon withdrawal of their funds from the current staking contract.

• Staking contracts will no longer deliver an APY in G$, but market rate earned interest can still be used to deposit funds into the GoodReserve.

• Stakers will continue to earn GOOD tokens for their stake. This is part of a longer term plan to attract corporate stakers and partners through providing a way to meaningfully engage and influence with the economy.

• GOOD allocations to stakers are subject to further changes.

2. Reduce Speed of Minting - Reduce Reserves Ratio from 20% → 15%

• This change is proposed to ensure GoodDollars are being minted at a healthy and sustainable rate, and the currency is not being leveraged too quickly relative to the circulating supply, and value in the GoodReserve.
• The current reserve ratio is 69%.
• The Reserve Ratio is currently set to reduce by 20% per year.
• The proposed change will slow down the rate of minting. The proposed change is to reduce the reserve ratio to 15% reduction per year. This reduces the rate of leverage, of G$ minted relative to cDAI in the GoodReserve.

3. G$ Savings

• This proposed change suggests allocating G$ rewards for community members that stake their G$. This will enable members who stake and save their G$ to earn G$ bonuses alongside GOOD tokens.
• Currently, staking G$ is rewarded with GOOD tokens, the non-transferable governance token of the GoodDollar ecosystem.
• A G$ savings rate also creates an additional incentive for community members to hold G$, in order to save. G$ stakers will continue to earn GOOD tokens for their stake, as well.
• The proposal would be to allocate a modest portion (10%) of the daily GoodDollars G$ minted as UBI, and allocate those G$ to be used towards a reward savings pool to fund G$ stakers.
• GoodDollar savers will be rewarded a fixed 5% APY from the rewards pool, on annual basis.
• The savings rewards smart contract will be activated for users and launched by January 2023.

Update 31/07/2022Code that passed initial audit: https://github.com/GoodDollar/GoodProtocol/pull/259 4

4. G$ DAO Community Fund

Currently all G$ minted are distributed as UBI to active members of the ecosystem. This proposal suggests allocating a portion of the G$ minted for daily UBI, to be moved into a community fund that is managed by the GoodDAO.

• This proposal suggests allocating a percentage of G$ minted daily towards a community fund that will be managed and overseen by a set of community guardians, nominated by GoodDAO.
• The proposal is to allocate 10% of the daily GoodDollars G$ minted as UBI and allocate those to a community fund controlled by a yet to be created GoodDollar DAO funds committee.
• These funds will be automatically diverted into a smart contract that will be transferred to a multisig upon selection of the GoodDollar DAO funds committee. Upon ratification of this vote, an additional proposal will be enacted to create a group of 5 community guardians to sit on the multisig.
• The intended purpose of the GoodDollar DAO funds is to encourage community-driven GoodDollar adoption and its usage as a medium of exchange. Examples of intended usage of the G$ funds: -GoodDAO Grants DAO: enable a community fund to vote on and fund G$ entrepreneurs and community members. -GoodDAO Jobs: enable the GoodDAO to propose key working groups, roles, work to be done, local chapters and initiatives and have a source of funds to fund it. -Fund the creation of GoodDAO working groups, such as protocol research, local marketing teams, and more. -GoodDAO treasury: over the 5-10 year time period, these funds could be used for the GoodDollar protocol to begin to fund operating costs currently subsidized by the GoodDollar LLC, such as gas fees, hosting, etc.

Motivation for asking changes in such Protocol policy

• Reduce leverage in the GoodDollar ecosystem
• Prepare for incoming funds to the Reserve
• Reward active community members who are transacting in G$
• Empower the GoodDAO with a community fund to promote its own adoption
• All changes are subject to further changes -The protocol vision is to build out a multi-asset Reserve, as well as multi-chain Staking protocols -As GoodDollar staking is deployed on side chains, APY and staking rewards will be reconsidered
  • A grant for protocol research and how to sustainably and responsible optimize G$ staking APY with other G$ rewards usage (savings, community fund) will be a pre-condition to re-releasing GoodDollar G$ staking rewards