[PROPOSAL] Loan to GoodDollar protocol to support UBI distribution

TLDR:

  • GoodDollar is a non-profit decentralized protocol designed to deliver sustainable and scalable UBI.
  • The GoodDollar G$ token model leverages yield protocols to sustainably fund the minting of new tokens G$ that are distributed as UBI for recipients and rewards for protocol supporters.
  • 250,000 world from over 180 countries have received over $25,000 in G$ UBI from a $300k market cap, and the protocol has between 40k to 80k members who claim G$ daily. Members are concentrated in emerging economies key to financial inclusion: dashboard . gooddollar . org
  • GoodDollar is launching V2 where we are integrating with AAVE protocol to allow our supporters community to stake their USDC while sharing the yields to our UBI protocol and earning G$s in rewards.
  • The GoodDollar protocol proposes to the Aave Grants DAO a request to bootstrap liquidity for in our staking contracts to increase the value of UBI distributed to members every day. Our request is for with AAVE Grants DAO is not a grant per se, but rather a loan of 500,000 USDC staked to the GoodDollar protocol.
  • The 500,000 USDC staking commitment will increase the income flows of our inclusive economy and enable AAVE community to gain governance in the GoodDAO community governance which would strengthen collaboration among the two ecosystems.

What is GoodDollar?

GoodDollar is an Ethereum protocol on a mission to leverage new digital asset technologies to enable all people to experience, learn about, and join the digital economy. To ensure maximum participation, we are building ground-breaking products that are inclusive by design. GoodDollar envisions a world where everyone has access to basic economic assets, according to the principles of universal basic income (UBI).

The GoodDollar Foundation, a non-profit NGO sponsored by eToro, recently completed a fair-launch protocol deployment both in G$ and Governance tokens, none of which were distributed to members of either the core team or the Foundation.

Since the launch of our Proof of Concept (v1) in September 2020, we’ve grown the global GoodDollar community to more than 250k registered users, 80k+ of whom access their GoodDollar wallet app every day to claim G$, a reserved-backed cryptocurrency. G$ issuance is governed by a modified Bancor Formula bonding curve, so the G$ price and supply are a function (Bancor function detailed into the GoodDollar Whitepaper’s Appendix) of how much money is in the reserve contract.

The main input (besides direct G$ minting through purchasing to this reserve contract) of this bonding curve, which is used to generate new G$s for UBI distribution (see distribution-and-impact in GoodDollar Whitepaper), is the yield generated by our staking contracts as a result of their integration with 3rd party interest-bearing DeFi protocols such as Aave and Compound.

GoodDollar V2

Our PoC proved that the GoodDollar system can successfully generate an inclusive and sustainable crypto UBI for anyone who wants to join the digital finance ecosystem. Now with GoodDollar V2, we want to scale up the protocol and grow the amount of G$ we can distribute to our UBI claimers. To further this goal, we are introducing a new set of capabilities, which are outlined in the following graph:

Perhaps the biggest change is that GoodDollar V2 will include two staking rewards contracts. This is a major difference from V1, which only integrated the Compound protocol and offered no rewards. All yields went to the protocol).

With V2, we will add an Aave staking contract, along with a new rewards mechanism to incentivize those who wish to to support the GoodDollar decentralized UBI system. The Rewards scheme works as follows:

  1. Rewards vary depending on the third-party protocol (e.g. Compound, Aave etc.) and currency pair selected by the user.
  2. Staking rewards are calculated in G$ values, as set out in the smart contract (e.g. XM G$ in rewards per month).
  3. Rewards are pro-rated based on the amount of capital staked per block.

Simply put, users are rewarded in each block, according to the following calculation:

$(UserStake/TotalStaked) * (Reward Per Block)$

Users can choose not to withdraw their allocated rewards, which would be redeployed as incentives, thus helping to attract additional stakers.

The initial staking rewards mechanism are allocated as follows:

Compound (DAI) Total Reward Per Block = 138.88 G$ | (291M G$ yearly) 
Aave (USDC) Total Reward per Block = 69.44 G$ | (145.5M G$ yearly)

Currently, more than 1M DAI is deposited in our Compound Staking Contract.

We believe the integration of Aave V2 will be an important incentive for our supporters. This is why we are seeking to forge a partnership with the Aave Grants DAO that will help us bootstrap liquidity aggregation in this staking contract.

With the launch of GoodDollar V2, we will also be introducing a brand-new DeFi concept called Social APY, which calculates the yields that users generate for our Global GoodDollar Community through their stakes. This key measurement of supporter impact is calculated according to the APY that each third-party protocol offers to a specific asset (e.g. USDC in Aave), divided by the reserve ratio of the bonding curve that issues the G$.

So for a 3.44% Aave APY on USDC and a Reserve Ratio (total GoodDollar Reserve value / GoodDollar MarketCap) of 80%, the Social APY would be 4.30%. The financial APY, meanwhile, is calculated according to the rewards scheme set out above.

Below is a screenshot of how these two measures would appear on our V2 Dapp (currently only available on Kovan TestNetwork):

All our V2 contracts are audited and ready to be deployed on mainnet. Once we have finalized a restructuring of our legal strategy to enable the transfer of smart contract ownership to the GoodDAO, V2 will be ready for launch.

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Grant Scope: Bootstrapping liquidity in AAVE GoodStaking Contract

As I hope we made clear above, our request for a partnership with the Aave Grants DAO does not mean we are seeking a donation… We are instead seeking a fully repayable USDC loan to the Aave StakingContract, the yield of which would go toward generating crypto UBI for our global community of claimers. Our goal is to demonstrate our ability to grow the value generated by our protocol without relying on donations. Instead, supporter capital remains safe and intact, generating yields that underpin the minting of G$.

Our hope is to initiate an open conversation with the stewards of the Aave Grants DAO about the best way to approach this goal, since we understand from a review of prior approvals that our request differs from many of the previous grant applications you have entertained.

Our goal is to have 1 million USDC locked to the Aave protocol within one quarter from the launch of V2. Given this, we believe an initial stake of 500k USDC from Aave Grants DAO would create enough momentum to attract a considerable number of supporters to our community who want to collaborate in the mission of onboarding the next 100 million people to the DeFi economy.

In exchange, Aave Grants DAO will receive the wide range of benefits we offer to our supporters. These include:

  • G$s Rewards: Calculated according to our rewards mechanism, these will give Aave Grants DAO an avenue to interact with our 250k-strong (and growing) G$ claimer community in countries across the globe. It would also offer access to the Global G$ MarketPlace (in Sharetribe) for goods and services established by a member of our community. Alternatively, the Aave Grants DAO could forgo these rewards, which would instead go toward attracting other Aave stakers to the GoodDollar community. Or the DAO could choose to withdraw the G$ incentives and exchange them for other assets through our GoodReserve contract (bonding curve serving as primary market) or secondary markets (main liquidity is allocated in Ethereum’s SushiSwap and Fuse Network’s FuseSwap).
  • GoodDAO governance: Because the entire GoodDollar community is critical to the success of our mission, we will be distributing our (non-transferable) GOOD governance tokens to both claimers (people who claim G$s UBI from the protocol every day) and supporters (stakers and holders). Half of the GOOD tokens we will distribute at the launch of V2 will go to our supporter (stakers and holders) community, while the other 50% will go to claimers. On September 29th, we performed a snapshot of community participation in order to fix the initial distribution of 96M GOOD (fair distribution to both groups of G$ claimers and supporters). While the GOOD token is non-transferrable, holders can delegate their votes to other members, and we would love to see important entities such as yours play a role in shaping the future of our global UBI economy. Following this initial post-launch distribution, we will introduce an ongoing monthly distribution of 8M GOOD tokens, 2M of which to be allocated among staking agents, so AAVE Grabts DAO would be a beneficiary of GOOD governance tokens.

GoodDollar is determined to demonstrate that a new Social Impact ethos is achievable within the crypto industry. Those of us who believe in the potential of DeFi for achieving positive change can use our protocols not to generate profit but to sustainably share a piece of our wealth with communities around the world who lack both the financial system access and the necessary education to enter our DeFi Ecosystem.

GoodDollar is fully committed to facilitating the opening of markets DeFi has not yet penetrated. Since we believe this can only benefit the wider blockchain universe, we hope to open a dialogue with Aave Grants DAO about how we could work together to further this goal.

Greetings and enormous thanks for considering our request,

The GoodDollar Team

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Interesting proposition, and one applicable to many DAO’s - staking their funds “for good” whilst waiting to deploy them in projects / grants.

They earn interest on funds and also expose their projects to the rapidly growing GoodDollar community, and possibly leading players in the crypto world who are also integrating with GD.