GIP-110: Should the Gnosis DAO create and fund a Gnosis Pay rewards program with 10k GNO?

Karpatkey · July 17, 2024, 9:20am

GIP-110: Should the Gnosis DAO create and fund a Gnosis Pay rewards program with 10k GNO?

In favour
Against

0 voters

Summary

This proposal aims to create a cashback program for Gnosis Pay, benefiting GNO holders. The program will feature five tiers of cashback rewards, ranging from 1% to 4% based on the amount of GNO deposited in Gnosis Pay. An extra 1% (1pp) will be awarded to Gnosis Pay OG NFT holders. Rewards will be airdropped weekly to users ~7 days after their transactions, calculated based on the minimum GNO balance held during the week the payment was made. The rewards, measured in the currency of the payment, will be distributed in GNO using the Gnosis Chain GNO/USD, EUR/USD or GBP/USD Chainlink (or Chronicle for GBP) price feed at the time of distribution of the reward. A maximum of EUR 20,000, USD 22,000, or GBP 18,000 of spend will be eligible to accrue rewards per month for every user.

Rationale

After last year’s outstanding growth, Gnosis Chain has stagnated, mainly due to the substantial incentives offered by alternative L1s and L2s. However, many of the users and capital in these other chains are likely to leave once the incentives end. Gnosis aims to create sticky users through a suite of products, with Gnosis Pay being the first. After months of improvements, Gnosis Pay is now ready for mass adoption. This cashback program is strategically designed to bootstrap user engagement without significant costs to the DAO. Users participating in the program must have GNO in their Gnosis Pay Safe wallet, incurring an opportunity cost by not staking their GNO. Thus, since GNO held in a Safe wallet will not be staked, the additional cost to the DAO would be minimal compared to the benefits.

Implementation

Users who hold GNO in the Gnosis Pay Safe will be eligible for cashback rewards on eligible Gnosis Pay Card transactions according to the following tiers:

≥0.1 GNO: 1%
≥1 GNO: 2%
≥10 GNO: 3%
≥100 GNO: 4%

The cashback percentage scales continuously within each tier (e.g., holding 5.5 GNO earns 2.5% cashback). Beyond 100 GNO, the cashback percentage does not increase any further. Additionally, Gnosis Pay OG NFT holders who qualify for the airdrop (with at least 0.1 GNO deposited) will receive an extra 1% cashback. For instance, a user holding 5.5 GNO and the OG NFT would receive 3.5% cashback. This feature will add value to future NFT campaigns by Gnosis Pay (e.g., referral programs).

A maximum of EUR 20,000, USD 22,000, or GBP 18,000 of spend will be eligible to accrue rewards per month for every user.

The program will be administered and managed by Karpatkey, responsible for tracking, determining, and distributing the rewards, as well as reporting the results. The reward calculation code will be open source. We will also provide an endpoint for those that want to feature the rewards in their UIs.

Rewards will be distributed weekly, 5-12 days after the user made the payment, based on the lowest amount of GNO tokens held in their Gnosis Pay Safe during the week the payment was made. It is this amount of GNO held prior to the card payment that will be relevant in calculating the cashback. For example, having 1 GNO in the Gnosis Pay Safe and making a payment in the same week would yield 2% cashback. However, topping up GNO to the Gnosis Pay Safe after a payment does not change the cashback applicable to that payment. Eligible “payments” do not include ATM withdrawals, which will not count towards card payments for the purposes of this program. By participating in the program (transferring GNO to the Gnosis Pay Safe), users agree that Gnosis Pay will share transaction details related to ATM withdrawals with karpatkey. Transactions similar to this one on essence (for example, topping up bank accounts with the card) will also not be eligible, and this information will also be shared. However, personal information will not be shared. The program will run until the budget runs off, or until the DAO votes to terminate it or replace it. Cashback received from payments there were refunded will tracked and until the users has a “positive balance” of accrued rewards, no further payments will be made.

Shall this proposal passes, a trial period will commence on August 19th, which will run for a week and will not accrue any rewards. Then, the actual program will commence on August 26th.

The GNO Cashback Program is sponsored by GnosisDAO, offered and administered by the Gnosis DAO Operational Foundation, and operated by karpatkey in accordance with its mandate from the Sponsor.

GNO Cashback Offer Rules (“Official Rules”)

Sponsored, Administered, and Operated by: The GNO Cashback Program (“Offer”) subject to these Official Rules is sponsored by GnosisDAO (“Sponsor”), offered and administered by the Gnosis DAO Operational Foundation (“Administrator”), and operated by Karpatkey (“Operator”) in accordance with its mandate from the Sponsor.

1. Eligibility

The Offer is only open to Gnosis Pay account holders who have: an Operational Account; and are in compliance with the Gnosis Pay terms and conditions available here Gnosis Pay WebApp Terms of Service | Gnosis Pay Legal, which includes compliance with the applicable cardholder terms, which are here for the UK+Switzerland and here for the EEA (“User”). For the purposes of these terms, an “Operational Account” means a Gnosis Pay account (including the card) which has not been frozen, suspended, closed, deactivated or terminated. Users must meet the eligibility criteria up to and including the date of distribution of any GNO Reward (as defined below). Failure to meet the eligibility requirements prior to the distribution of any GNO Reward will mean the User is not eligible and will not receive any GNO Reward.

2. Acceptance of Rules

By Opting In (as defined below) or otherwise participating in the Offer, each User: (a) agrees to be bound by these Official Rules and by the interpretation of these Official Rules by the Administrator and by the decisions of the Administrator, which are final and binding in all respects ; (b) acknowledges compliance with these Official Rules; and (c) agrees to comply with any and all applicable federal, state and local laws, rules and regulations. Receiving any Cashback (as defined below) is contingent upon fulfilling all requirements set forth in these Official Rules.

3. Offer Term; Snapshot Period

The Offer begins and ends at the times and dates specified by the GIP proposal or, if earlier, shall end as soon as there are no more funds in the Cashback Reward Pool (as defined below), or as may be further specified by the Operator, in its absolute and final discretion (“Offer Period”).

The “Snapshot Period” is the seven (7) days preceding a Card Payment (as defined below).

4. Method of Participation

To participate in the Offer, a User must satisfy the eligibility criteria set out above, and meet the below requirements:

Opt in via Gnosis Pay Web App as directed on the UI;
Have or hold at least 0.1 GNO tokens in their Gnosis Pay Safe throughout the Snapshot Period (“GNO Holding”); and
Make a payment (excepting any ATM withdrawals or Payment Manipulation) from the User’s Gnosis Pay card (“Card Payment”), up to a maximum eligible amount of EUR 20,000, GBP 18,000, or USD 22,000 (as applicable to the User) per User per calendar month (“Maximum Eligible Payments”).

Users can decide to opt out of the Offer at any point by transferring out their GNO tokens from their Gnosis Pay Safe or reducing their GNO Holding to less than 0.1 GNO.

Any GNO obtained through bad trading practices, including but not limited to wash trades, false trading, self-dealing, or trades that display any attributes of manipulation (“GNO Top-Up Manipulation”) will not be counted towards the GNO Holding of the User.

Any card payments, or activities in relation to the Offer, that constitute manufactured spending, refund cycling, account churning, misleading purchases, cooperation with merchants, self-funding, or other activities that display attributes of an attempt to game or manipulate the Offer (“Payment Manipulation”) will not be counted towards the Card Payment amounts of the User.

Any person engaging in GNO Top-Up Manipulation, Payment Manipulation, or otherwise trying to game, exploit, maliciously manipulate the Offer (“Offer Manipulation”) to increase their rewards or reduce anyone else’s will not receive the GNO Rewards and will be blacklisted from any future participation in this Offer and any future reward program sponsored by GnosisDAO, in Operator’s sole and absolute discretion.

5. Cashback

The total Cashback reward pool is 10,000 GNO (“Cashback Reward Pool”).

Users will only receive Cashback: (i) provided that the User is still satisfying the eligibility criteria set out in section 1 above at the time of the distribution; (ii) so long as and to the extent that there are still funds available in the Cashback Reward Pool will Users receive any Cashback; and (iii) calculated against their Card Payments up to the Maximum Eligible Payments, beyond which there would be no further Cashback for Card Payments in that month.

Cashback will be distributed in accordance with the below:

Lowest GNO Holding throughout the Snapshot Period	Cashback on Card Payment(s) (“Base Cashback”)
≥0.1 GNO	1% scaling continuously
≥1 GNO	2% scaling continuously
≥10 GNO	3% scaling continuously
≥100 GNO	4% cap.

The cashback percentage scales continuously within each tier, meaning, for example, that if a User’s lowest GNO Holding through the Snapshot Period was of 5.5 GNO, then their relevant Base Cashback would be of 2.5%.

Users holding a Gnosis Pay OG NFT in their Gnosis Pay EOA wallet (“OG Holders”) will receive an additional 1% on the Base Cashback (“OG Bonus”, which together with the Base Cashback is referred to as “Cashback”), hence their total Cashback would be as follows:

Lowest GNO Holding throughout the Snapshot Period	Base Cashback	OG Bonus	Total Cashback for OG Holders
≥0.1 GNO	1% scaling continuously	1% fixed	≥2% (scaled based on Base Cashback)
≥1 GNO	2% scaling continuously	1% fixed	≥3% (scaled based on Base Cashback)
≥10 GNO	3% scaling continuously	1% fixed	≥4% (scaled based on Base Cashback)
≥100 GNO	4% cap.	1% fixed	5% cap.

6. Distribution of Cashback

The Cashback rewards will be automatically distributed in GNO tokens on Gnosis Chain to the User’s Gnosis Pay Safe (“GNO Reward”), on a weekly basis, 5-12 days after the relevant Card Payment.

GNO Rewards will be calculated in the currency of the Card Payment using the Chainlink (or Chronicle for GBP) price feed for GNO/USD, EUR/USD or GBP/USD at the time of distribution of the Cashback to the User.

Any User who is reasonably found to be either failing to meet the Offer eligibility criteria or who is engaging in or attempting to engage in Offer Manipulation will not be sent any GNO Reward, and may suffer the consequences further set out in section 4 above. ANY VIOLATION OF THESE OFFICIAL RULES BY USER WILL RESULT IN SUCH USER’S DISQUALIFICATION FROM RECEIVING ANY GNO REWARD AND ALL PRIVILEGES AS A USER UNDER THIS OFFER WILL BE IMMEDIATELY TERMINATED. ANY ATTEMPT BY ANY PERSON TO DELIBERATELY DAMAGE OR UNDERMINE THE LEGITIMATE OPERATION OF THE OFFER MAY BE IN VIOLATION OF CRIMINAL AND CIVIL LAW AND SHOULD SUCH AN ATTEMPT BE MADE, THE SPONSOR, THE ADMINISTRATOR, AND THE OPERATOR RESERVE THE RIGHT TO SEEK REMEDIES AND DAMAGES (INCLUDING ATTORNEYS’ FEES) FROM ANY SUCH PERSON TO THE FULLEST EXTENT PERMITTED BY LAW.

7. Refunds

If a User receives a refund on a Card Payment, any GNO Rewards will be suspended until the total amount of Cashback corresponding to the refunded amount has been offset. This means that the User will not receive any new GNO Rewards until the value of the Cashback from the refunded amount has been fully accounted for by new Cashback calculations on eligible Card Payments. This is without limitation to any measures the Operator may take against the User if the User is found to be engaging in Offer Manipulation.

8. Limitation of Liability

THE CASHBACK IS OFFERED AND PROVIDED “AS IS” WITH NO WARRANTY OR GUARANTEE BY THE SPONSOR OR ANY OF ITS RELATED ENTITIES, OR THE ADMINISTRATOR, EITHER EXPRESS OR IMPLIED. IN NO EVENT WILL THE SPONSOR OR ANY OF ITS RELATED ENTITIES, THE ADMINISTRATOR OR OPERATOR BE LIABLE TO ANY USER FOR ANY DIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES (INCLUDING LOSS OF USE, DATA, BUSINESS OR PROFITS) ARISING OUT OF OR IN CONNECTION WITH A USER’S PARTICIPATION IN THE OFFER, WHETHER SUCH LIABILITY ARISES FROM ANY CLAIM BASED UPON CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE, AND WHETHER OR NOT THE SPONSOR OR ANY OF ITS RELATED ENTITIES, THE ADMINISTRATOR, OR THE OPERATOR HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS OR DAMAGE.

SOME JURISDICTIONS DO NOT ALLOW THE LIMITATION OR EXCLUSION OF LIABILITY FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES, SO THE ABOVE LIMITATION OR EXCLUSION MAY NOT APPLY TO USERS IN SUCH JURISDICTIONS.

9. Indemnification

By participating in the Offer, each User agrees to indemnify, defend, and hold harmless, the Sponsor and any of its related entities, the Administrator, and the Operator from any and all liability, for any claims, damages, injuries or losses of any kind, and to release all rights to bring any claim, action or proceeding arising out of, in connection with, or relating to participation in the Offer or receipt of any GNO Reward. Each User assumes all liability for any injury or damage caused, or claimed to be caused, by participation in the Offer, or the acceptance, receipt, or use of the GNO Reward or any Cashback component. Each User further agrees that in any cause of action, the Sponsor or any of its related entities, the Administrator, and the Operator’s liability will be limited to the value of the GNO Rewards distributed to the User during this particular Offer, and in no event shall the Sponsor or any of its related entities, the Administrator, or the Operator be liable for attorney’s fees.

10. No Assumption of Responsibility; Force Majeure

The Sponsor and any of its related entities, the Administrator, and the Operator are not responsible if the Offer cannot take place or is delayed, or if the GNO Reward cannot be distributed or is delayed, interrupted or fails due to acts of God, war, natural disasters, weather, acts or threats of terrorism, strikes, lockouts, labor disputes, work stoppages, fire, acts of government, or other events outside of the reasonable control of the Sponsor and any of its related entities and of the Administrator and Operator.

11. Notices, Amendments and Clarifications

Administrator reserves the right, in its sole discretion, to cancel, terminate, modify, or suspend the Offer or any part of the Offer and to change, amend or modify these Official Rules or any part of these Official Rules, provided that any such modifications or amendments remain consistent with and uphold the fundamental philosophy and principles of the original Offer and that any such change or other notice shall be either posted by Administrator or Operator to the GIP forum relating to this Offer or published as a new GIP and take effect two weeks after such post or at such other time as specified by Administrator in the post. Administrator reserves the right, in its sole and absolute discretion, to modify and amend these Official Rules from time to time without notice during the Entry Period for clarification purposes or if the amendment or modification is otherwise non-material or non-significant.

12. Feedback

If you have any feedback, questions or complaints regarding the Offer or these Official Rules, please email gnosisdao@karpatkey.com.

13. Dispute Resolution

In the event of any dispute in connection with the Offer or these Official Rules, Administrator reserves the right to make all final decisions regarding the Offer, in its sole and absolute discretion.

Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the LCIA Rules, which Rules are deemed to be incorporated by reference into this clause. Any arbitration commenced pursuant to this Clause shall take place in the English language through an independent and impartial board comprising one arbitrator to be appointed by agreement between the parties to the proceedings.

By Opting In and otherwise participating in the Offer, you acknowledge that you waive any right to participate in a class action, collective action, or group litigation. Any disputes or claims arising out of or relating to these Official Rules shall be resolved on an individual basis. You agree that you may bring claims against the Administrator, Operator, Sponsor, and any affiliated or related parties only in your individual capacity, and not as a claimant or class member in any purported class or representative proceeding.

14. Accessibility of Official Rules and reward calculation code

The GIP Proposal for this Offer is available at the following link: GIP-110: Should the Gnosis DAO create and fund a Gnosis Pay rewards program with 10k GNO? and these Official Rules are linked in the GIP Proposal for this Offer. The GNO Reward calculation code will be open source and available at: GitHub - karpatkey/gnosis-pay-rewards-monorepo (“GNO Reward Calculation Code”).

15. Taxes

Cashback received and GNO Rewards may be taxable, depending on the country, state, and/ or local tax laws applicable to the User. Users are solely responsible for reporting such items in their tax returns and paying any associated tax(es), duties, levies and liabilities.

16. No Financial Advice

Nothing contained herein or in relation to the Offer shall be construed to be financial advice. Holding and transferring crypto assets involves a high degree of risk and there is always the possibility of loss, including the loss of all digital assets in the event of a mistaken transfer (whether to an incorrect address or an incorrect chain). Please seek professional advice before making any financial, investment, or trading decisions.

17. Entire Agreement

These Official Rules constitute the entire agreement between Administrator and the User. The invalidity or unenforceability of any provision of these Official Rules will not affect the validity or enforceability of any other provision. In the event that any provision of the Official Rules is determined to be invalid or otherwise unenforceable or illegal, the other provisions will remain in effect and will be construed in accordance with their terms as if the invalid or illegal provision were not contained herein. The Administrator, the Operator, and the Sponsor and its entities’ failure to enforce any term of these Official Rules will not constitute a waiver of that term or any other provision of these Official Rules. Each User agrees to waive any rights to claim ambiguity of these Official Rules. Headings are solely for convenience of reference and will not be deemed to affect in any manner the meaning or intent of these Official Rules or any provision hereof. In the event there is a discrepancy or inconsistency between disclosures or other statements contained in the Offer–related materials, including any referenced privacy policy or terms of use on a website and/or the terms and conditions of these Official Rules, the Official Rules shall prevail, govern and control and the discrepancy will be resolved in the Administrator’s sole and absolute discretion.

staworth · July 17, 2024, 12:23pm

We think this is an excellent idea for driving activity to Gnosis Pay, and are pleased to support this proposal

The substantial interest and attention the product has received to date has been great, but the available data suggests that volume per user (c. €311 per user per week) is likely still accounting for only a smaller proportion of the average user’s total activity. Likewise, the growth in users has been steady, but the numbers are still relatively small. We therefore expect there is significant room for growth in activity for Gnosis Pay from all angles from this initiative.

The implementation focusing on holding GNO tokens in the user’s Gnosis Pay Safe is a clever way to attract short term demand to GNO, and reward long term users and holders. The tier system is also well thought out, and we expect will encourage users to expand their existing holding to benefit from the next available tier. We also expect that this will be an interesting experiment to see how far the average spend per user per week increases. It would be helpful to track existing users through the incentive process, to separate out new user growth from increasing spend among existing users.

Forsaken · July 17, 2024, 12:53pm

I like the proposal, my only concern is whether there should be a maximum reward limit (weekly or w/e) to avoid exploiting.

On the other hand, just for the sake of discussion, I’m wondering if the focus should be on the money ‘locked’ inside the gnosis pay safes. Perhaps by having a yield to attract more people to keep their money in gnosis pay rather than a bank which will probably increase usage as well. Like letting the user have a EURe buffer for spending, and the excess EURe being added to Aave or Spark etc for yield and withdrawn only to cover the buffer when money is spent.
By extending this thought maybe for a large amount let the user lock it for a time period, and karpatkey can handle it as it sees fit, since you have the expertise to do so, (keeping a fee)
Thanks!

joepadawan · July 17, 2024, 1:32pm

I’m not in favor of a tiered cashback system
I’ve tried many of these cards and they all go wrong
After a while they start to look for hidden ways to increase revenue as whales abuse the cashback system.
Then the team is only busy weeding out abusive transactions and laundering to get some % cashback.
Also the % are way too high
A point system to gain free gas or other benefits / partnerships for OG’s and users would be more realistic.
Name one card that survived the cashback system
The fact that it’s totally free is enough

mrtdlgc · July 17, 2024, 1:38pm

I have already voiced my concerns around such a subsidy program in a previous thread, which was left outstanding with no response from Pay team. Let me quote those concerns to this thread as well:

First: Pay is still a KYC-gated product for the residents of EEA+UK. Hence, such a program would only benefit users from a certain region of the world, which, we would probably all agree, already have better access to financial services. My argument against initiating such an incentive program while the card is still limited within this region would be, forgive me for being too straight, that it would feel to me as subsidizing European consumerism by holding GNO.

Second: Based on the publicly available Dune dashboards, it seems that Pay and other self-custodial debit card/current account alternatives have so far failed to achieve and establish a product-market-fit. In this regard, I believe Gnosis Pay team should provide better accountability to the DAO for the justification of support from GNO holders. It has been almost a year since the announcement of Gnosis Pay at EthCC in 2023, and even though Pay has exceeded the number of orders compared to the main competitor (Holyheld), I have a huge doubt that the number of users and the general volume generated through payments is justification for support.

Third: More like a question. Is Gnosis Pay ready to scale and sustain an exponential growth, which is expected through a subsidization? Just off the top of my head, friction of onboarding users to Gnosis Chain due to no direct on-ramps through CEX rails, KYC through Fractal, extremely strict/invasive AML checks, manual creation and shipment of cards are the main blockers for scaling which results in the requirement of extra human resources. This could easily be dealt with through aggressive recruitment. However, as we have seen it time and time again that startups following this approach during the early stages of exponential growth either file for bankruptcy or have to conduct huge layoffs when the growth reaches to a certain level. Would love to get the opinions of GP team on this.

Overall, it has been over a year since the announcement of Gnosis Pay at EthCC in 2023, it has failed to establish a product market fit based on the publicly accessible data at hand. And focusing on user growth through subsidy is the number one mistake a tech startup could do. I am willing to change my mind for this proposal provided that Pay team can prove otherwise with data they have to consider it as an early success to receive a subsidy mentioned in this proposal (which is almost on par with the amount of user payment volume so far). Otherwise, I do think it is a bit too premature to subsidize the use of the card using the holdings of the DAO.
Either an accountability system should be established between Pay and the DAO or this does not bode well in the eyes of GNO holders, especially considering Pay being affiliated with Gnosis LTD while being a separate entity with no transparency to the DAO regarding its operations.

coreolis · July 17, 2024, 1:53pm

I Will be voting against for the reasons mentioned in reply to the earlier discussion:

•No accountability for Gnosis Pay to the DAO.

•As a separate company with no direct link to the DAO (apart from building on the chain) there is no clear economic coupling with the DAO, quote from the Gnosis 3.0 vision:

‘Gnosis Ventures incubates, invests in, and supports projects in all early stages, spinning incubated projects out where appropriate. The relationship between these ventures and the token can take several forms: Either GNO is used as a token directly or the Gnosis token is economically coupled with the project tokens.’
-I would expect these token incentives to be structured more formally, perhaps as an investment from GnosisDAO into GnosisPay the company

•No clear path to profit has been outlined from Gnosis Pay. These incentives seem like a one time boost to GnosisPay volume. What happens when they run out? Will the DAO give out more tokens? I would like to see how this might fit into a broader strategy that will turn Gnosis Pay into a profitable business rather than just a one time subsidy from the DAO.

I am not against the DAO funding the growth of Gnosis Pay if the first two problems are solved however, currently it seems like a gift from the DAO treasury to a private company that uses the chain, with no metrics being provided as to how it brings value to the chain or the DAO members. Even so, Gnosis Pay and the team behind it seem to be delivering and improving the product, perhaps the company works more efficiently behind closed doors. If this is the case, then I would prefer a ‘verify, don’t trust’ model with a clearly defined, formal economic relationship between the DAO and Pay before allocating DAO treasury resources to it.

joepadawan · July 17, 2024, 2:06pm

Agree, the Gnosis part is a dream. Truly the only self-custody card. I support a GNO grant to work on existing problem areas mention above, like a less invasive on-offramp. Easier onboarding and holding partners to your standards not the other way around.

This is the best card I’ve used and still some of my friends gave up during the process. The Gnosispay + Safe tech works perfectly, clearly the friction sits elsewhere…

This proposal is just weird because it wants to throw money at the wall while users already pinpointed most of the things that hold the growth back.

N0xyGen · July 17, 2024, 4:11pm

In principle, I think cashback is a good marketing measure to boost the growth of the card. However, there are 2 points that make it difficult for me to agree with this proposal.

Point 1: The biggest hurdle for non-crypto natives to use the Gnosis Pay card is the lack of basic functions such as a Gnosis Pay app, integrated IBAN and Apple/Google Pay. The effect of the cashback marketing instrument would be significantly greater if these basic functions were already integrated at the start of the cashback incentive.

Point 2: In my opinion, the present proposal does not ensure the sustainability of the cashback system. The amount of the proposed cashback cannot be financed by the pure card fees. If the financing is not secured, it is a temporary incentive, which can lead to the problem already mentioned that users will then no longer use the card and move away. A look at the cashback systems of other crypto cashback cards (e.g. crypto.com) also shows that users react very angrily when cashback is granted and then withdrawn again at a later point. This would mean that the boost in usage (and the increase in value of the GNO token) that the cashback system can undoubtedly generate would be short-lived and quickly evaporate.

Of course, the Gnosis ecosystem offers good counter-mechanisms that other crypto cashback systems do not have, such as valdiators or staking in general, but the (short-term) rush and the subsequent fizzling out of users weighs more heavily in my opinion, making it difficult for the ecosystem to absorb this and possibly causing greater damage to the ecosystem and the GNO Token.

Conclusion: A cashback system must be sustainable if you want to attract users to the ecosystem in the long term. In my opinion, the short-term boost from a marketing budget is not enough to attract users to the Gnosis ecosystem in the long term.

N0xyGen · July 17, 2024, 4:21pm

Also, the Gnosis Pay team should not underestimate how creative people can get to trick the cashback system. Before a cashback system is hastily introduced, it should be ensured that appropriate measures have been taken to prevent this.

In this context, I would also like to know how much the DAO currently provide for Gnosis Pay to be free of charge. Can someone provide a link that shows how much the DAO is currently spending on Gnosis Pay?

refri · July 17, 2024, 10:12pm

Although cashback might be a valid measurement to increase usage I don’t support this scheme cause imho it will mainly increase volume, and maybe most from ppl already holding GNO, but not help so much to get more ppl to use Gnosis Card and the wider gnosischain ecosystem.

NelsonRodMar · July 18, 2024, 9:27am

I fully support this proposal, a lot of people would be attract by using the Gnosis Card and having a tool open could lead to future incentive from other team, a good way to promote there product to real user KYCed and not to sybil user.

And yes this program is beneficial for Gnosis because, more incentive to use the card equal more user using it equal more activity on the chain equal more reward for staker, so it’s a virtuous circle for me.

On thing that could be done better is the fact that we could take Stake GNO in account also, for example with Stakewise or even solo Staker, so people would have yield on there GNO and this would secure even more the chain, it’s a win win situation.

And to respond to people worried of the fact that we don’t have IBAN yet, so there no good way to on-ramp/off-ramp threw simple bank transfer. Actually yeah it’s not the easiest way, but you can directly go to Monerium dApp and make on-ramp threw a simple Bank transfer and off-ramp in the same way. And I suppose it’s just a matter of time before it’s fully integrated in the Gnosis Pay website.

N0xyGen · July 18, 2024, 10:16am

I would also like to add that the planned payout period of 5-12 days for Cashback Rewards is far too short. This is an easy way to trick the system. Example: I buy something from Amazon, wait 12 days until I get the cashback and then send it back. I get my money back from Amazon and have received the cashback.

What concrete measures are planned to prevent such cashback tricks?

mkoeppelmann · July 18, 2024, 11:33am

Thank you everyone for your comments.

I am in support of the program and I will lay out my main arguments.

Lets first discuss the state of Gnosis Pay so far: the numbers here are largely accurate. The “card sold” does not track cards that where given via promotions/ for free and also all cards that use GBPe (less than 20%) are missing. So while now a couple of thousand people have a card ~2500 user have done at least one payment with the card. Out of those roughly 30% have spent <=$100 - so basically just “tested” it.

What are reasons to use the card today?

It is self-custodial
As much as we care about self-custody - we do not believe that this in itself is a factor that will attract many user. User in general do not have the concern that they bank they are using will suddenly “run away” or loose their money. And the tiny portion of users who have that fear will probably not even be satisfied with Gnosis Pay as e.g. you kind of have to “trust” a stable coin issuer and to a smaller extend Gnosis Pay as it can access funds within the range of the user controlled daily limit.
It is more convenient/ cheaper for crypto holder
Gnosis User
This is probably the main argument for anyone who has already funds in some form on Gnosis Chain. If you would today spend those funds you would probably need to bridge them to another chain first, deposit them to an exchange, sell them for fiat, withdrawal the fiat. So for Gnosis chain user the value proposition is clear, but the number of existing Gnosis Chain users that also live in one of the countries where the card is available is very limited and we have reached probably already many of those.
Crypto User
For crypto user in general that hold funds on other chains the “convenience” argument looks already different. While bridge solutions are getting better we know, and often got the feedback that turning you funds on chain X into EURe on Gnosis (or worst GBPe on Gnosis) can still be a cumbersome process. And quite possibly for those users it is still easier to send funds to a CEX and go from their.

So unless you have funds on Gnosis or you are at least very familiar with all the bridge and swap solutions that are in theory already out there it is unclear what your concrete reason should be to use the card today over the other cards basically every current Gnosis Pay user has.

What should be reasons to use the card in the future?

So if we don’t believe the “self-custody” in-itself will attract user - why are we putting so much work into it? Because “self-custody” always allows “permissionless innovation”. If the user actually controls it own account with its own key, they user can always that the key and use an alternative interface. On top of that we already saw countless hackathon projects that have started to do things like:

seamless integration of onchain yield into pay
integration of payment flows into DAOs
integrations that would allow a direct transfer to merchants
novel reward/ membership programs with NFTs
use of community currencies (e.g. Circles or Breadchain)
usecases integrated into RWA (Backed, Realt, Centrifuge to mention 3 already on Gnosis)

Those things are not theoretical. They are behind actively worked on. Teams from Gnosis are building Metri that will allow usage for Circles with pay. At least two teams are building integrations into Aave and and Maker.

So the reason people should use Gnosis Pay should be is: more features, more innovation, better rates, access to financial products they do not have access to otherwise.

So I see this proposal as an interim solution to bridge the “incentive gap” that soon will be filled by the results of Defi / permissionless innovation. It is important for Pay to keep its momentum so that builders that decide today to start building on Gnosis/ Gnosis Pay have the confidence that they are not just building for a couple of thousand user.

How does Gnosis benefit?

In short - more activity and builders coming to Gnosis chain. The announcement of Gnosis Pay had already a significant impact on projects like Aave on Maker (Spark) deploying on the chain. More Gnosis Pay user will automatically bring more user and builder on the chain. Make discussion to get more native CEX integrations easier, increase the chance to get native USDC support, better bridge liquidity, more trading volume on Cowswap on Gnosis, …

In the past GnosisDAO has approved 50k GNO for Defi incentives that certainly did boost TVL for some time but ultimately mainly went to few “whales farming rewards”.
In contrast, here we are talking about 10k (~1% of GnosisDAO holding) that will likely have an transformative impact on the chain. Right now GnosisPay is already probably the “highest visibility” application on Gnosis - despite just having a total payment volume of ~$4m. Lets assume the average user will get 2.5% cashback (from holding 5.5 GNO (this will probably create a bunch of new GNO holders as well)) - this means that at the current price: GNO=$260 → 10k GNO = $2.6m rewards = $104m payments.
I am certainly if pay grows from ~$4m to → $104m in payments it will transform the position and perception of Gnosis Chain dramatically.

Karpatkey · July 18, 2024, 4:47pm

All of this concerns are valid points, and proper measurements will be taken to avoid this, namely:

Monitoring tools by the Pay team to avoid gaming the system. Any way of getting cash from payments will be excluded from accruing rewards. In the post, we mentioned ATM withdrawals or bank deposits, but these also include buying crypto with the card. We don’t have access to the data to do it ourselves, so the Pay team will provide a list of txs that will be excluded.
Refunds will accrue “negative rewards”. If someone received x GNO as rewards, and then they get a refund, they need to accrue more than x GNO as rewards to start accruing rewards again. This means that gaming the system through refunds can only be performed once.
In any case, setting a limit of some amount per month makes sense. We can start by limiting the payments that accrue cashbacks up to €20k/month.

Many of this issues are currently being worked on by the Pay team.

Card fees will not surpass the accrued GNO, but the positive effects for the ecosystem can. Additionally, holding GNO has an opportunity cost (staking rate), and by not doing so it also benefits the DAO and GNO holders.

The DAO has not funded Gnosis Pay.

Louk · July 19, 2024, 9:35am

Hey all,

It’s a good short-term idea, but for retaining customers who already have a broad range of options, it may have a disappointing effect.

The benchmark for loyalty in this field is American Express. Their network of partners, where you benefit from discounts on purchases, and their customer service are strong arguments. Instead of cashback, consider associating Gnosis Pay with well-known brands in the ecosystem to provide access to exclusive deals.

It’s a short-term tool, but everything is worth considering to showcase the real use cases of the Gnosis Card .

LugsB · July 25, 2024, 8:03am

I think its a great idea. I run Gnosis validator nodes and am a big supporter of the chain. I have a Gno pay card and never used it because of the friction and lack of rewards.

I used to use the Binance card because the rewards were similar to the tiers proposed here. It was great for paying monthly bills, and getting a little back for bigger ticket items.

If the marketing budget runs out then the reward tiers could be reduced in line with transaction commission to make it sustainable long term. Even 1% back is better than nothing elsewhere.

refri · July 25, 2024, 8:02pm

I am running validators too and use my gp card to generate real life tx on gc and also curious how long it will take till one of my spending tx will be included in a block one of my validators proposed

edit: what friction you are talking about? Moving funds to gc? Cause I rarely sell crypto I just place fiat to gc using monerium and send it to my gp safe. Using Revolut it is just a few clicks and one onchain tx, taking usually not more than 5min in total.

cnupy · July 26, 2024, 6:34am

I’m very much in favour of this proposal. However, I would like to suggest some changes to the implementation of the Program that would further benefit the Gnosis DAO and the Gnosis Chain in particular.

I propose that LST GNO derivatives (e.g. Stakewise osGNO) should be eligible for holding. This will benefit the holders by giving them a stable income from their holdings and further strengthen the security of the Gnosis Chain;
rewards should be capped (possibly different tiers can have different caps);
rewards should be paid on a deferred basis (e.g. once every three or six months) to avoid gaming the program;
certain types of transactions should be excluded from rewards (e.g. money transfers, withdrawals, etc.);

LugsB · July 26, 2024, 9:48am

It’s the source of funds that I would feed the safe wallet with. There is no point for me to use it at the moment from a FIAT account. But I will be using it later in the year.

N0xyGen · July 26, 2024, 10:20am

As an additional incentive and support for the network, it would perhaps also make sense for users to be able to hold osGNO in order to be eligible for the cashback.