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

Governance GIPs
8

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crypto cashback cards (e.g. crypto.com) also shows that users react very angrily when cashback is granted and then withdrawn again at a later point.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.

5 Likes
9

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?

10

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.

1 Like
11

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.

1 Like
12

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?

13

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?

  1. 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.

  2. 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.

10 Likes
14

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.

6 Likes
15

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 .

1 Like
16

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.

3 Likes
17

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 :wink:

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.

1 Like
18

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.);
3 Likes
19

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.

20

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.

21

To make this an additional use case for $GNO I wouldn’t include liquid staking tokens in this program, otherwise it would just boost the rewards for GNO, that are in use anyway…

2 Likes
22

Is there a timeframe wen snapshot vote will go live?

23

We just edited the proposal, incorporating feedback from the community, topping the eligible spending for accruing rewards in eur 20k/gbp 18/usd 22k per month, and specifying the terms and conditions. It’ll be moved to snapshot soon.

1 Like
24

I don’t understand this sentence “Users who hold GNO in Gnosis Pay Safe” … do you mean the noncustodial wallet associated with the safe/card account or the second one? If the second one, how will it be possible to deposit and withdraw funds? from what I know it is not possible to withdraw… sorry I’m a newbie

25

Welcome @Luigidm91

Yes, the “pay safe” is a special Safe that is used with Gnosis Pay. It is absolutely possible to withdrawal from that (otherwise it would not be “none-custodial”). The only restriction it has is that such a transaction (withdrawal) needs to be done with a few minutes delay. This is done so that a malicious user can not spend with the card (and before the EURe is deducted) withdrawal all their EURe from the Safe.

1 Like
26

I think it was a good ideal to cap rewards per month per user to prevent the worst forms of abuse.

Regarding use of LST GNO - I am with @litocoen on this one.
I think with ~250k validators Gnosis Chain does not suffer from having too little. All GNO rewards that go to GNO holders (like staking rewards and this program) can be seen as a “tax” on those that do not participate in those schemes and just hold GNO. Being a validator benefits the chain, as I layed out above - bringing (genuine) economic activity to the chain benefits its even more - so it is justified to give those groups extra GNO (and thus tax the regular GNO holders). Still, GnosisDAO should also protect the interest of “regular GNO holder” as much as possible and this try to minimize GNO spent.

1 Like
27

ok but how can I withdraw? the only way I know of to do it is through the gnosis card dapp, and only for eur at the moment