GIP-35: The target total supply should be 3M GNO?

GIP-35: The target total supply should be 3M GNO ?

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GIP: 35
title: The target total supply should be 3M GNO ?
author: Karpatkey (phase 1) & Smenaamix (phase 2)
type: Meta
created: 2022/04/10

Simple Summary

The goal of this proposal is to kickstart discussions about drastically reducing the total GNO supply (which will add visibility and community participation in the coming years).

This GIP would improve economics and clarity of GNO rules by targeting 3M GNO total supply. It would also formally veto the GnosisDAO treasury for voting, giving more voting power to GNO holders.

Abstract

We have been discussing the GNO distribution problem for a long time:

A wider distribution can be achieved with the right set of rules and economic incentives that would attract investors who understand GNO’s potential. A straightforward measure is to target 3M GNO total supply (reducing it from 10M to 3.M GNO).

The difference between the current circulating supply and the target supply can be withdrawn from the vesting contract once the proposal is accepted. GNO, which is held in the DAO contract is not considered circulating but part of the total supply. The remaining GNO in the vesting contract is not part of the circulating not total supply.

Motivation

  • Clear rules for GNO economics will attract new investors: Greatly reduced uncertainties about future emissions impacting the secondary market and potential execution risks
  • Empower current GNO token holders and multiply the representation of new GNO community members: Increase more than 3X the ownership and voting power
  • Gnosis 2.0 as the future of decentralised teams: Given the current vision of future rewards for GNO token holders with project tokens, the need for new GNO is reduced.

Specification

Non-circulating GnosisDAO vesting: 6.8MM GNO. These are the GNO vesting from the original GnosisDAO announcement : 8MM GNO, vesting for 8 years. This proposal intends to lock and progressively burn this amount (enforced by contracts).
Non Circulating Gnosis Ltd vesting: 0.4MM GNO

Non Circulating GnosisDAO available: 0.5MM GNO. GNO already vested, without considering the GIP-16 commitment.

Non Circulating GC incentives GIP-16: 0.4MM GNO. Incentives program proposed in GIP-16 for the Gnosis Chain

Circulating Treasury: 0.25MM GNO. GNO holdings on the GnosisDAO treasury, used for market making and DeFi strategies. Most of these GNO were acquired in the open market and OTC deals during the last 2 years. See GIP-20 for more information.

Circulating Non-treasury: 1.6MM GNO. Circulating shown on Coingecko, discounting the treasury holdings.

Note: This is an approximation and it does not consider any future proposal that the teams and core units may be working on right now.

Implementation

There will be transaction data corresponding to funds to be lock and burn here when this proposal moves to phase 3.

GnosisDAO Snapshot

There will be a Snapshot link added here when this proposal moves to phase 3.

8 Likes

Reducing the total GNO supply is widely supported in the community. Also, I think we’re on the right path to reduce the uncertainties of GNO. I hope we can vote and execute quickly.

(If this proposal is voted during the launch of SafeDAO, I think that Gnosis DAO will benefit from a good visibility!)

Let’s do this!

3 Likes

In general I agree with the points mentioned in the proposal, but I am not sure if the proposal will be able to achieve the desired result. From my personal experience unit bias is a thing, people are much more likely to invest in tokens with a smaller $ denominated value than the big $ tokens. It also requires a certain level of sophistication to understand FDV and the vast amount of new users don’t understand the concept. If you burn the supply over 7 years, this should increase the $ denominated value of GNO, which makes it more unaffordable for the smaller investors.

In my opinion ETH is so decentralized because it was so cheap and affordable for a long time. If you launch ETH with the current price, you wouldn’t be able to achieve this level of decentralization. So I think you will probably get better results if you increase the token supply, but this should be against the interests of the current investors.

So I suggest the DAO offers a solution similar to YFI and Woofy. We should make mGNO tradable on the open market. Users can exchange mGNO for GNO (32 mGNO for GNO)

In my opinion this should make it much easier for smaller users to invest in GNO and it doesn’t change a thing for current GNO stakeholders.

6 Likes

Hi - There is already a GIP-33 on the forum. Please update your GIP to number 35. Thank you!

2 Likes

Done!
Tx John and sorry!

1 Like

it would be great if we could have an opinion from the Gnosis team
@mkoeppelmann ? @StefanGeorge ? please

1 Like

wen phase 3 ? wen snapshot link ? :slight_smile:

4 Likes

Very much in favour of this proposal. Looking forward to the Snapshot vote.

4 Likes

Big majority says: let’s get it done!:slight_smile: :innocent:

3 Likes

Thank you for this proposal @smenaamix! I largely agree with some alternative suggestions.

Some comments:

A large amount of non-circulating GNO tokens is indeed a red flag for investors. I agree GNO token holders should send a strong signal about their view on the token supply and future emissions. In our own estimations, there won’t be a need for more than 3M GNO in circulation.

We could make a proposal to GnosisDAO to withdraw enough GNO tokens once to match the 3M GNO token supply with the goal of not touching the vesting contracts after this withdrawal again. This would be a soft-burn as the tokens are in theory still available but there is social consensus among GNO holders that they should not be touched. The total supply would be reduced to 3M GNO.

This is similar to many other DEFI protocols, which have a target total supply but still have a minting function in their ERC20 token to increase supply in case this is needed.

After the vote passes the total supply and the fully diluted valuation could be updated on websites like Coingecko and Coinmarketcap to reflect the GNO holder’s perspective.

Regarding the voting power of GnosisDAO: GnosisDAO cannot vote itself on Gnosis proposals or could do so only via a proposal itself, which doesn’t make too much sense anyway.

11 Likes

I think this makes a lot of sense. A lot of investors misunderstand the GNO distribution and suspect that there is a lot of supply to be vested by early investors or that it is part of the GNO treasury listed on Openorgs/DeepDAO.

Just to clarify my understanding, the outcome would be the following taking Coingecko as an example:

Total Supply: 3,000,000
Circulating Supply: 1,865,027

  • possibility to mint additional supply at the discretion of the DAO if necessary
5 Likes

Yes, this would be the outcome!

6 Likes

Thank you very much for your reply @StefanGeorge !

I agree your comment.

Do you think we should make a new proposal? Or is it possible to update this proposal?

(I am not very familiar with the processes of governance and I picked up this proposal from @Karpatkey because it was published on February 4th (more than 2 months) and the Gnosis community seems to support this proposal) :slight_smile:

Very happy to learn this. That was the information I was missing.

Thank you!

4 Likes

I think it is sufficient to update the existing proposal. The target total supply should be 3M GNO. The difference between the current circulating supply and the target supply can be withdrawn from the vesting contract once the proposal is accepted. GNO, which is held in the DAO contract is not considered circulating but part of the total supply. The remaining GNO in the vesting contract is not part of the circulating nor total supply.

For the snapshot proposal, we will craft the required transaction payload to withdraw the necessary GNO from the vesting contract. We will also prepare to update the APIs used by Coingecko and Coinmarketcap to reflect this change. I suggest posting the proposal in about 2 weeks’ time in phase 3. This gives enough time for everyone else to take a look at the proposal and prepare everything for execution.

8 Likes

Perfect, thank you !

I just updated the proposal. If you see other updates, please let me know. English is not my native language so… ^^’

3 Likes

This looks good! We will move it to phase 3 soon.

6 Likes

I am in favour of drastically reducing the supply of GNO

2 Likes

I hope that this can quickly be voted on and that the communication around this proposal (if accepted) will be well executed. I also suggest that to make the request to update other pages like Gnosis (GNO) | Binance Research

Already posted elsewhere the multitude of things one could use the treasury GNO for that doesn’t involve selling anything and effectively locking away the GNO to provide marker liquidity at price as well as provide a financial base to borrow (allowing for treasury expansion btw as well as stronger GNO price support)

Creating a GNO and/or GNODAI uniswap v2 LP that could have vaults on Maker gives GnosisDAI much greater flexibility in both providing GNO price support using an uncorrelated stable, and a large relative to GNO circulating cap. Literally GnosisDAO could use the GNO cap to borrow large amounts of DAI at ~2% that it could use to lever up other positions and returns.

I already know that Karpatkey is using Maker with curve stETH/ETH to borrow DAI with a Maker vault and lever up their position (which is good for the DAO)

Basically burning the supply reduces GNO overall market cap to ~1B, and worse should need arise the DAO will have to mint and dilute later (not a great look if this is decided). It is going to make it look like Gnosis value is shrinking vs. growing.

I watch GNO price and due to the significant GNO/ETH LP GNO price basically yo-yo’s with ETH where as pairing GNO with stables like DAI basically creates a much more stable GNO price, as well as higher LP returns. I have growing and significant data that Token-DAI LPs get almost 2x higher fees than Token-ETH pairs. I also have a small but significant set of data (with some notable exceptions) that communities that focus on Token-stable liquidity being the dominant component price decorrelate (to a greater extent) than communities that focus on Token-ETH liquidity.

GnosisDAO seems hell bent on both burning GNO and basically pumping up correlation on GNO/ETH and while this community is doing a number of positive things the GNO price still lives within the .11-.13 ETH/GNO price range which is barely book value as compared to the GnosisDAO treasury.

It is admirable that GnosisDAO has coupled its price to ETH for so long. Perhaps it is time to make a significant change so both the GNO price AND the market cap can finally grow by decoupling ETH from GNO and refocusing GNO liquidity on GNO-stable v2 LP (like GNO-DAI). Take the ETH stuck in these contracts and double down on stETH/ETH finally break the log jam limitation of ETH:GNO ratio price lock.

Free GNO price from ETH and use that ETH with stETH to both borrow to lever and earn return. This helps the Ethereum ecosystem, and helps Gnosis both at the same time. Perhaps making bold moves like the above, and doing something different might finally allow GNO price and market cap to appreciate.

1 Like

Hi Makerman, I like your posts with additional ideas, but it seems they fade away a bit here. Maybe good to make a separate forumpost or work together with karpatkey to setup some of your ideas and check what is needed and what is needed from GNO holders.

2 Likes