GNO Token Dynamics (Staking)

General
1

Tere People of Gnosis!

I read:
That the GNO Token is being used for Staking and securing the GnosisChain.
The GnosisChain is basically the Ethereum Beaconchain with minimal adjustments.
The Transaction Fees are being paid in xDAI, which is awesome - big Props to the xDAI People for setting this up :wink:

So now I am confused how this works, have a few theories, how it could work, but I don’t know.

  • So if I stake GNO on my Node and will receive xDAI as staking reward?
  • GNO stays the fixed supply token of 3M
  • How is the transaction fee burn implemented on GnosisChain? No burn?
  • When staking GNO on my Node, I cannot simultaneously use it for voting?

Any clarification would be appreciated. :slight_smile:

Thanks and with best regards!
Lenny

2

Hello,

So if I stake GNO on my Node and will receive xDAI as staking reward?

Validators stake GNO to secure the network and earn GNO as consensus rewards. In addition, they can receive xDAI as execution rewards when proposing blocks. More details about rewards can be found in the Gnosis Chain docs.

GNO stays the fixed supply token of 3M

Yes, following GIP-35, the total GNO supply was reduced to 3 million, initially, the tokens were soft-burned and a few months ago, GIP-116 completed the process with an actual on-chain burn.

How is the transaction fee burn implemented on GnosisChain? No burn?

With EIP-1559, a base fee is burned for each transaction. In practice, due to the bridge configuration, these burned fees are redirected to a treasury controlled by kpk (formerly karpatkey), who are managing the GnosisDAO treasury.

When staking GNO on my Node, I cannot simultaneously use it for voting?

Yes, your staked GNO can still be used for governance. Voting power is attributed to the withdrawal address associated with your validator(s).

1 Like
3

Thank you @Chim9,

One last thing I am not 100% sure about is:
When validators receive GNO as a reward - in the documentation piece it says ~14% as of 2023.
These rewards cannot add new GNO as the total supply is fixed at 3M.
The Documentation also says that all earned rewards come from penalties.

So in itself it makes sense as: No added GNO all GNO earned are GNO penalized for.
From outside it feels a bit weird that Staking would be a 0 Sum Game in regard to GNO staking.

SO just asking is it really like this, or is there a burning mechanism in place somewhere which allows the creation of GNO for stakers?

4

Afaik GNO rewards are paid from Gnosis DAO treasury, apy decreases with number of validators, a calculation can be found here: Launch parameters for Gnosis Beacon Chain (GBC)

5

Ahh I see, yhea this picture would make more sense :smiley:
So regarding the treasury flows, I assume that this is counted as “operating expenses”.

Brings me to the conclusion: Might be longterm sustainable if the profits from liquidity provisioning to the DeFi ecosystem greatly surpass those expenses. If the DAO then buys back GNO to cover these expenses.