NOTE: This discussion is NOT about the native token of Gnosis (xDAI) - it is simply about the question of which chain (Ethereum or Gnosis) is the “home” of the GNO token.
As it stands right now GNO was originally minted on Ethereum and thus is native to Ethereum. GNO tokens on Gnosis Chain on the other hand come from a bridge contract. Essentially GNO on Gnosis represents a claim against GNO on Ethereum.
If everything runs smoothly those details should not make much of a difference and 1 GNO on Ethereum should be equal to 1 GNO on Gnosis. However - if bugs occur, or other forms of unexpected events it will actually make a difference.
I am proposing to change the “source of truth” for the GNO token to switch from Ethereum to Gnosis. I see three reasons to do so:
Bridge risk. Currently, the bridge has the right to mint unlimited GNO tokens on Gnosis. Of course, it is only supposed to mint GNO tokens on Gnosis is an equivalent amount has been locked on Ethereum (and that should be limited) but bridges are unfortunately still a potential source of hacks and bugs and thus are a risk. Every bridge bug is very dangerous in any case but as GNO is relevant for the consensus of the chain it is especially true for GNO.
Total supply of GNO
There are 10m GNO on Ethereum. While GnosisDAO has decided to burn 7m of that and reduce the supply to 3m this has not (and can not) be enforced by code. The reason is that 7m GNO are in a vesting contract that will vest GNO to the GnosisDAO till 2025. So the GnosisDAO can simply not burn the token it currently does not control. Changing the “source of truth” for GNO to Gnosis chain would give us the opportunity to enforce the DAO vote in code.
GNO generated on the beacon chain
GNO that is currently “created” on the Gnosis beacon chain through rewards can not be minted or created on Ethereum. While the DAO could use the 7m it promised to burn to “back” the new GNO that is being minted (and thus would be sufficient for 100+ years) it still does not feel like a clean solution. If on the other hand, GNO is canonical to to Gnosis it is fine to simply mint new GNO on Gnosis for validator rewards (the same way ETH is minted to Ethereum validators)
Rough outline of technical steps to do this change:
Increase the supply of GNO on Gnosis one time to 3m. All additional GNO that will be minted in this step will be minted to the bridge contract.
Remove the right from the bridge to mint a new GNO when a bridge transaction comes from Ethereum. Instead, disburse the GNO from step 1)
A separate system contract could either get the right to mint GNO (or if easier to implement) mint a huge (e.g. 2^128) amount of GNO that is only disbursed if withdrawals from the beacon chain occur. Disbursing this GNO can be seen as equivalent to minting new ones.
In summary: In practice, those changes should not affect the GNO token on Ethereum or the GNO token on Gnosis. However - those changes are meant to reduce external dependencies of Gnosis Chain and thus make it more resilient and secure.
I’m in favor of a native GNO token, however, I am concerned about the impact that it might have on dex liquidity and cex exchange support. For example, Kraken lists GNO; do we have any idea if they would continue to support a native listing?
Yeah, most CEXs currently support GNO. And indeed there is a theoretical risk that they might stop doing it. However, I think it is a risk worth taking. Our goal needs to be that exchanges support GNO on Gnsois natively and ideally as many as possible other assets on Gnosis (at the very least xDAI).
With regards to DEXs - this should not be affected at all by this proposal. Even if we declare GNO on Gnosis the “source of truth” there could still be most of the DEX liquidity on Ethereum. However - I am in favor of moving at least most of the assets and defi activity of GnosisDAO to Gnosis to help kickstart Defi activity on Gnosis. Ultimately that is much more valuable to Gnosis and GNO.
Thanks for asking this question! Because I actually understood the opposite, that the existing GNO contract will remain in use, and hence the intent to “increase” the amount of GNO:
It seems to me that this proposal would also give the Gnosis Chain the flexibility to iterate the tokenomics of the PoS token. At the very least, a smoother way to implement the staking yield.
From that perspective, a clear guideline on GNO emissions into the future may help investors make educated decisions.
Regarding the additional supply, should the design take into account the possible scenario where more than 3M GNO is “demanded” in mainnet? I.e., there is enough new GNO minted that more than 3MM is “bridged” to mainnet. I guess we could eventually resort to the burnt GNO, but that would be pushing the same question into the (far?) future.
Regarding the bridge risk, wouldn’t GC consensus still be at risk if the bridge gets exploited while holding the additional GNO minted in step 1? GNO in GC is about 367k. Granted that would be the case if total staked GNO is below 2x what’s held in the bridge. One possible approach is to speed up the migration of GNO to the GC so that the GNO minted to the bridge is smalled (but there is a current dependency on MakerDAO). Another possibility would be for these additional GNO to be progressively minted on a as-needed basis to mitigate this risk.
@nicosampler
It is clear that the GNO contract on Ethereum can not be changed/ upgraded.
On Gnosis the GNO token also does not have any upgrade functionality - however - a fork of the chain could of course make changes. So my hope is that we can keep using the existing GNO contract on Gnosis to make life easier for the Defi ecosystem on Gnosis and not require them to go through a migration process (which is painful for DEXs and Lending markets like Agave)
@Sisyphos I agree, even after this change most GNO is currently on Ethereum - so the bridge risk would still exist. IMO it should be our goal to encourage as much as possible GNO to move to Gnosis.
pull factors should be: possible staking rewards on Gnosis. Potentially a Safe token distribution to GNO holder - IMO this should happen then exclusively on Gnosis.
On the flipside, Maker vaults are certainly a factor for Ethereum but we should work on concepts (hopefully with Maker) to be able to borrow against GNO on Gnosis.
Upgrade the contract or fork it, if feasible without too many hurdles, seems fine to me as long as it is made clear that it’s not done to overcome the 3m total supply without urgent need.
Great proposal and a clean solution for points 2 and 3.
It also seems to be an important piece in solving for 1. But as noted earlier, the bridge situation is still “very dangerous” as the funds in the bridge will still be much larger than the amount of GNO staked.
As most of the GNOs are still on Ethereum, there is probably no easy fix for this.
Getting the amount of GNO controlled by the bridge smaller than the amount staked sounds like a significant milestone and one that can not be reached while the bridge has access to minting unlimited GNO. So even though the bridge will have a “too large amount” of GNO, it is still an important step.
To get to this milestone, we need to get more GNO into Gnosis Chain and get more GNO staked.
Would it be possible to increase the GNO staking rewards until the staked GNO is higher than the GNO in the bridge? This way, we have three drivers for fixing the bridge GNO/staked GNO ratio, (1: less GNO value in the bridge) attracting more GNO to Gnosis Chain for (2: more GNO staked) staking and (3: less GNO value in the bridge) in the process diluting the GNO in the bridge.
Perhaps it could also be possible to, in a permissionless way, collect all base fee rewards (the resulting surplus on the Ethereum side of the xDai bridge) to buy GNO on Ethereum (for instance, via CoW Swap), bridge it to Gnosis Chain, and burn it (or in some other way distribute it to validators)?
Some of this might not make sense. Trying to wrap my head around this
@manboy
100% agree - the steps I proposed are just the start - ultimately we need to get as many as possible to bridge their GNO to Gnosis Chain. One instrument we have to accelerate that are the Safe tokens that have been promised already to GNO holders. We should certainly exclusively do that on Gnosis Chain.
I like the idea of a temporary increase in validating rewards to attract staked/locked GNO. To address the concern that this would only further concentrate power to a few large token holders, the promotional bonus could be payable to only the first 100 validators per wallet address, or something similar.
Could even make the bonus payouts contingent upon successful conversion of GNO to the native chain…
Bridging GNO from Ethereum to native GNO adds immediate,significant liquidity and utility to Gnosis Chain.
The biggest barrier to consumer onboarding has always been the question, “How can I transfer my Fiat money to blockchain money?” xDai ownership knocks this wall down.
Bridging GNO From Ethereum to Gnosis Chain makes it simple to buy a Stable Coin (xDai) via Decentralized Exchange (DEX) such as cowswap.exchange or honeyswap.org.
Non-KYC Fiat onramps honeyswap.com and mtpelerin.com break barriers from fiat to blockchain, as well as Cross-chain DApps like CowSwap, HoneySwap and augmented.finance.
Let’s increase Gnosis Chain adoption by supporting and encouraging existing and emerging DApps to promote their projects using xDai and GNO and ties to CowSwap, honeyswap Augmented and other DApps which bridge ties to Gnosis Chain.
this shouldn’t be named along with the other projects you mentioned: IMO it’s either a scam/rug or the team went away after getting exploited. Most liquidity is borrowed against a shadowed token (agAGF) at least on gnosis chain and avalance (haven’t looked at the other chains), and AGF supply has increased beyond the announced max supply…so everyone should stay away from it.
I feel that the current reliance on Ethereum will not allow it to be the fast transaction in the short to medium term.
GNO has good ideas that they shared in the maker forum to give utility and viability to the ecosystem, I think focusing on creating incentives can help migration, but of course, not incentives that can foster losses for the protocol.
Supporting more On/Off ramps, incentivizing the creation of dapps, encouraging GNO blocking, but in Gnosis chain exclusively can be ways to create long term incentives but with measurable results.
Using this as an example project that was active on-chain and not promoted. Seems to still be active, SmartContracts are still functioning and other chains have activity.
Also used CowSwap and HoneySwap as examples of types of tools that encourage migration of GNO from Ethereum to Gnosis Chain as part of this subject thread.
Personally, and admittedly I am a novice in all things crypto and Gnosis, though i have read the whitepaper put out way back when. Anyway this all sounds very well thought out and remarkably logical. To me.
I dont think that centralize exchanges will have a problem with this / I do think they will follow.