The goal of this proposal is to kickstart discussions about drastically reducing the total GNO supply.
This GIP would improve economics and clarity of GNO rules by burning 68% (6.8MM GNO) of the total supply (10MM GNO). 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 GNOâs potential. A straightforward measure is to burn 68% of the GNO supply, reducing it from 10MM to 3.2MM GNO.
Rationale
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.
GNO Composition
Noncirculating 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 burn this amount.
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.
I am new to Gnosis ecosystem and the GNO distribution was always a concern for me.
This will also incentivize people to lock the GNO on the newly opened 1 year contract ; now they can lock tokens without concerns about GNO dump.
So I support this proposal .
Itâs the simplest way and probably most affective way to do it .
on the other hand , It is like to burning money . So it could be more complex ways but less affective in short term.
Perhaps the only downside I see here is in terms of opportunity cost. Looking at altchains and their generous (ridiculous) incentive programs, it doesnât seem like inflation ever factors much in investor confidence.
Would the burn be effective, or would the DAO end up setting fire to more opportunities for growth?
Granted, the existing 400k GNO for incentives is nothing to sneer at. $110M USD at current market rates.
Alternate consideration: if a burn is decided, what is the best strategy? Burn it all in one go, or spread it in several events?
There is a history of legitimate yet underappreciated projects doing massive burns with seemingly no positive result in market confidence. GET Protocol is one such example.
On the other hand, some other approaches have hyped up burning into a regular PR event and gotten good returns on that, like Binance Smart Chain.
I absolutely support a burn as soon as feasible, but dont think we need to attempt to accurately guess the DAOs needs at this point by only having the one burn. I think we should push GIP-19 through ASAP and show the market that GNODAO intends to burn unneeded GNO as it vests to the Treasury. This allows more flexibility and possible incentive programs. We could also pair this with a 1 for 32 token split to match mGNO and GNO prices and increase the ability of retail to purchase multiple GNO rather than fractions.
I agree with the comment above regarding becoming a large Uniswap LP for GNO/ETH. It provides an easy route to obtain GNO and the trading fees can be utilized to further the project.
About the supply cut: Yess!
I am glad to see the supply cut happening, because a heavy inflation ainât good, and the whole point would be not to scare away the new cashflow & make it more appealing to investors-traders. Making it more scarce is obv imo a really good thing, also our voting power would increase. As I recall, Ernst did mention 3 million GNO supply as more than enough, but the proposed 3.2M is still fine for me. The mentioned supply cut would help us reach our goals faster -I believe- and also in the crypto space cutting a heavy inflation is unique, just as unique as our dual token model. I would push for the 3M, if thatâs possible.
As a DeFi & âeth canary networkâ strategy, I would suggest to compete with Polygon for the âeth canaryâ spot. With actions towards bringing Aave to Gnosis chain, or should I say, bring Gnosis chain to Aave.
Would be a good marketing, as Aave becoming a stronger-trusted *brand day by day especially, if a âdefi boomâ would happen this year⌠I believe it will happen, and I would love to see Gnosis Chain there with the Gnosis logo, to bring more awareness and users to our chain, and obviously the usecase would have itâs effect, it would be great to use Aave to borrow against GNO to buy back more GNO for example,or just the effect of having more locked GNO would be one step forward. It is very likely, that even the marketing effect is worthy enough, depends on what value we gotta give in exchange for getting it done. I would be happy to hear what other community members think about this idea, maybe itâs not the DeFi strategy that you asked for, but maybe something worth considering!
Hi, where can I read more details on the vision in order to be more familiar with it please as you wrote âGnosis 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.â Thank you!
Reduced uncertainties and clarity are powerful BizDev & products attributes. The GC & GBC stories are one-time events complicated to understand. Such a big and unique merge/acquisition allows as well to implement other changes for the long term good of the project.
" Should we burn 68% of the GNO supply?" appears as a suggestive question implying that lots of conversations happened on multiple channels & occasions within the community and mostly all led to a YES.
3.2MM total supplies fits elegantly with 32 mGNO needed per validators
The existing treasury size and management records demonstrate that the DAO & Chain should be able to maintain operations and incentivize the right projects when needed.
I personally favour 1-off burn over a slow or incremental burn. Clarity & decisiveness.
The risk of lobbies influencing the protocol in the coming months mitigates.
A burn benefits all holders, should they be OG whales, shrimps or newcomers.
As a trader and holder I would jump in like the moon boys and say yes burn it all, now.
YET!
I think the best solution would be to vote on a proposal to lock-burn every quarter.
Means lock all the 68% in a contract, every quarter GNO holders vote to burn or claim and use in treasury for whatever might come up in the future (liquidity, grants, financing).
I do not understand the nuances of whether to burn or not.
But if we do decide to burn
I would support a one-time rather than a slow burn. Gnosis is a builder, not a marketer. We do not want to waste time organizing/celebrating multiple token burns
Also, IMO keeping the option to âmaybeâ use it later means the market will significantly discount the current signal to burn part of it.
I would prefer it to be done sooner rather than later. Ideally, if it could coincide with the Cowswap airdrop buzz (or immediately after), that would be great. Coz it would mean enough visibility.
I canât imagine the market not responding to a 68% token burn. But IF that happens, then it is safe to assume that the market never valued those GNO. And if they were to remain, vesting/using them would logically reduce the GNO price.
Big like to charlesâ comments! If nothing talks against it, and it only has a positive effect, why would we not do it? I would prefer doing it in a whole, not partially. I think it could have a marketing value by doing so, atleast, everyone loves in the whole crypto space when a token gets more scarce by wise-strategic decisions. Cutting ~70% upcoming inflation will bring some relief, easier to get to top100, as everyone loves to have more potential. I hope we will see it bringing awareness too on Gnosis, we should try to play that card with such a valueable event, as it would be great news, and even has marketing value.
+1
This seems like a great idea! Would be great imo to see it either the same time or around the Cowswap airdrop a max of âcoupleâ days later, these have the value of being a âmarketingâ without doing marketing, maybe just with a little push. More awareness to Gnosis definitely what we would seek for to grow in users.
I am going to make a point and leave this here about why Gnosis should NOT consider burning the GNO and do something different.
Currently Gnosis focuses liquidity on the GNO:ETH pair to provide trading liquidity.
I have already written a paper on the merits of DAO owned liquidity and given the size of the ETH treasury for Gnosis I understand why the community stuck with this pair for trading liquidity.
What I want to suggest is that Gnosis would do well to consider an alternative use for their GNO and that is to start funding GNO:DAI Uniswap v2 LP and petitioning MakerDAO to open up a UNIV2GNODAI vault so the community can borrow DAI against this position to use as a source of cash liquidity either for increasing the above position or for DAI liquidity on GNOsis chain.
My point here is that Gnosis DAO can basically burn its currency, or it can use this currency to:
Establish a very large GNO:DAI LP on Uniswap which based on my own analysis of these LP pools will earn more fees when the crypto markets dump or rise.
These LP tokens when they are TOKEN-DAI pairs actually have a price value volatility that goes as the sqrt(TOKEN price) where as TOKEN-ETH pairs are almost linear in price volatility because of the strong price correlation between TOKENs prices and ETH.
Over time this LP via fees (and depending on size and volume trading) will soak up all available liquidity either on the stable (DAI - unlikely) or on the TOKEN itself (GNO).
for DAO owned LP with Tokens paired with stablecoins effectively sinks TOKEN liquidity because to get 10% of the TOKEN in this contract requires a price change of 20%. The negative of v2 liquidity inefficiency is actually a bonus for a DAO.
coupled with a Maker vault (and I canât speak for governance here saying we will for sure give Gnosis one - but I can say if Gnosis were to apply for such a vault I am going to make a very strong case for giving Gnosis one.)
Gnosis chain runs on xDAI wouldnât it be prudent for Gnosis to actually look to work with Maker to get more DAI liquidity at least on its own chain, using its own assets, while also creating a Deeply Liquid trading venue to cash (DAI) for GNO - somewhere? Literally if Gnosis does the above and Maker gives Gnosis a DAI vault based on the above liquidity Gnosis could then partner with Maker to wormhole DAI into Gnosis chain via a Maker instance on Gnosis chain. This literally becomes a no brainer when the DAI on Gnosis chain backed by deposits there are backed by GNO:DAI LP on L1.
I could go on here but I want to urge this community to think carefully about simply burning away capital and market cap for zero return. BTW: If Gnosis could get to even 1-2M GNO paired with DAI the definite market then becomes GNO:DAI v2 LP which defines the price with a guaranteed volume profile. As discussed in the above paper this starts to provide pretty strong low end price support for the token as well.
Right now to get to my 30% mark for Gnosis only about 1-1.2M GNO with about 300-400M owrth of DAI is needed. Seems daunting but given Gnosis treasury is plugging away 1-1.5M/week in profits it would only take a few years of cash at current prices to achieve this level of LP. Couple an initial investment with a Maker vault and it becomes pretty easy to get to this leve of investment quickly. FYI: If this goal is reached then the community could feel confident that it could raise additional funds by selling GNO with a known price.
I really would like to community to think about putting its Market cap to work vs. just burning it all away.
I support the burn proposal. I agree with the above commenters regarding how the burn should take place: all at once instead of increments. This can be used as a marketing ploy too if timed correctly (someone mentioned soon after the CoW drop). I want to stress the magnitude of this decision and that we should exercise an abundance of caution when timing the execution. This should make headliners on all crypto news outlets and Gnosis - with itâs amazing projects and team - should get the exposure it deserves.
Fully agree with the opinion of Navin. I support one-time burning of tokens. This minimizes the risks of the possible use of non-circulating GNO. This is very important for investors.
Fully agree to destroy