The Economic Case for Gnosis Pay

[ernst]

Gnosis Pay is a more conventional business than Gnosis Chain. This post sits alongside the Gnosis Chain and EEZ piece and makes the case for Pay on its own terms. It has a clearer path to sustainability, more predictable cash flow into the DAO, and a different shape of bet.

The idea behind Gnosis Pay is straightforward: legacy payments infrastructure is complicated, fragmented, and gated. To offer a card product, you need relationships with a card network, a BIN sponsor, a payment processor, a compliance provider, and several others. Getting those contracts in place takes years and significant capital. Most crypto projects never bother, which is why most crypto card products are thin wrappers around a single provider with limited functionality and high dependency on that provider’s goodwill.

We did the work. Gnosis Pay has integrated and holds contracts with a network of licensed and authorised partners including: Monavate, Pismo, Elliptic, Visa, Sumsub, Paymentology, Apata, G&D, Noah, Monerium, and Avenia to facilitate underlying card issuance, processing, compliance, and on/off ramp infrastructure. That is not easy to replicate. It is also not the point of the product in itself. The point is what it enables: wrapping all of that complexity and making it invisible to the user. From the user’s perspective, they have a card that works. From a developer’s perspective, they have an API. The messy reality of legacy financial rails sits underneath, abstracted away.

Gnosis Pay is a B2B product. Through our network of licensed partners, we provide a payments infrastructure stack: card issuance, processing, compliance, on/off ramps. Other companies use this stack to offer their users a payments experience without spending years building it themselves. Think of it as payments infrastructure as a service, sitting on top of the contract relationships we have spent years assembling.

This is a large and growing market, with room for more than one or two companies. The core expertise is in bridging old and new payment rails. Stripe is coming at it from the traditional payments side, building crypto capability in-house. Gnosis Pay is coming from the crypto side, having brought significant payments expertise in-house.

Why is card program management a good business?

Card programs make money the way they have for decades: a small, recurring cut of every transaction. As the program manager sitting between the partner and the card rails, Gnosis Pay charges partners across a range of fee categories: account fees, interchange share, FX on cross-border spend, bin sponsorship, network authorizations, and dispute handling. Taken together, this transactional revenue runs roughly 0.9%–1.5% of the total payment volume our partners’ cardholders spend, on any chain.

That is a structurally strong position. A roughly 1% take rate on payment volume is durable, recurring, and broad-based rather than dependent on any single fee. It does not depend on market conditions or speculative demand, and it has sustained card businesses for decades.
The economics also improve with scale, because the largest fixed costs (maintaining the contract relationships and compliance infrastructure described above) are largely independent of volume. Every additional dollar a partner spends is mostly margin.

Gnosis Pay v1 was built as a B2C product. We learned from that. The unit economics of acquiring individual consumers in payments are brutal, and the differentiation is hard to sustain. The more defensible position is B2B: own the infrastructure, let partners own the user relationship. That is what v2 is built around.

The transition explains why user growth has been flat. V1 was originally B2C and later retrofitted to accommodate partners. Across the original Gnosis product and v1 partners, we have roughly 10,000 users. We have not been actively acquiring new ones while v2 was being built.

Going forward, both metrics matter: partner count and the users those partners bring. V2 is built to scale both. We are rolling out v2 now. The first major partner is a large stablecoin wallet with over 15 million activated wallets, meaning a wallet with a phone number attached to it.

Many of those users are in emerging markets across Africa, LatAm and Asia, with a growing presence in Europe and the US. Our initial focus is the EU and the cross-border issuance markets: Africa and the other regions where stablecoin payments solve a real problem. To support the partnership, Gnosis Pay became multi-chain and deployed on Celo. More on the partnership coming soon.

We are currently loss-making, but the path to break-even is well-defined and tied to volume and transaction mix. Gnosis Pay reaches break-even at roughly $27M in monthly payment volume across our partners’ cardholders, on any chain.

What that means in terms of cardholders depends on how they actually spend: both how much, and how often. Each transaction carries a largely fixed processing cost (authorization, 3DS, clearing), so a profile of frequent, lower-value transactions reaches break-even at a higher user count than one of larger, less frequent purchases for the same total volume. In emerging markets, where spend per cardholder is lower, that is roughly 150,000 cardholders. Across our current user base in non-emerging markets, card usage tends to be more frequent and at higher value, and break-even is reached at meaningfully fewer cardholders (50,000–80,000).

The other important variable is our ability to convert partner wallets into active card users. At 1% conversion, the first partner alone reaches the emerging-markets break-even threshold of 150,000 cardholders.

The margin structure improves significantly at scale: the fixed costs of maintaining contracts and compliance are largely independent of volume, so the path from 10,000 to 100,000 users is more a sales and distribution challenge than a unit economics one.

How does this connect to GNO?

The Gnosis Pay company is a separate legal entity. Any profits above operating costs flow directly into the DAO treasury by contractual agreement. As the business scales and moves into profitability, that translates into predictable and growing cash flow. At 200,000 cardholders, we expect roughly $1.5-3M per year flowing to the DAO, depending on team structure and contract terms. Unlike Gnosis Chain, where value accrual depends on blockspace demand, Gnosis Pay’s revenue is recurring, margin-based, and tied to user count.

The three pillars are complementary. Gnosis Pay transactions settle onchain across multiple networks, including Gnosis Chain. As Gnosis Chain becomes composable with Ethereum mainnet through the EEZ, the settlement layer becomes more capable: a user refilling a card can do so cheaply on-chain, while a larger transaction can route through Ethereum liquidity when needed. Gnosis App is also a user of the Pay stack: its card functionality runs on the same infrastructure as external B2B partners. The payments product, the chain infrastructure, and the consumer app reinforce each other.

My TL;DR: Gnosis Pay is not yet sustainable, but the path to sustainability is clearer than it is for most crypto payment projects. The infrastructure is built. The contracts are in place. The unit economics work at scale. Getting from 10,000 to 100,000 users is the execution challenge, not a question of whether the business model works. Above that, the cash flow to the DAO scales meaningfully: at 200,000 cardholders, $1.5-3M annually depending on cost structure.

That is a different kind of bet from the EEZ. Both are worth making.

Disclaimer: Gnosis Pay is a developer of blockchain infrastructure and software solutions. Any regulated services which Gnosis Pay’s solutions interact with are provided exclusively by regulated financial service partners in their respective jurisdictions. This post contains forward-looking statements and financial modeling estimates that are inherently speculative, depend on external factors such as user adoption / partner execution, and should not be relied upon as financial advice or assurances of future performance.

[Wismerhill]

Thank you for publishing this Friederike. It is the first time the DAO has been given an actual economic model for Gnosis Pay rather than activity updates, and numbers can be discussed in a way narratives cannot. Appreciate the effort in transparency that you are pushing for. In that spirit, the numbers in this post raise specific questions, because several of them can be reverse-engineered and do not reconcile with what the DAO has approved and funded, which means many necessary and welcomed changes are happening.

I’ll start with the break-even figure. At a 0.9-1.5% take rate, break-even at $27M in monthly volume implies revenue of roughly $250-400k per month, which means the cost base being solved against is roughly $3-5M per year. GIP-128 allocated $8M per year to Gnosis Pay. Those two numbers are $3-5M apart, could you explain a bit more this point? Either the cost structure has already been cut roughly in half, or the break-even calculation excludes costs the DAO continues to carry on the Gnosis Ltd budget but in another line.

The second thing the post makes explicit is that the B2C thesis is retired. The unit economics of consumer acquisition in payments are described as brutal and the differentiation as unsustainable. That has been true of card economics for decades, and it was equally true in July 2025 when GIP-128 underwrote an $8M per year budget on the consumer thesis, with a GNO cashback programme funded on top of it. I believe this was a matter of organization maturity and lack of profitability culture, which is now being corrected. I will not dwell more on that, but it has a forward-looking consequence: the cost structure built for the abandoned strategy should be retired on the same timeline as the strategy itself, and the renewal discussion should fund the business described in this post, not the one it replaces. I think you are preparing us for this, and it’s a reasonable decision based on facts.

I do have a set of questions:

1. Reconcile the break-even cost base with the GIP-128 budget. Which costs are inside the $27M per month break-even calculation, and which remain on Gnosis Ltd’s budget: cashback, consumer marketing, the Gnosis App card stack, shared engineering, compliance staff? Could you publish the P&L behind the break-even figure, including current monthly burn and the headcount dedicated to Pay? Even something very lite could be sufficient.

2. Is the 0.9-1.5% take rate gross to the stack or net to Gnosis Pay? From my findings, in card program management, the distribution partner who owns the user relationship typically takes the majority of the interchange, and the Q3 2025 report itself flagged capped take rates on EU domestic volume. What is the net take rate to Gnosis Pay after partner revenue share, BIN sponsor, processor, and network costs, separately for the EU book and the emerging-markets book? Break-even at $27M per month holds at the stated take rate. If the net rate is materially lower, the threshold moves materially higher.

3. What is contractually committed by the first partner? The path from 10,000 to 150,000 cardholders runs through one unnamed partner at an assumed 1% wallet-to-cardholder conversion. Is there a minimum volume commitment, a contract term, exclusivity, termination rights? What benchmark supports the 1% conversion assumption, and what does the model look like at 0.2%? A break-even path that depends on a single counterparty and a single assumed conversion rate seems very fragile.

4. The success case is smaller than the subsidy. What is the bull case? At 200,000 cardholders, a 20x from today, the DAO receives $1.5-3M per year against $8M per year of funding and roughly $6M already deployed under GIP-128. On these numbers the DAO never recovers its investment. Either the budget comes down materially as the B2C cost structure is dismantled, or the upside at 500k to 1M cardholders is much larger than the figures given. Which is it, and what will the Pay funding ask look like at GIP-128 renewal?

5. Does the team match the new strategy? B2C payments needs growth marketing and consumer support. B2B program management needs enterprise sales, partner solutions engineering, program operations, and compliance scaling. How many of the Pay team today are in those B2B roles versus roles built for the consumer product? Who owns B2B sales? And has the tech lead vacancy disclosed in the Q4 report been filled? A ground-up platform rebuild and a B2B pivot are exactly the conditions under which that vacancy is material.

6. Where is the pipeline beyond partner one? The Q3 2025 report cited over 100 partners in the funnel with 10 integrations in active development. The Q4 report cited 4 new partners live and 17 signed contracts. Six months later, the economic case seems to rest on a single partner. Of the 17 signed contracts, how many are live today, how much volume do they generate, and what explains the attrition? Maybe I misunderstood the business line this is concerning, apologies if this is the case.

On the constructive side, here is what I would suggest, since the post invites the DAO to underwrite this as a conventional business:

First, retire the B2C cost structure with the B2C strategy: let the GNO cashback programme expire on June 30 without renewal, since it is a consumer acquisition cost supporting a thesis this post abandons, cut consumer marketing for Pay to zero, and treat the Gnosis App as a B2B partner of the stack at arm’s length pricing, paying the same fees as external partners.

Second, resize the funding to the model: the break-even math implies a $3-5M cost base, so the Pay line at renewal should come down from $8M to that level, with tranches released against published milestones - partner go-lives, monthly TPV, and net take rate.

Third, report like the conventional business this post says Pay is: a monthly TPV, net revenue, and burn figure, which any card program manager already produces for its own board.

Fourth, formalize the DAO’s claim on the upside: I think some form of profit-flow agreement or anything that can be produced without too much tax implications would be great. The DAO, beyond the founders, could have a director or observer seat on the Pay entity or business unit, and require DAO approval for any external raise or any amendment to that agreement. None of this would constrain the strategy. It funds the strategy actually described here, instead of the one it replaces.

I repeat that these questions are only for the sake of helping present the business case to GNO tokenholders, and improving the quality of reports in order to support the strategy or steer it if necessary.

[ernst]

Hey – thanks for taking the time reviewing the strategy.

Mattia, who heads Gnosis Pay, will give you detailed answers soon – we’re still running at capacity with last week’s hack and the Berlin Blockchain Week starting tomrrow.

Tl;dr: We have already dramatically decreased burn rate, so I think there is a misunderstanding here: The 1.5-3m/ year at 200k users is profit, so on top of breakeven. Past investments can thus be recovered in the mid-term if Pay is even moderately successful. In part, the reduction in spend comes from re-negotiating contracts, cutting efforts for our own license, and letting go senior executives who weren’t appropriate hires for the stage of the product. The other part comes from no longer having to factor in CAC as we did before.

The other point I want to quickly address: The partners we were talking with were small-ish wallets. We will serve them, but scaling Gnosis Pay requires larger partners who already have distribution. When I say “first partner”, I mean “first heavy-weight partner that can significantly impact numbers”. Obv one significant partner is not ideal in terms of business strategy, but having one as a design partner that we can then point to when speaking with others, is wind on the sails of Gnosis Pay.

[hhh]

thanks sounds promising