Token incentives for Gnosis Pay

[mkoeppelmann]

After launching Gnosis Pay we heard a lot of positive feedback and we see steady growth in userbase and transaction volumes. While there is still a very long list of improvements (virtual cards, Apple/Google pay, better options to top-up the card, …) we still think the product is interesting enough already to start accelerating growth.
From a GnosisDAO/ Gnosis chain perspective it is important to understand that a Gnosis pay user is also much more likely to become a general Gnosis Chain user. So if GnosisDAO would spend incentives on pay, those incentives would indirectly benefit a lot of protocols and projects (at the very least: DEXs, money markets and other defi apps).

A simple proposal would be:
A user can sent GNO (that they either already had or just acquired) to their pay-safe. Now they will start earning “cashbacks/ rewards”. A simple rule could be:

0.1 GNO → 1%
1 GNO → 2%
10 GNO → 3%
100 GNO → 4%

Potentially, to make it more engaging, this rate could also continuously increase (on this log10 scale). Rewards could be calculated e.g. once a week and dropped to user.

[prebufffo]

Hi Martin, here Paolo from Erigon.
I like this proposal, buy I would like it more if those GNO were somehow linked to a liquid stake service.
I mean that the user could be rewarded as for that table, but GNO are put in a LSD and rewards are a partial compesation for Gnosis Pay. Also more GNO at stake is better.

[Nay]

Hi Martin,

It’s a great idea that can help Gnosis Pay to enter an explosive growth phase. There are a lot of learnings in how CeFi platforms have done incentives for their cards, for instance, a card from Crypto.com. I think during the bull market they had an incentive structure with numbers similar to what you’re proposing here, but they had to cut it back significantly since then to make it sustainable. It’s important to get the economics right so we stimulate growth but spend GNO on incentives in a measured and sustainable way.

Maybe we can also consider doing rebates on specific services like Netflix, Youtube, if it’s possible to strike some deals with these companies, like crypto.com did. Just throwing things to think about.

[mkoeppelmann]

@Nay
Right - it is very possible that this program needs to be adjusted down at some point and we probably directly should set that expectation. A simple way to get started would be to directly cap the program to e.g. 10k GNO.

@prebufffo I am deliberately suggesting here to use GNO instead of staked GNO. We can ask ourself - who currently adds more value to the chain - a user that daily uses the chain via the card, has their stables on the chain, swaps between e.g. sDAI and EURe on Cowswap - maybe borrows EURe on Spark or Aave - or a user that simply parks their GNO in a LSD.

I would at this point certainly say the first user is more important for the chain. So in a way this program allows those GNO holder who do not want to stake to also earn interest on GNO.
Lets e.g. go for the 100 GNO option. You could stake them and earn 10% = 10GNO per year. Or you could use them with the card.

10 GNO = $3300. If you want to earn that with 4% cashback you would need to spend $82,500 a year via the card.
So long story short - I deliberately picked GNO vs. staked GNO to make the whole program more economically for the DAO. At this point with >220k GNO staked I don’t think that more apps/ user would be attracked to the chain if we had more GNO staked. However - I think more apps/user will come to the chain (and that will also lead to more GNO being staked) if we have more hype/activity on the chain.

[yabirgb]

Another thing that came to my mind was to enable the option to easily round the payments and use the COWSwap TWAP buys to buy GNO. Can also be used with the cashback so I can use the cashback to buy COW if I want. That would allow me to have higher cashbacks in the future

[coreolis]

I think this is a very interesting idea, certainly there must be some measures in place to stop too much emission of GNO but on the whole this makes sense as the incentive mechanism for the card until Gnosis Pay has the bargaining power to approach other companies for subscription offers.

It does seem to be a temporary solution (albeit a good one) as the tokens in the treasury are finite and without a cap, assuming this program is as successful as I believe it could be, tokens could be emitted at a rate that is harmful to the GNO price, diluting non card holding DAO members. Is there any plan to transition these incentives into ones generated from the product itself? My concern would be the reward focussed users would migrate to a better offering once the incentives stop or wind down

In order to quantify how much tokens would be worth emitting to set the cap I would be very interested in seeing some reports on how much value each card user brings to the chain, in terms of direct revenue as well as less tangible value.

Aside from bringing the above value to the chain it would also be interesting to know the revenue streams of Gnosis Pay itself and how these might benefit the DAO, I understand payments is a convoluted business and Gnosis Pay is a separate company but I think if the incentives are coming from the DAO this should be reciprocated from the company (if the above revenue calculations don’t already justify it)

[mrtdlgc]

Hey Martin, thanks for bringing up the discussion. It is indeed imperative that a “debit card” will need to implement simple incentive programs in order to be a viable alternative to the existing ones in the market to gain competitive advantage (main one being cashbacks). However, I’ll have to argue that it is a bit premature to initiate a token incentive program considering the current state of Pay due to a few reasons.

First: Pay is still a KYC-gated product for the residents of EEA+UK. Hence, such a program would only benefit users from a certain region of the world, which, we would probably all agree, already have better access to financial services. My argument against initiating such an incentive program while the card is still limited within this region would be, forgive me for being too straight, that it would feel to me as subsidizing European consumerism by holding GNO.

Second: Based on the publicly available Dune dashboards, it seems that Pay and other self-custodial debit card/current account alternatives have so far failed to achieve and establish a product-market-fit. In this regard, I believe Gnosis Pay team should provide better accountability to the DAO for the justification of support from GNO holders. It has been almost a year since the announcement of Gnosis Pay at EthCC in 2023, and even though Pay has exceeded the number of orders compared to the main competitor (Holyheld), I have a huge doubt that the number of users and the general volume generated through payments is justification for support.

Third: More like a question. Is Gnosis Pay ready to scale and sustain an exponential growth, which is expected through a subsidization? Just off the top of my head, friction of onboarding users to Gnosis Chain due to no direct on-ramps through CEX rails, KYC through Fractal, extremely strict/invasive AML checks, manual creation and shipment of cards are the main blockers for scaling which results in the requirement of extra human resources. This could easily be dealt with through aggressive recruitment. However, as we have seen it time and time again that startups following this approach during the early stages of exponential growth either file for bankruptcy or have to conduct huge layoffs when the growth reaches to a certain level. Would love to get the opinions of GP team on this.

Hence, I hope we can come to a point where we can seriously consider token incentives for Gnosis Pay. But for that to happen, we should first at least wait until Pay to expand into more regions so that more people can have a chance to benefit from the incentives. Second, we should receive better accountability from Gnosis Pay to the DAO itself so that all GNO holders can make a better informed decision for justifying a direct subsidy. These two primitives are integral to transparency within as well as impartiality of the DAO.

[CryptosNF]

I’ve just read the discussion, and I share a lot of opinions and thoughts with the last two posts

If the DAO is to finance, GnosisPay must be treated as if it were a totally external project, and must provide us with sufficiently established sources/data/proposals so that we can vote with full knowledge of the advantages/disadvantages and a much more informed vote.

Knowledge is power

Then I also saw the discussion about choosing GNO or GNO LSD.

And I understand @mkoeppelmann point of view, but I don’t think GNO stackers should be left out of a service like Gnosis PAY.

There are LSD validators who don’t have the desire/financial means to buy a complete node and yet they participate in the chain (even if they’re rewarded for it).

I’m a gnosis LSD stacker, yet I use gnosis every day, I participate in the validation and growth of the chain and its ecosystem using its DEFI protocols.

And it would bother me to be excluded from a possible additional reward around the gnosis ecosystem.

So maybe reconsider?

I can also propose a few ideas, given that LSD has a yield, why not, for example, lower the cashback for LSD compared to GNO?

This will give yield via validation and a little extra bonus to those who + pay with gnosis pay.

Why not also see, as mentioned in the comments, possible partnerships with brands/companies? Netflix, Spotify

(Why not even with crypto companies/products)

We have a whole ecosystem developing around payments/services/goods

There are more and more crypto companies let’s deal with them for gnosis pay!

Give-and-take for everyone

I was also thinking of an idea,

We could also look at other factors for cashback, the GNO amount is good, but maybe also look at stacking time?
Combine it with the stack amount for such a high cashback %.

(This would avoid those who buy GNO, take advantage of the cashback on a few purchases and then resell directly).

Otherwise, I agree that it would only benefit a very few people and a very few countries, and it would be premature to leave all these countries on the sidelines.

So I think it’s premature to make such a decision, when there are so many elements missing from CAD

On the benefits it can bring, the real interest, etc etc (with datas/data/source)

And then the rest that comes up in the posts, but it’s a fascinating topic of discussion!

Here’s my contribution

[Gnosisticsquid]

Gnosistic Squid here, Hi everyone i have been reading everthing that has been said on this topic since its fundational auggestionback when in the DAO.
I truly beleive this is a brillant idea. I just havent been in any position to do a blood thing about anything financially unfortunately. I am a Disabled US NAVY VETERAN, WHO CAN NOT WORK, PER THE VA! GO FIGURE! ANYWAY.

I am building a Node and plan on incorporating a Dapp-GnosisNode (3 Nodes) into it. Save for the purchase of those GNOs. I left a message from the GP team to get back with me so i can start that process. I might take some of my direct deposit and put it on Gnosis Pay as a way to save for the GNOs we shall see. Will keep yall informed. Keep up the GOOD WORK. By the way and Not for Nothing THIS IS THE BEST BLOCKCHAIN RUNNING BY FAR JUST SAYING

[refri]

@mkoeppelmann

From a GnosisDAO/ Gnosis chain perspective it is important to understand that a Gnosis pay user is also much more likely to become a general Gnosis Chain user

Totally agree on this, but I am not sure if the incentives given to GNO holders will attract many ppl from outside. Ofc it should increase volume by making it more worthwhile to use the card for ppl holding gno anyway, but imho we (or Gnosis Pay) should focus on attracting ppl from outside. A program with the option to build a real crypto portfolio without spending money (just cashback) for it could be a great selling point to all these that are interested in crypto but haven’t really bought in or only due to intermediaries (like Revolut) and don’t really hold crypto on theri own.

And cause I suppose there are much more people not using crypto (but are interested in) right now as there are GNO holders (or ppl intersted in holding GNO) it might be more reasonable to address these.

Cause these ppl will most likely have a basic understanding of ETH although they haven’t really tried it out, it might be best to give some incentives (cashback) in ETH for a limited time (maybe half a year after signing up) to get them familiar with it (must be accompanied by a series of educational mails during their first months) and after that, once they have done some tx (like changing ETH to EURe or GNO) switch the incentives to GNO (or don’t give any more if they haven’t done anything).

Also this needs to be accompanied by some advertisement to address this crowd. I am not sure what’s the best way but for sure I know some people they would go for this.

[TBSocialist]

Hey, this is Josh from Breadchain! Generally I think this is a good idea to incentivize more users over to the chain and interest in GNO. A fundamental aspect of this of course will be the economic design to know if the program can last long enough to attract a critical mass while still feeling like a limited offer. What tokens would you see the cashback being received would be? Interest from the staked GNO for eg could be used to be sold into EURe or other Gnosis related assets to help it last longer, etc. if set up well.

[henry]

I think this idea is worth trying, as it is simple and flexible to implement.

I noticed some concerns about the potential over release of GNO. I believe these worries might be unnecessary. If it ever reaches that point, Gnosis Pay should already have a significant user base, and the incentive strategy can be easily adjusted as needed.