Delivering a “trickle-up” value structure to those that need it most
UPDATED on 19.01.22: After being made aware of a TVL error on the GoodDollar site the TVL figure below has been updated to $1.1 million.
One dapp on the newly integrated layer-1 Fuse Network has people talking as we enter 2022. GoodDollar is a people-powered framework to generate, finance, and distribute global basic income via the GoodDollar G$ coin. Its goal is to provide a baseline standard of living and reduce wealth inequality through the creation of a universal basic income (UBI).
Founded by Yoni Assia, the co-founder, and CEO of eToro, Europe’s largest social investment network, GoodDollar is based on Assia’s theory of social money first presented in 2008. eToro has financed the GoodDollar project as part of its corporate social responsibility initiative. Supporting the nonprofit’s effort to bridge the global wealth gap using DeFi and smart contract technology.
That news arrived in mid-September 2021, along with a $1 million stake from eToro which pushed the TVL on the platform from around $93,000 to today’s figure of around $1.1 million.
As seen below, once the total stake started to rise considerably the interest being generated of course followed suit, showing more clearly the potential of the platform. Additionally, since the launch of V2 staking for UBI generation is open to the public and incentivized with G$ rewards.
How it works
The GoodDollar economy revolves around two primary user types: Claimers and Supporters.
Claimers are individuals that claim a daily basic income in the form of G$ coins. Vitally, their unique identity must be verified.
Supporters are individuals or institutions that believe in basic income and bottom-up growth and fund the supply of G$ coins through staking their capital to support the GoodDollar economy. They do this through committing and locking funds or staking as it has become known to various third-party interest-bearing protocols and mechanisms. Some G$ coins are minted and distributed as basic income to claimants every day.
The value in the GoodDollar reserve comes from the interest that is generated from supporters who stake cryptocurrencies in decentralized third-party protocols. Through the amassed reserve interest, G$ coins are minted. They are used to pay supporters market-rate interest payments, while a daily amount of G$ coins is set aside to be distributed as basic income.
Over time, more G$ coins are minted relative to GoodDollar’s Reserve. The system is built to accommodate scale, whereby the value and utility of the G$ coin to its holder’s increases as more people and merchants join the GoodDollar network.
GoodDollar in short
- Third-party protocols generate value in a supported cryptocurrency such as DAI or ETH, and that interest is moved into GoodReserve.
- The number of G$ coins minted is determined by the GoodDollar’s leverage relative to the value of interest locked in the GoodReserve.
- Initially, every G$ coin is fully collateralized in a supported cryptocurrency on a one-to-one ratio. For example, every 1 DAI moved into the reserve produces G$ coins in equal value.
- G$ coins are distributed back to supporters in value equal to their interest in the third-party protocols and mechanisms. The reserve ratio is expected to decline over time, minting more G$ coins relative to the crypto assets in reserve.
- The remaining balance of G$ coins minted is distributed equally daily as basic income to claimers, divided evenly between the number of claimants that issue a claim on a given day.
Claimers will be able to access and claim G$ coins initially through the GoodDollar Wallet, though ultimately, G$ coins will be available through a variety of endpoints with secure and unique identity solutions. The GoodDollar Wallet requires Claimers to identify and occasionally re-verify themselves to restrict fraud and system abuse.
Why GoodDollar makes sense now?
There are certainly many compelling cultural, economic, and ethical reasons such a platform is finding traction right now.
- Adults with less than $10,000 form 56.6% of the world’s population but hold less than 2% of global wealth.
- In the wake of the coronavirus outbreak, over 71% of Europeans now support some form of basic income.
- More than 20 nations are now exploring UBI as a key policy proposal.
- Innovations in decentralized finance have made it possible to generate interest on stable assets and efficiently redistribute them.
This has created a perfect storm for GoodDollar whereby the will and the means to deliver UBI are in place for the first time in history.
Take a little give a lot
The cryptocurrency industry has generated significant wealth for early adopters, and many of those pioneers are now looking to give back through charitable contributions. Ryan Selkis, Dan Matuszewski, Qiao Wang, and Haseeb Qureshi pledged to donate at least 1% of their wealth to charities each year through a new initiative. Fortune recently launched a philanthropic fund for journalism on Ethereum alongside NFT artist Pplpleasr. The Trippy Bunny NFT project has donated 100% of its mint proceeds to a suicide prevention foundation. It is also now commonplace to see charitable contributions being requested to join and participate in play-to-earn gaming opportunities.
The idea of a universal basic income has long been discussed. Except previously, there appeared to be no complete infrastructure to deliver such an innovation. Now, as more countries explore the idea more seriously, the frameworks appear to be in place to deliver on old plans. In essence, furlough packages rolled out in countries like the UK amidst the pandemic went some way to test the idea in the wild.
Those looking to learn more about GoodDollar and how to get involved either as a claimer or supporter can check out helpful links below.
The above does not constitute investment advice. The information given here is purely for informational purposes only. Please exercise due diligence and do your research. The writer holds ETH, BTC, AGIX, HEX, LINK, GRT, CRO, OMI, IMMUTABLE X, ENS, GALA, AVASTR, GMEE, CUBE, RADAR, FLOW, FTM, BNB, SPS, WRLD, ATOM, and ADA.