“We have a fundamental belief that there are enough people who care not only about doing well for themselves, but care about doing good for others as well.”

- Gooddollar whitepaper

The biggest challenge in launching a crypto Universal Basic Income is making certain the system is not only worthy but sustainable.

Achieving this is what the GoodDollar V2 protocol is all about: creating an impact economy that makes placing your money in the service of others not only socially and ethically rewarding, but financially attractive too.

The rise of DeFi has democratized a vast array of financial products and services. It has enabled thousands of communities across the globe to explore new ways to compound different types of assets, all with the aim of maximizing yields while minimizing risks. The protocols these groups have built boast different value proposals and risk profiles, and are generating wealth for thousands upon thousands (soon million and billions) of individuals.

DeFi itself would not have been possible without technology -- most importantly, the smart contract, which enables important new tools for transforming idle money into productive capital. 

Remember when money was trustworthy because it was backed by assets like gold and silver?

This is exactly how the GoodDollar ecosystem is designed, except that instead of precious metals, it uses compounded cryptocurrencies. Bonding curves are an algorithmic way to maximize the generation of currency underpinned by real assets, which are in turn deposited by users in interest-bearing protocols. This is a process not dissimilar to that used by banks to earn fractional money on customer deposits, except that decentralized smart contracts make GoodDollar more transparent and less prone to human error or meddling. 

In the GoodDollar Proof Of Concept (PoC), which took place earlier this year, the team set out to explore ways to harness two of these tools in the service of creating people-powered money. 

The first is what most in the crypto world know as “staking.” This is where a user locks in capital and receives interest in return. 

The second of these—the “bonding curve”—may be less well-known but is perhaps even more important. The bonding curve is a smart contract function (in GoodDollar’s case, it's a variation of the Bancor Formula) capable of creating and destroying a unit of cryptocurrency according to the offers and claims made to or against the Reserve in the contract.

The PoC, of course, succeeded beyond our expectations. And now it’s time to take GoodDollar to the next level with V2, which will open up new staking incentives and decision-making through the GoodDAO. From now on, the entire GoodDollar community will have a voice in the configuration of the parameters of the system’s incentive mechanisms, along with the types of assets that will back the G$ in the future.

GoodDollar V2 in practice

GoodDollar V2 will offer a host of new features to incentivize crypto HODLers and traders to aggregate liquidity and serve as market makers in the protocol. These features are designed to offer ways for GoodDollar supporters to earn yield for themselves (as with any DeFi protocol) while contributing to the novel cause of distributing a crypto UBI token to an engaged community of 250k+ G$ claimers (and growing).

Claimers, meanwhile, will play a vital role in GoodDollar’s quest to open crypto to all by turning G$ into a new medium of exchange. Claimers can use G$ to buy, sell or swap goods and services in the Good Marketplace, to exchange it for other cryptocurrencies via our primary market (i.e., within the Good Reserve contract) or via secondary markets (like FuseSwap in the Fuse network). Or they can just store their G$ to be spent in the future.

In the 13 months since the launch of V1, the Protocol has distributed 173 million G$ ( a little more than US$23,000) to 251,000 claimers—all based on an initial donation of $58,000 from our founding sponsor, eToro.

We can do even more

Despite these amazing numbers, the economic impact of the GoodDollar system still has almost infinite room for growth. 

V2’s goals for wealth generation and distribution are ambitious, and we will need the full support of the community to achieve them. Full participation will help maximize the amount of crypto that can be distributed to the hundreds of thousands of people claiming crypto UBI via the GoodDollar wallet app. The strength of the model has been demonstrated in a period of rapid growth for the crypto industry, a period in which it has become increasingly clear that the future of economic coordination lies on the blockchain. 

The elements of the V2 Protocol

The launch of V2 will open up new routes for people to be part of the GoodDollar economy. It will offer our supporters new ways to earn G$ while providing liquidity that will strengthen the protocol -- and therefore, the whole community. These include

GoodStakings: Users can earn G$ by pledging assets to staking contracts. Aggregated compound interest earned by these assets will flow to the Good Reserve, increasing support for the generation of G$ to be distributed to the community. V2 will be launched with two interest-bearing protocols—cDAI and aUSDC—but the GoodDAO may choose to add other contracts in the future.

Incentivized Primary Market: Unlike many other cryptocurrencies, GoodDollar’s aggregated value is not solely determined by its market capitalization. The G$ price is also regulated by the amount of G$ minted or burned against the Good Reserve contract through the buying or selling of assets. In order to keep as much value as possible within the ecosystem, V2 will include a new exit contribution of 3%. In other words, when a user buys other assets from the Good Reserve by burning G$, 3% of the total will be kept by the Protocol.

Discount Token: V2 will introduce a new token, the G$X, that can be used to offset the exit contribution mentioned above. Users earn G$X by buying G$ directly from the Good Reserve contract. Should they later want to exchange their G$ for other assets from the contract, they can use their G$X to get a discount on their exit contributions.

Fund Manager & Keepers: there are many tasks and transactions the protocol must execute to enable the smooth functioning of the Protocol. These tasks relate to the activation of UBI generation; the transfer of interest from staking contracts to the Good Reserve contract; and, of course, to the transfer of G$ from the Ethereum Network, where G$ is generated, to the Fuse network, where it is distributed to claimers. In V2, these tasks will be delegated to members of the community—called Keepers—who will receive G$ to cover the transaction fees plus a 10% incentive in exchange for their contribution.

The GoodDAO: This last item on this list is arguably the most important of all since it will ultimately govern all of the protocol’s parameters. Do we want to add more asset classes to the Good Reserve contract? The GoodDAO can do this. Do we want to increase the G$ rewards for staking? Let's propose this to the GoodDAO.  Given the immense creativity we have already witnessed in the community, we are confident the GoodDAO will come up with unforeseen ways to further GoodDollar’s mission of distributing a truly global crypto UBI. 

That’s all for now -- except to say that this is the first of a series of articles in which we will explain each of the components and features of V2 in more depth. Please don’t hesitate to get in touch and to share your thoughts and ideas about what we should cover next. Now more than ever before, GoodDollar is your protocol. We’re excited to have you as part of the journey.

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