[Proposal] Exchange $100k USDC in matching pool funds for $100k Glo Dollar

[garm]

Title: [GCP-00x] - Exchange $100k USDC in matching pool funds for $100k Glo Dollar

Author: Garm Lucassen, CTO of Glo Dollar

Version 2.0, a revision to the previously posted v1.0

Summary

We propose that Gitcoin exchange 100k of its matching pool USDC for 100k Glo Dollars, the stablecoin that helps end extreme poverty, and plan to hold the Glo Dollars for at least 12 months.

Doing so has two benefits:

1. Enable Gitcoin’s matching funds to have additional impact through Glo Dollar’s basic income funding mechanism that reduces extreme poverty
2. Support the development of an alternative US regulated stablecoin that benefits the public and the broader crypto ecosystem, instead of a few shareholders

The Gitcoin matching pool currently holds a little over $13 million of assets. Exchanging $100k for Glo Dollars would mean swapping approximately 0.7% of the matching pool funds for an equivalent amount of Glo Dollars.

The Case to Embrace Glo Dollar

Glo Dollar is the stablecoin that enables holders to help end extreme poverty, without donating anything.

Glo Dollar is US regulated and 1:1 backed by a reserve of cash and US Treasuries. When the Glo Foundation receives revenue from the reserve, they donate it to GiveDirectly’s basic income programs that lift people out of extreme poverty. (See this article for why we donate to GiveDirectly.)

At scale, we expect every $20,000 of Glo Dollar market cap to lift 1 person out of extreme poverty. At Tether’s current market cap, that corresponds to lifting four million people out of extreme poverty. Even at smaller caps, this amounts to millions of dollars of money generated for GiveDirectly.

By choosing to put some of its treasury into Glo Dollar, Gitcoin can embed philanthropy into its everyday operations and leverage Gitcoin’s matching pool funds as an additional tool for funding public good creation. We think choosing Glo Dollar as one of the stablecoins in its treasury aligns with Gitcoin’s stated mission to build and fund digital public goods. Though not digital, a global basic income for anyone who falls below the extreme poverty line can be considered an important public good. Glo Dollar is a donation-independent funding mechanism that can support such a basic income perpetually and at scale. Anyone holding Glo Dollars contributes to this funding mechanism at no cost. Affecting 700 million people, extreme poverty is a highly costly problem in terms of human potential and wellbeing, but it is solvable through unconditional cash transfers. The bottleneck for these programs is funding.

As a final consideration: the incumbent stablecoins already function as a public good, yet are managed by for-profit entities incentivized to choose the benefit of shareholders over the benefit of the ecosystem. Even if you do not hold USDC or USDT yourself, most of DeFi runs on them under the hood. It’s time the ecosystem adopts a stablecoin that is managed as a public good.

Glo Dollar previously participated in Gitcoin’s Web3 Open Source Software round and metacrisis funding round. Check out the Glo Dollar website for more information on everything you might want to know about Glo Dollar, such as how Glo Dollar works and how we issue Glo Dollars in a regulatory compliant manner by partnering with Brale.

Proposal

We propose that the Gitcoin matching funds pool exchange $100,000 in USDC for Glo Dollar and commit to holding the Glo Dollars for a period of 12 months.

To execute upon this effort, we propose to carry out these steps:

1. Appoint a DAO coordinator that collaborates with the Glo Dollar team on this proposal
2. Allocate $100,000 USDC to a matching pool diversification wallet address
3. Swap USDC for Glo Dollar using Uniswap or an OTC desk
4. Transfer exchanged Glo Dollar to Gitcoin’s matching pool multisig wallet
5. Co-market the completion of diversification efforts with the Gitcoin community and the broader world
6. After 12 months, evaluate whether to exchange the Glo Dollars back to USDC or to continue to hold on to Glo Dollars for an extended period of time

Glo Dollars are always exchangeable 1:1 for USDC with our issuing partner Brale, should the need arise to revert this position sooner than 12 months.

Vote

We propose the vote to be a yes / no vote.
Swap $100,000 USDC in the matching pool funds for $100,000 Glo Dollars, or do not swap.
1 - Yes to swap $100k USDC for Glo Dollars
2 - No do not swap USDC for Glo Dollars

Our objective is for everyone to prosper through this proposal: Gitcoin, Glo Dollar, and, most significantly, the 700 million individuals living in extreme poverty.

[CoachJonathan]

Thanks for incorporating all the feedback @garm! This proposal looks much more manageable and easy to say “yes” to.

I personally don’t have a strong opinion on this one, mostly because this is not a topic I am not an expert in. I’d love to hear from some other Stewards more knowledgable on the topic of treasury diversification before I cast my vote.

[jengajojo]

I will let the core contributors comment on whether there are sufficient resources for this:

@garm

Appoint a DAO coordinator that collaborates with the Glo Dollar team on this proposal

Otherwise, I have no objections and I’d vote Yes to swap $100k USDC for Glo Dollars

[carlosjmelgar]

This is a great cause, but I am having a difficult time identifying traction/ impact from Glo Dollar. I’d be more supportive of this cause if it was used to fund public goods within the crypto/ eth ecosystem instead of GiveDirectly. Many Gitcoin grantees and recipients of RPGF on Optimism are working to tackle the same issue and beginning to use onchain tools to report/ track their impact.

I’m also having trouble identifying how the org earns income from the stables? What’s the DeFi play here?

[garm]

Thanks @carlosjmelgar !

I shared some thoughts on why we intend to donate to GiveDirectly rather than funding on-chain public goods in a comment on the previous proposal thread. In particular, we do not focus on on-chain public goods because of GiveDirectly (a) its appeal to a non-crypto audience which allows for growing beyond crypto to ultimately grow the size of the ecosystem and (b) its capability to scale extremely well whilst retaining a very low overhead to deliver basic incomes earning it top scores from charity evaluators

Note that our donations to GiveDirectly will be transparent and on-chain. Our issuing partner Brale pays out all of our yield on-chain, and we donate to GiveDirectly on-chain too: Crypto addresses | GiveDirectly

Brale generates yield by investing in short-term US treasuries, rather than being active in DeFi. The approach is essentially identical to USDC / USDT, which power a huge chunk of DeFi and as a consequence their stability has become a public good themselves. Unfortunately, however, they’re managed as for profit entities that are incentivized to prioritize the profit of their shareholders, rather than the crypto ecosystem at large. That’s why we believe the ecosystem needs a centralized stablecoin that’s managed as a public good by a non-commercial entity.

[krrisis]

Happy this proposal is moving, appreciate @kyle’s productive input here on v1, as one of the key decision makers.

Will vote yes.

[griff]

I’d vote yes on this.

But it would be ideal not to lose any trading fees using Uniswap, instead can we use Brale to issue fresh GLO for our USDC?

If not, what would the trading fees look like?

[owocki]

I like the Glo Dollar team. They’ve got good vibes and a cause that is easy to support. And I’m thankful to them for being a past Greenpill podcast sponsor

For the remainder of this post I will speak as a steward of Gitcoin and what I think is best for Gitcoin. Forgive me for cutting to the chase and just asking the hard questions, but I am concerned about 3 things here.

1 . Minimzing Coordination overhead.

Everyone at Gitcoin is focused on their Essential Intents, and I’m not sure which Essential Intent this maps to. If it’s out of our focal area, we should considering saying no. Not to be mean, but because focus is super valuable and Gitcoin is at a critical inflection point (product adoption or gtfo) now.

2. Liquidity

Where does it come from? If we wanted to swap these tokens out bc we needed them to fund Gitcoin, would there be liqudiity?

Uniswap doesnt show enough liquidity to do 30k GLO back to USD.

and I think I’m checking the most traded market? Per coingecko:

3. Mutualism

I like Glo and I think Glo likes Gitcoin. It would be great to see Glo using Gitcoin Grants or funding Gitcoin Grants Programs or something. Kind of like a product use swap.

(This might be happening and I dont know about it so forgive me if that is the case)

I think Glo can help Gitcoin by using its product. and I think Gitcoin can help Glo by them using our products. This seems like a more interesting thing to me than the money itself.

[wasabi]

Price impact is ~$25 on actual liquidity/market conditions at Uniswap

OTC should be used for large swaps until liquidity improves.

[thedevanshmehta]

@owocki

If it’s out of our focal area, we should considering saying no

Yes that’s a good point, currently the proposal seems less like a mutually beneficial proposition for both parties and more like a charitable endeavour (not that there’s anything wrong with charity but we should call it what it is)

@wasabi

Price impact is ~$25 on actual liquidity/market conditions at Uniswap

OTC should be used for large swaps until liquidity improves.

Currently it’s looking like Gitcoin takes on costs (risk of a new stablecoin, liquidity issues, coordination overhead in OTC deals) with little benefit as it pertains to our theory of how we can change the world

@owocki

I think Glo can help Gitcoin by using its product. and I think Gitcoin can help Glo by them using our products

This would be a good place to start the discussion on what a more balanced deal would look like which isn’t just charity from gitcoin. To start with, glo dollar should at least participate in the quarterly gitcoin grant rounds which they haven’t done based on my cursory check.

I would vote no on this one until the terms are more favorable to gitcoin, ideally involving their use of some of our products.

[garm]

Thanks for the good vibes Owocki, appreciate you cutting to the chase and asking the hard questions! My thoughts on your 3 concerns below:

1. Minimizing coordination overhead
This proposal maps to the Essential Intent network effects, as it grows Gitcoin product adoption. It also fits with Gitcoin’s purpose To empower communities to fund their shared needs. But wait, how does this proposal map to these things?

Well: by embedding philanthropy in the matching pool funds, Gitcoin increases the output of existing funds. It makes Gitcoin fund two additional public goods “for free”: stablecoin diversity (a shared need for the community “crypto ecosystem”) and scalable extreme poverty eradication (a shared need for the community “humanity”).

Since the recipients of the basic incomes can be counted as beneficiaries—or users if you will—of the Grants Program, this Gitcoin product is more adopted.

There’s a leverage-other-people’s-networks opportunity too: GiveDirectly is one of the world’s fasted-growing and most appreciated charities, so when Gitcoin incorporates a novel way to fund this charity, this should be used in Gitcoin communications to grow product adoption further by reaching beyond-crypto audiences (similar to the collaboration with Unicef).

It’s worth mentioning that the status quo is that Gitcoin is donating the yield on this $100k USDC to USDC’s issuer Circle instead of to public goods. While there is indeed some coordination overhead to swap USDC to Glo Dollars, this is (imo) minimal, and there are no other costs associated with doing so while benefiting three parties instead of one: Gitcoin, Glo Dollar and people living in extreme poverty.

2. Liquidity
Uniswap liquidity is not an issue. Because Glo Dollar is a centralized stablecoin, Gitcoin is able to mint/redeem any amount of Glo Dollars 1:1 for USD or USDC with our issuing partner Brale, or one of the OTC partners we work with.

We have facilitated multiple $100k+ mints on Ethereum and Polygon through these channels. Brale is currently not listed as a market on coingecko / coinmarketcap yet, but they’re working on it

3. Mutualism
We’ve internally discussed running a Gitcoin round to fund initiatives that embrace Glo Dollar before, but this hasn’t been brought up in a concrete way with anyone on the Gitcoin team yet. I’d personally love to do this in early 2024 as funding initiatives that embrace Glo Dollar in their proposal is a great way to incentivize the ecosystem’s adoption of Glo Dollar, but we figured it’d be odd to make this proposal dependent on that timeline.

[garm]

Some details of the proposal may not be as apparent as they should be, so for the record:

1. Gitcoin will be able to leverage this in their own marketing, so it’s not purely a charitable endeavor. Moreover, right now the yield is being donated to Circle’s shareholders instead.

2. Glo Dollar takes on any costs associated with swapping USDC for Glo Dollars, as well as the other way around.

3. We’ve participated in two previous Gitcoin Grants rounds, and I’m looking forward to running a grants round in the future that funds grantees that embrace Glo Dollar in their proposal somehow.

[annika]

I’m in favour of this proposal — and I think @kyle’s edits from the previous iteration are bang on and make this v2 much more palpable.

I’d vote yes for this for one primary reason: contributing to advancing the regen space, broadly speaking. I wouldn’t advocate for this for just any regen project — but I’ve spoken with the Glo team and, from what I gather, they are ambitious & high-integrity individuals with a bold altrusitic vision and a high degree of competence. We need more of this in crypto. Stablecoins are poised to play a more and more meaningful role in global payments, and as an industry we should be encouraging models like this that seek to help the greater good.

At the same time, though, I do share @owocki’s concerns:

• On (1) — This is probably my biggest concern: easy as swapping in and out of a new coin may sound on the surface, this is likely a series of multisig txs with a non-trivial amount of complexity and anything like this is at least some level of distraction operationally. In this case I think the pros outweigh the cons, but the work here is not lost on me. (and @kyle feel free to enlist my operational help, here, if you can use me in taking any of the coordination burden off the Foundation — happy to contribute)

• On (2) — My concerns are assuaged by @garm’s response — that said, the minting/redeeming is an extra operational step, adding to complexity to manage (in line with my prior paragraph)

• On (3) — I think the potential for mutualism here is really big! There is so much in overlap of the ethos of the two projects, and I deeply respect the teams running each; think both could learn a lot from each other. I recognize that this proposal is not immediately a “Hell Yes” in the context of Gitcoin’s new Essential Intents, which I typically wouldn’t advocate for veering outside of — but I do think there’s potential here: when I think about the new Intent around “Community-First” (which includes governance participation, among other things) — maybe there is something here around getting Glo folks involved as an active delegate or otherwise.

[thedevanshmehta]

Thanks for taking the time to draft a response! Good to know Glo dollar would take on swapping costs & have used gitcoin products before

@garm

Gitcoin will be able to leverage this in their own marketing, so it’s not purely a charitable endeavor

I’m still not fully convinced by this part - if for whatever reason Glo dollar loses its peg in the future, the reputational backlash of gitcoins endorsement would outweigh any short term marketing benefit

@garm

Moreover, right now the yield is being donated to Circle’s shareholders instead.

Some part of this yield would be going to Brale’s shareholders too, is that correct? Would be curious if you can dive deeper into the numbers here of how much goes to them versus GiveDirectly.

Overall i appreciate Glo Dollar’s intent and would be more sympathetic if their approach was more flexible than only GiveDirectly , such as contributing a part of the yield to our matching funds. As it stands the reputational risk of gitcoin’s endorsement of an unproven stablecoin and the danger of losing our assets in case of a de-peg is not worth the questionable marketing benefits we obtain.

[kyle]

Thanks for the revisions here. I would vote yes on this in the current form. It feels like it is not without risk, but that the risk is fairly contained and worth the investment to show our support for the initiative.

I would be happy to help partner so that we don’t see slippage and can coordinate the transfer of USDC to GLO, if that is necessary.

[ale.k]

I think the aim of the proposal and the rethinking of the role of stables in general is very well aligned with Gitcoin’s mission, though unconventional compared with treasury + matching pool management in the past.

@garm - would be great to have some more context if Glo is approaching other DAO’s/grants programs with similar proposition, or if this is planned as a bit of a pilot?

Overall - I’m personally in support and excited about the future the Glo team is building.

[robioreefeco]

With the shared goal of benefiting Gitcoin, Glo Dollar, and the millions of people affected by extreme poverty, I cast my vote as follows:

Yes to exchange $100k USDC for Glo Dollars

Thank you for your dedication to creating positive changes through innovative and impactful sociocultural experiments.

[meglister]

I really appreciate the thoughtfulness that’s gone into this thread and willingness to revise. I’m also a big fan of what you’re building! I am still planning to vote no on the proposal and am signaling this publicly since I currently have not-insubstantial voting power (600k gtc i think.)

Especially as we get ready for GG19, I am noticing a TON of coordination and ops overhead at Gitcoin. This feels like an initiative that adds to that operational overhead (eg - will require product support, grantee education, etc) without substantially impacting our Essential Intents.

That said, if the proposal passes I will gladly support with needed in-product allowlisting, etc.

[FractalVisions]

@ale.k

would be great to have some more context if Glo is approaching other DAO’s/grants programs with similar proposition, or if this is planned as a bit of a pilot?

We were approached by Glo dollar for some sort of offer during GG18 and really was not sure what it was at that point. Also seeing this post a few hours ago. So it doesn’t seem like this is exclusively being offered to Gitcoin.

https://twitter.com/glodollar/status/1718991548401283287?s=46&t=_8dkepIOA6H5XhasVM4F9g

And seeing other DAO organizations within Gitcoin are accepting these deals already.
https://twitter.com/kokonutnetwork/status/1717885649003393492?s=46&t=_8dkepIOA6H5XhasVM4F9g

[CoachJonathan]

This vote has now been moved to Snapshot.

You can cast your vote here: Snapshot

The vote is live now until November 6th at 16:49 UTC.