Splitting GTC Utility from Governance

From what I can see in the forum, there is a lot of concern and discussion surrounding the DAO’s financial sustainability along with the vision and strategy. Floating around within this discussion (and discussions prior to this) is thoughts about the utility of our GTC token. As we move into developing our core protocols (Passport and Grants), it seems to be an attractive idea to capture some of the value of this protocol through adding functionality to our GTC token, which currently only serves as a governance instrument. Considering that the majority of our treasury is held in GTC, it seems to be a good idea to go in a direction that creates demand for GTC in order to bolster our treasury and improve our financial stability. However, I have seen very little in the way of caution of creating token demand, particularly with regards to how it will affect governance.

Should we add utility (outside of governance) to a governance token?

I would argue no. Let’s suppose that we do a really good job in creating demand for GTC, to the point where it becomes attractive to speculators. These speculators are not guaranteed to be mission-aligned, in fact, we should assume that they aren’t. Their only alignment is with the price of GTC going up within the timeframe that they desire to hold the token for. If a short-term investor buys GTC, then they will vote for decisions that make GTC go up in the short term, regardless of whether these decisions align with Gitcoin’s mission.

How can this be mitigated?

I think there are a couple of options. One potential option is to create a separate token with no governance rights (or even minimized governance rights) and add all utility features on top of this token, thus diminishing the negative impact of speculation. Another option is to move away from token governance all-together (there are some really good arguments for this. The writing’s pretty much on the wall for the faults of pure token governance).

I think overall we have some time before this becomes a real issue. We are nowhere near the level that would turn GTC into an attractive speculative investment for the non-mission-aligned investor. And, for right now, the “whale owners” of GTC are rather benevolent. But neither of these things should be taken for granted. Would love to hear the community’s thoughts on these concerns, as well as allow this post to serve as a beacon for discussion on the merits/drawbacks of GTC as we have been imagining it so far.