The GoodDollar Basic Income Economy
Our Mission: Trickle-Up, People-Powered Basic Income
GoodDollar is an open, people-powered decentralized protocol capable of generating a scalable and sustainable basic income token.
We strongly believe that a “trickle-up” value structure that delivers liquidity into the hands of people is preferable to the conventional trickle-down approach to capital, credit, and interest-bearing money conceived in the 1980s. The GoodDollar economy achieves this by delivering purchasing power directly to users who make daily claims while providing incentives for those whose staked capital is critical to powering the system. Aligning incentives between GoodDollar supply (users who stake) and demand (users who claim), and across all other key stakeholders, is central to the creation of a sustainable, scalable ecosystem around the GoodDollar economy.
Supporters who lock capital in support of UBI generation earn rewards for liquidity provision equivalent to the returns their assets yielded for the GoodDollar Reserve. This is similar to a bond or endowment model, allowing them to do well while doing good.
On the demand side, meanwhile, any person identified and verified as being unique and alive can claim a daily sum of G$. User-centric-designed applications lower the barrier of entry for people to access G$, and thus explore digital assets in general.
This paper outlines the vision for the future of GoodDollar and its many features and functions.
User Experience And Value Flow - In Eight Steps
The GoodDollar economy revolves around two primary user actions: claiming G$ basic income daily; and / or supporting its generation by staking capital and earning rewards.
Individuals who claim G$ on a daily basis must verify that they are real and unique individuals before they make their first claim.
Supporters of the GoodDollar protocol fund the supply of G$ by committing and locking funds (referred to as “staking” hereafter) to various third-party, interest-bearing protocols and mechanisms.
The staked capital generates interest in a supported cryptocurrency such as DAI or ETH. That interest is moved into the monetary reserve that supports G$ (called hereafter the “GoodDollar Reserve”): a smart contract that functions as an automated-market maker, and acts as the monetary reserve for GoodDollar and mints G$ coins. The number of G$ coins minted is determined by the leverage of G$’, relative to the value of interest locked in the GoodDollar Reserve (Reserve Ratio).
At inception, every G$ was fully collateralized by a supported cryptocurrency on a one-to-one ratio. For example, every 1 DAI – a decentralized cryptocurrency stabilized against the value of the US dollar (US$) – moved into the reserve produces G$ in equal value. Stakers receive G$ in a value equivalent to the interest their capital has generated in the third-party protocol(s) they have selected, as per Step 3. The reserve ratio is expected to decline over time, leveraging more G$ relative to the crypto assets in the reserve.
The remaining balance of G$ minted is distributed to GoodDollar community members who make daily claims. The amount of G$ distributed as basic income is divided evenly among users who log in to claim on a given day.
Initially, users will claim their G$ through the GoodDollar Wallet, though ultimately the wallet will be joined by a variety of endpoints with secure identity solutions. Before making an initial claim, a user must verify that he or she is a living and unique individual. The Wallet may request periodic reidentification to deter fraud and system abuse.
G$ is liquid and convertible to other cryptocurrencies, and is available to buy and sell directly via the GoodDollar Reserve smart contract.
Key Stakeholders
UBI Recipients:
Claim a small basic income in G$ every day.
Receive an equal share of the total G$ minted daily.
Can send / receive and buy / sell G$ coins.
Encouraged to grow the network via a referral marketing mechanism designed to increase adoption of the G$ coin.
Are included in regular distributions of GOOD governance tokens, which gives them membership in the GoodDAO, and thus a voice in GoodDollar’s future direction.
Stakers
Members of the GoodDollar community who believe in the trickle-up economy.
“Stake for good” by depositing supported cryptocurrency to third-party protocols or mechanisms via the GoodDollar Trust.
Receive rewards worth the equivalent of market rates of interest in G$, which is immediately convertible to other cryptocurrencies without financial penalty.
Are included in regular distributions of GOOD governance tokens, which gives them membership in the GoodDAO, and thus a voice in GoodDollar’s future direction.
Also receive social rewards in the form of Social Annual Percentage Return (hereafter “Social APY”), a readout on the exact contribution their capital has made to the GoodDollar impact economy.
Merchants
Accept G$ coins in exchange for goods and services. G$ distribution offers the potential to stimulate retail demand in formerly cash-poor communities, if embraced by merchants.
Conduct marketing promotions in G$.
Integrate with a “plug-and-play” corporate social responsibility program.
Third-Party Partners
Include developers of apps, protocols, asset exchanges, vendors, etc. that can be plugged into GoodDollar’s smart contract architecture.
Integrate GoodDollar functionality that serves either the supply side (e.g. financial services, exchanges, corporate/employee matching programs) or the demand side (wallets, vendors, service providers) of the GoodDollar economy.
Core GoodDollar Team
Has separate operational and developments budgets fuelled by donations
Does not have financial incentives or token allocation of G$
Market Demand & Target Market
There are key user and stakeholder hypotheses built into our theory of change and adoption. Ultimately, the success of the GoodDollar economy is contingent upon market demand from both those who support G$ and those who claim it, as the economy itself is a balance between supply and demand.
G$ is designed to gain usage and to be widely adopted as a means of exchange over time. Like Bitcoin, the initial dollar value, or “price”, of each G$ will be low – in the tenths of a cent on the dollar range to begin with. Our belief is that, because it offers free access to an instantly liquid, global basic income network, G$ will first be adopted in markets where smartphone-enabled populations currently live on less than US$10 a day. We believe that, for these populations, G$ could emerge as a useful complementary currency for use in peer-to-peer digital marketplaces as well as for on-the-ground goods and services, particularly as the network grows.
UBI Recipients: Poverty Reduction and Leapfrog Innovation
GoodDollar provides a payments infrastructure and complementary currency designed to unlock global commerce and barter at the cross-section of the mobile-enabled and the financially excluded. Right now, at least 80% of the world’s population lives on less than US$10 a day, while nearly half, or more than 3 billion people, live on less than US$2.50. [20]
According to the World bank, levels of global extreme poverty rose in 2020 after more than two decades of steady reductions. This came as COVID-19 combined with the ongoing forces of climate-linked disasters and conflict to hamper progress toward the goal of reducing the percentage of the population living in extreme poverty to 3% by 2030.[21] That goal lies a long way off given 2020 estimates that suggest more than 9% of the global population, or around 700 million people, live on less than US$1.90 a day.[22]
It is our belief that there is a substantial potential demand for daily payments of “free money”, even at low-value amounts. Of the 700+ million people living in extreme poverty, half are residents of just a handful of countries: Nigeria; India; Democratic Republic of Congo; Ethiopia; and Bangladesh. Importantly, penetration of mobile phones and smartphones in these countries is relatively high and rising.[23] According to the World Bank, nearly 70% of the poorest 20% of households have a mobile phone. Indeed, such households “are more likely to have access to mobile phones than to toilets or clean water”.[24]
Yet, mobile adoption has not translated into financial inclusion. According to The World Bank’s most recent calculations, 1.7 billion adults have no access to traditional financial services, even though one billion of this financially excluded population have a mobile phone and nearly half a billion have an internet connection [25]. Initially, we believe that GoodDollar will be most rapidly adopted and display the greatest impact for the one billion users at this cross-section of mobile-enabled and financially excluded. As we describe in the section on value adoption, it is our assumption that impoverished communities display the demographic and economic conditions to spearhead a “cluster” adoption pattern, a key hypothesis for GoodDollar’s network growth.
For these populations, we believe that GoodDollar will offer an accessible on-ramp into digital assets for the first time, similar to the role M-Pesa played in introducing digital money in Kenya and beyond. The GoodDollar Wallet is an example of our efforts to lower the barriers to entry into the digital economy by putting crypto assets into the hands of the target market, often for the first time.
As research from the McKinsey Global Institute suggests, these are the same target populations that are poised to become the early adopters of digital financial systems [26] in a repetition of the phenomenon that powered the rapid uptake of digital and mobile money systems across the African and Asian continents. In that case, entire populations leapfrogged the development of traditional financial and banking systems and began using cutting-edge technologies. Notably, there are early indications of this adoption trend in digital assets. Some 13-16% of South Africans and 11% of Nigerians say they hold and use cryptocurrencies, compared to the 5% of U.S. citizens [27]. In these markets, there is less opportunity cost to onboard and adopt new value systems.
“Staking for Good”
GoodDollar enables people to support a trickle-up economy whose growth philosophy is driven by adoption from the bottom upwards. Essentially, the GoodDollar economy marks a paradigm shift from past models of economic growth. Whereas nation states now utilize the minting of new money as a tool to create and encourage economic growth, in the GoodDollar economy, newly minted money flows directly to the hands of people. If you, like us, agree with this approach, you now have a unique opportunity to support it through GoodDollar.
By doing so, you will perform a central function in releasing capacity at the bottom of the economic pyramid now untapped due to a lack of liquidity. Economists at PwC project that, when unleashed, this pent-up demand in emerging markets will fuel global economic growth rates in the next century that are twice those in advanced nations, by powering entrepreneurship, commerce and wealth creation [28]. We see GoodDollar basic income, G$, and the entire GoodDollar ecosystem playing a key part in powering this growth engine over the coming years and decades.
We also have a fundamental belief that there are enough people who care not just about doing well for themselves, but also about doing good for others. Among individuals and organizations alike, there is a large and growing appetite to invest in impact-driven initiatives that seek human and/or environmental wins alongside financial gains. While the size of the impact investment market is currently estimated at around US$715 billion, the market is dominated by institutions and options for retail investors remain limited [29].
Evidence indicates that this demand to “do well while doing good” will only increase as younger generations enter the workforce. Numerous studies show that millennials and members of Gen Z are more committed to helping others than previous generations. And one Sopact report suggests that nearly 7 out of 10 millennials in America are interested or very interested in impact investing [30]. The fallout from COVID-19 has only served to accelerate this trend, as it has so many others. According to a report from Deloitte, more than three-quarters of millennials and Gen Z say they have become more sympathetic to the needs of others, while around two-thirds (67%) express the view that “we are all in this together” [31].
The arrival of a cohort numbering in the tens or hundreds of millions in the digital sphere would deliver similarly dramatic benefits as a result of the network effect, the phenomenon whereby the value of a product or service increases in value the more heavily it is used.[32]
Decentralized finance -- new distributed financial systems based on open smart contract protocols and crypto-specific mechanisms such as staking and automated market making -- has given rise to many of blockchain’s most successful use cases. From 2017 to 2020, more than US$9 billion in value was staked in various protocols, including native staking blockchains such as Tron, Tezos and others [33].
In the Ethereum ecosystem as a whole, more than US$107 billion worth of assets was staked or locked across decentralized finance protocols as of December 2, 2021, a more than 300% increase from the start of the year [34]. We believe that as the decentralized finance ecosystem continues to mature, grow and improve the user experience, capital will flow in greater and greater volumes from traditional finance to decentralized and open finance ecosystems.
With GoodDollar, users have the opportunity to “stake for good” -- i.e. to earn low-risk, market-rate returns by leveraging third-party decentralized finance protocols while at the same time helping GoodDollar to fulfil its vision of providing a global basic income. This is a market-incentivized, no-donation model that also provides an altruistic avenue to facilitate growth in the digital economy and offer financial benefits to the financially underserved. Ultimately, it is at the intersection of these two growth vectors – of investor demand to deploy capital to socially beneficial projects, and the emergence of the decentralized finance ecosystems – that the GoodDollar economy will realize its enormous potential.
[20] Global Issues, Poverty Facts and Stats, October 2020 [21] The World Bank, October 2020 [22] The World Bank, October 2020 [23] Newzoo, September 2018 [24] The World Bank, World Development Report 2016, December 2016 [25] The World Bank, April 2018 [26] McKinsey Global Institute, September 2016 [27] Statista, June 2019 [28] PwC, February 2017 [29] Global Impact Investing Network, 2021 [30] Sopact, July 2018 [31] Deloitte, May 2020 [32] Corporate Finance Institute, May 2020 [33] Staking Rewards, ongoing [34] Defipulse.com, ongoing
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