GoodDollar presents a framework for an open, people-powered decentralized approach to scalable and sustainable global basic income.
We strongly believe that delivering a “trickle-up” value structure that delivers liquidity to the hands of people is preferable to the conventional trickle-down approach to capital, credit, and interest-bearing money. The GoodDollar economy achieves this by delivering purchasing power directly to the “Claimers” while providing incentives for “Supporters,” whose staked capital is critical to powering the system. Aligning incentives between GoodDollar supply (Supporters) and demand (Claimers), and across all key stakeholders, is central to building a sustainable, scalable ecosystem around the GoodDollar economy.
This paper outlines the broad vision for the GoodDollar protocol, whose key features and functions will be detailed in due course in subsequent documentation.
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. 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 (“staking”) to various permissionless third-party yield-bearing protocols and mechanisms.
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 holders increases as more people and merchants join the GoodDollar network.
Permissionless 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 – a decentralized cryptocurrency stabilized against the value of the US dollar (US$) – moved into the reserve produces G$ coins in equal value.
G$ coins are distributed back to Supporters in value equal to the interest they receive 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 the reserve.
The remaining balance of G$ coins minted is distributed equally on a daily basis as basic income to Claimers, divided evenly between the number of Claimers 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.
People that “claim” a small basic income in G$ coins every day
They receive a daily share of G$ coins
Claimers can send / receive and buy / sell G$ coins
Referral marketing mechanism encourages early adopters to invite friends and family to the ecosystem, and increases adoption and local utility of the G$ coin
Either individuals or organizations who buy into the trickle-up economy
Supporters “stake for good” to the GoodDollar protocol, through staking supported cryptocurrency to their selected third-party protocols or mechanisms
Supporters receive reward payments in the equivalent value of G$ coins, which are immediately convertible to other cryptocurrencies without financial penalty
Supporters “do well while doing good” – receive market-rate returns while also making a positive social impact through support of the GoodDollar trickle-up economy
Accept G$ in exchange for goods and services
Conduct marketing promotions in G$
Integrate with a “plug-and-play” corporate social responsibility program
Include developers of apps, protocols, asset exchanges, vendors, etc., all of which can be plug-into GoodDollar’s smart contract architecture
Integrate GoodDollar functionality that serves Supporters (for example: financial services, exchanges, corporate/employee matching programs) or serve Claimers (wallets, vendors, service providers)
Has separate operational and developments budgets fuelled by donations
Does not have financial incentives or token allocation of G$ coin
There are key user and stakeholder hypotheses that have been built into our theory of change and adoption. Ultimately, the success of the GoodDollar economy is contingent upon market demand from both Supporters and Claimers, as the economy itself is a balance between balancing supply and demand for G$ coins.
GoodDollar is designed to gain usage and be widely adopted over time. Like Bitcoin, the initial dollar value, or “price”, of each G$ coin will be low – in the tenths of a cent on the dollar to begin with. Our belief is that through offering free access to an instantly liquid, global basic income network, G$ coin will first be adopted in markets where smartphone-enabled populations currently live on less than US$10 a day. We believe that for these populations G$ coin could emerge as a useful complementary currency for peer-to-peer marketplaces and goods and services, as the network grows over time.
GoodDollar is designed to provide a payments infrastructure and complementary currency in G$ coin to unlock global commerce and barter at the cross-section of mobile-enabled and financially excluded. According to the World Bank, 80% of the world population survives on less than US$10 a day, half of the world’s population (3.4 billion people) lives on less than US$5.50 a day, and 10% of the world’s population (or 736 million people) live in extreme poverty –US$2 a day or less . It is our belief that there is substantial demand for claiming “free money” on a daily basis, even at low-value amounts. Of the 736 million people living in extreme poverty, half live in just a handful of countries: Nigeria; India; Democratic Republic of Congo; Ethiopia; and Bangladesh, while cell phone penetration (and even smartphone penetration) rates in those countries are relatively high . In Nigeria alone mobile penetration is 73% on feature phones, an estimated 25.5 million people already own a smartphone device, and smartphone penetration is projected to increase to 140 million (75% of the population) by 2025 .
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 have a mobile phone and nearly half a billion have an internet connection . 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.
As supported by the McKinsey Global Institute, these are the same target markets that are poised to become the early adopters of digital financial systems . This is the same phenomenon that powered the rapid uptake of digital and mobile money systems across the African and Asian continents, with entire populations skipping over the traditional financial and banking systems. 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 United States citizens . In these markets, there is less opportunity cost to onboard and adopt new value systems.
Supporters, then, perform a central function in releasing this “pent-up demand” and dormant capacity that is untapped at the bottom of the pyramid due to a lack of liquidity. Economists at PwC project that the release of this pent-up demand in emerging markets will fuel global economic growth at twice the rate in advanced nations in the next century, through powering new entrepreneurship, commerce and wealth creation . We see GoodDollar basic income and the G$ coin as a key part of powering this growth engine over the coming years and decades and believe supporters will recognize this demand, too.
Evidence shows that this demand to “do well while doing good” will only increase with younger generations. Numerous studies bolster the trend that millennials and members of Gen Z are more committed to helping others than in previous generations. And one Sopact report suggests that nearly 7 out of 10 millennials in America are interested or very interested in impact investing . The fallout from COVID-19 has accelerated this trend, like many others. Over three-quarters of millennials and Gen Z have become more sympathetic to the needs of others across the globe, and around two-thirds (67%) suggest that “we are all in this together”, reports Deloitte .
Meanwhile, in the blockchain universe, decentralized finance, or building new financial systems based on open smart contract protocols and “staking”, or the concept of locking capital to participate in a blockchain or protocol’s operations, have emerged as key examples of blockchain’s most successful use cases. From 2017 to 2020, over US$9 billion in value has been staked in protocols, including native staking blockchains such as Tron, Tezos and others .
In the Ethereum ecosystem, as of early August 2020 over US$3.62 billion worth of assets has been staked or locked across decentralized finance protocols, with an approximate 620% increase in the past 12 months . We believe that as the decentralized finance ecosystem continues to mature, grow and improve the user experience, capital will flow from traditional finance to decentralized and open finance ecosystems.
 The World Bank, October 2018  The World Bank, April 2020  Newzoo, September 2018  The World Bank, April 2018  McKinsey Global Institute, September 2016  Statista, June 2019  PwC, February 2017  GIIN Research, April 2019  Sopact, July 2018  Deloitte, May 2020  Staking Rewards, ongoing  DeFipulse.com, ongoing