GoodDollar White Paper: A Distributed Basic Income

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Now Published!

It is with great pride and excitement that we release the GoodDollar White Paper: A Distributed Basic Income. This blog post mirrors our LitePaper. 

We welcome all feedback and comments.

A Distributed Basic Income Protocol 

GoodDollar (www.gooddollar.org) is a people-powered framework to generate, finance, and distribute global basic income via the GoodDollar token (“G$ coin”). Its goal is to provide a baseline standard of living and reduce wealth inequality through the creation of a universal basic income (UBI). 

GoodDollar leverages new protocols and smart contracts to deliver a “trickle-up” value structure, which places money in the hands of those who need it most. This is the reverse of the conventional trickle-down approach to capital, credit, and interest-bearing money.

 A digital asset that operates within the emerging ecosystem of decentralized and open finance, G$ coin is backed by a monetary reserve of cryptocurrencies and thus has tangible value. G$ coins are liquid and convertible to other cryptocurrencies, and will be available to buy and sell directly via the GoodDollar GoodReserve smart contract.

The value in the GoodDollar reserve comes from the interest that is generated from Supporters who stake cryptocurrencies in permissionless protocols. Through the amassed reserve interest, G$ coins are minted. They are used to pay Supporters market-rate interest payments, while a daily amount of G$ coins is set aside to be distributed as basic income.

GoodDollar’s decentralized global basic income concept has the potential to effect positive change in the world while pioneering a fairer and more transparent circular economy.

Basic Income

Basic income, a policy proposal first introduced in the 16th century, has recently gained traction with futurist economists, technologists and politicians as the best policy response to address income inequality, projected mass unemployment resulting from automation, and provide a basic safety net that prevents abject poverty. The economic fallout resulting from the coronavirus crisis has triggered fresh enthusiasm to assess new approaches to capital and liquidity distribution. 

This presents a ripe opportunity to advance distributed, bottom-up approaches to basic income, which we believe can advance at a greater speed than federal implementations.

Why now?

  • Adults with less than $10,000 form 56.6% of the world’s population but hold less than 2% of global wealth.
  • In the wake of the coronavirus outbreak, over 71% of Europeans now support some form of basic income.
  • More than 20 nations are now exploring basic income as a key policy proposal.
  • Innovations in decentralized finance have made it possible to generate interest on stable assets and efficiently redistribute it.

The GoodDollar token is an idea whose tech and timing have converged. For the first time in human history, the will and the means to deliver basic income are in place.

How It Works

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 yield–bearing protocols and mechanisms.

Every day, a number of G$ coins are minted and distributed as basic income to Claimers. The value in the GoodDollar reserve comes from the interest that is generated from Supporters who stake cryptocurrencies in permissionless protocols. Through the amassed reserve interest, G$ coins are minted. They are used to pay Supporters market-rate interest payments, while a daily amount of G$ coins is set aside to be distributed as basic income.

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 permissionless 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.

Monetary Tools & Control 

To optimize the utility and impact of the GoodDollar basic income economy, a set of monetary tools to manage and modify the protocol that rewards all G$ coin holders. These tools include:

  • Expansion Rate: the rate in which the reserve ratio declines and mints G$’s
  • Transaction fees: currently set to zero
  • Exit Contribution: for Claimers moving out of G$ into other crypto assets
  • Referrals Rewards Program: allocation of G$ coins to be awarded to users that grow the network.

These monetary tools will be controlled by the GoodDAO, the future governing body of GoodDollar to operate as a decentralized autonomous organization managed by GoodDollar stakeholders.

The supply of G$ coins is fixed to 2.2. trillion. 

Target Market & Impact

GoodDollar’s distribution is designed to provide a complementary currency for digital payments to unlock global commerce and barter at the cross-section of the mobile-enabled and financially excluded. 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.

Referral marketing strategies will encourage GoodDollar adoption in community clusters. Eventually, as the adoption of G$ coin grows due to online and offline network effects, a critical mass will be reached.

The goal is to ultimately onboard millions of new users to digital currency by giving each access to tradeable digital assets with real monetary value. The key to bridging this gap is overcoming the challenges of user experience in accessing and reaching mass market users with limited technical literacy. To facilitate this, the GoodDollar wallet is a simple digital wallet that can be accessed anywhere in the world with an internet connection. Its interface enables social media profile logins and sign-ups (Facebook, Google, and email/password), and focuses on the key action of “claiming” G$ coins as basic income and conducting peer-to-peer transactions.

Users can additionally invite other contacts to GoodDollar (and be rewarded for doing so initially), send and receive G$ coins, review account transactions, and explore the amount of activity within the GoodDollar economy, as any basic payment app.

Team

GoodDollar is a non-profit research project dedicated to the study of basic income and inequality. Its mission is to explore blockchain and digital asset technology for the practical implementation of universal basic income.  GoodDollar operations are financed entirely by donations.

Founded by Yoni Assia, the co-founder and CEO of eToro, Europe’s largest social investment network, GoodDollar is based on Assia’s theory of social money first presented in 2008. eToro has financed the GoodDollar project as part of its corporate social responsibility initiative.

Conclusion

The GoodDollar protocol presents an opportunity to invest in equality while fostering a “trickle-up” basic income economy that places liquidity in the hands of those who need it. GoodDollar aligns the incentives of all G$ coin holders, whether they choose to participate as a basic income Supporter or Claimer. Our mission is to leverage the significant innovations and developments across decentralized finance and open finance to create a protocol that can deliver global basic income at scale.

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