Gold Standard DAO Tokenomics Update #1
Gold Standard DAO: Sustainability Journal Vol.1
The number one agenda on our weekly team meetings has always been the same — sustainability and longevity of all OHM forks. It is a known fact that most OHM forks do not last and the infamous (3, 3) system does not seem to work for the long term. While having a gold-backed treasury is especially unique, we pride ourselves on being more progressive from not only other OHM forks but any crypto projects in general. However, we have come to realize that there is still a limit to our potential unless we continue to innovate and evolve. In this article we would like to explore our solution moving forward by introducing a selling tax while expanding our treasury asset options.
Introduction to Tax
You might be aware that most OHM forks offer extremely high APYs to incentivise staking, however there will always be some users that would choose to sell their tokens. It is well known that there are a countless number of projects out there that are killed by users dumping on the first day of launch, ultimately draining the liquidity of the project before it gets a chance to realize its full potential. This often happens when users quickly sell their holdings after making a quick profit by getting into these projects at a premium during the IDOs or presale. Some may recover but unfortunately most do not.
One may argue that it is the investors decision to decide what to do with their tokens. We whole-heartedly agree with the statement and respect the decisions of those who would want to sell their tokens in order to realize their gains. On one hand, we support the freedom of all investors to be able to sell their holdings at any time as this is DEFI after all. On the other hand, we have the longevity of the project in mind and strive to deliver its full potential to all believers. The truth is these two things can be true! It is important to realize that the key is balance.
The answer to the balance is tax. We believe that introducing a tax system that can feed the taxed portion directly back into the treasury could do the trick. This way we can maintain the freedom of users still able to sell their tokens and the sustainability of the protocol at the same time. We have considered vesting the tokens bought from the IDO and presale however this would prevent users from taking the full advantage of staking with high APY.
Treasury Assets Expansion
It has always been part of our vision to expand the treasury assets within our treasury. Gold Standard DAO is supposed to be a project that promotes the ‘Gold Standard’ literally and metaphorically. First of all, it is the gold standard for the monetary term and also the figurative ‘Gold Standard’ being the more advanced and forward standard. To be ahead of the curve our strategy to long term success is to accept interest bearing assets. On top of gold (AUX) we will also be accepting ibBTC, ibETH and sSpell to the treasury to ensure constant growth over time.
Interest Bearing Assets
Interest bearing assets are fully collateralized representations of their own respective cryptocurrencies aim to be the most liquid, secure and widely used asset throughout DEFI while at the same time providing users with a base interest rate just by holding them. Accepting any interest bearing assets into the DAO treasury is undoubtedly very beneficial in the long term.
How it works
An important component of GSD’s DeFi Model is Taxation. The revenues from taxation feed back into treasury.
GSD is subject to two types of tax:
- Sell Tax
- Buy Tax
The Buy/Sell taxes are dynamic, and will adjust to defend the protocol’s health. In the event of a price decline, the sell tax will increase and the buy tax will fall. This incentivizes buying and staking of GSD when the price is low while discouraging selling. Greater amount of assets would be fed back into the treasury the higher the sell tax goes. Therefore a stabilizing pressure is exerted on the market and helps GSD to steadily appreciate in value.
The combination of Sell/Buy taxes results in a very potent stabilization effect on the price of GSD, reducing risk and preventing behaviours which are bad for protocol health. Under this system, long term holders would make the most profit. Thus, Gold Standard DAO is the first decentralized reserve currency DAO where the most lucrative behaviour is also truly best for the protocol.
Moving forward our plan is to periodically consult the community on the direction our DAO will be going with the taxes. Naturally all stakers will not be affected by this decision when they stake their GSDs from the very beginning. Keep an eye out for a follow up announcement on the tax percentages!
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