How GoodDollar Works
How does the GoodDollar protocol and G$ tokenomics work? Learn how we utilize DeFi to fund wealth creation for all.
The GoodDollar protocol presents a sustainable and scalable framework for the distribution of Universal Basic Income (UBI) as a means to improve financial access and empowerment. Built on blockchain technology, GoodDollar leverages decentralized finance (DeFi) and token engineering to create money that powers the GoodDollar economy and the commons, distributing it as UBI and incentives that support real economic activity.
GoodDollar stands out as a unique project with a mission that goes beyond financial gains. Rooted in a commitment to financial inclusion and wealth redistribution, the GoodDollar token (G$) is designed to support an open digital economy where new money can be created and directed toward inclusive growth. The protocol distributes G$ to a global community of users while also incentivizing economic participation and ecosystem development.
Sustainability: A Natural Equilibrium 🌳
GoodDollar's foundational principle is sustainability, based on G$ as a reserve-backed token. Notably, there was no pre-mint or Token Generation Event (TGE) for GoodDollar (or allocation to founders or sponsors). Instead, G$ tokens are created through the protocol’s monetary mechanism tied to the GoodDollar Reserve.
The primary value in the reserve comes from investors, customers, and businesses that purchase G$ tokens in order to participate in and support the GoodDollar economy. These purchases add assets to the reserve and strengthen the system’s liquidity.
Additional value flows into the reserve from supporters who donate the interest earned from capital they stake in decentralized finance protocols. This model allows supporters to contribute ongoing yield to the system while retaining ownership of their underlying capital.
New G$ tokens are created primarily when purchased from the reserve or by increasing reserve leverage through reductions in the reserve ratio, allowing the protocol to mint additional G$ while maintaining reserve backing. The newly created tokens are then distributed as UBI and incentives that support the growth of the GoodDollar economy and commons.
Stability: Striking the Right Balance 🎠
G$ is designed to maintain a level of price stability that is “stable enough” to encourage circulation and usage of G$ tokens for payments rather than pure speculation.
Its price is supported by the assets held in the GoodDollar Reserve and governed by the protocol’s bonding curve mechanism. This reserve-backed model helps moderate extreme volatility and provides a predictable pricing framework appropriate for a currency intended for everyday use within the GoodDollar economy.
Liquidity: Trust and Incentives ♻️
Ensuring token liquidity is vital for a cryptocurrency’s success. G$ tokens are always liquid and convertible to other cryptocurrencies through the GoodReserve smart contract, which acts as the protocol’s primary market maker and a market maker of last resort.
This mechanism allows users to buy or sell G$ directly against the reserve, enabling participants to easily enter or exit the GoodDollar economy.
Liquidity is further supported on sidechains through decentralized exchanges (DEXs), enabling users to trade G$ into other cryptocurrencies, fiat gateways, mobile money systems, or other digital assets.
The Basics of GoodDollar Tokenomics
Augmented Bonding Curve: The Heart of G$ 💙
The G$ token operates on an Augmented Bonding Curve backed by a monetary reserve. The token’s price is automatically calculated using a modified version of the Bancor V1 formula.
This mechanism dynamically adjusts the price of G$:
When G$ is purchased from the reserve, the price increases.
When G$ is sold back to the reserve, the price decreases.
The bonding curve allows the protocol to create new money that funds UBI and the commons, with the level of leverage determined by the reserve ratio. Lower reserve ratios increase leverage and enable the protocol to mint more G$ relative to the assets in the reserve.
On-Demand Issuance: Balancing Supply and Demand ⚖️
G$ issuance is governed by the bonding curve mechanism and reserve parameters. New G$ can be minted when users purchase G$ through the reserve or when reserve leverage increases through adjustments to the reserve ratio.
Conversely, G$ is burned when tokens are returned to the reserve through sales, helping maintain balance between supply and demand.
Sources of Reserve Value
The assets held in the GoodDollar Reserve originate from several sources:
Market participation Investors, users, and businesses purchasing G$ contribute the primary value to the reserve, strengthening the monetary base of the GoodDollar economy.
Supporter yield contributions Supporters may stake capital in third-party DeFi protocols and donate the yield generated to the GoodDollar Reserve, allowing them to support UBI without donating their principal capital.
Ecosystem fees and contributions Protocol revenues or ecosystem-generated fees may also be directed to the reserve to support the monetary system.
G$ Distribution 🔷
The GoodDollar protocol distributes newly created G$ across several functions that support the GoodDollar economy and commons.
The protocol is multi-chain by design. Core monetary infrastructure exists on the base chain, while UBI distribution occurs on low-cost networks such as Celo and XDC, making participation accessible to users globally.
G$ created by the protocol is allocated across several categories:
UBI distribution for verified users
Savings incentives that reward long term holders
Community and governance treasury
Ecosystem incentives that support aligned projects and real economic activity
The UBI mechanism distributes G$ daily to verified users. The available UBI pool is divided among users who claim within each 24-hour period.
Identity verification and periodic revalidation create a filtering mechanism sometimes described as Proof of Need, where users with the greatest economic need are most likely to claim the UBI.
Governance: GoodDAO 💪
The GoodDollar protocol is governed by GoodDAO, its decentralized governance system.
Membership in GoodDAO is determined by holding non-transferable GOOD governance tokens, which allow participants to propose, debate, and vote on protocol changes. Because GOOD tokens cannot be traded, governance power is designed to be distributed across the community rather than concentrated among wealthy token holders.
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