[Temp check] Convert 20% of ENS DAO's USDC Holdings to Glo Dollar (USDGLO) to fund Web3 Public Goods at no cost

DAO-Wide Temp Check
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Hi, I’m Bram, and I’m with Glo Dollar, the stablecoin that funds public goods.

Overview

We propose that ENS DAO converts 20% (~$920,000) of USDC holdings from the ENS DAO Wallet to Glo Dollar (USDGLO) to fund Web3 Public Goods at no cost.

Doing so has three distinct benefits:

  1. Program Web3 Public Goods Funding into ENS DAO’s treasury through Glo Dollar’s Automatic Public Goods Funding (AutoPGF) Mechanism. By holding Glo Dollars and selecting ‘Web3 Public Goods’ as its funding cause, ENS DAO funds Web3 Public Goods without having to donate.
  2. Strengthen ENS DAO’s resilience by diversifying USDC holdings into multiple native, USD-backed stablecoins.
  3. Support the development of an alternative US regulated stablecoin that benefits the public and the broader crypto ecosystem.

What is Glo Dollar?

Glo Dollar (USDGLO) is the stablecoin that funds public goods.

Stablecoin companies generate $7.4 billion in profits/yield annually from their stablecoin reserves. Our approach is different—we funnel 100% of our profits to public goods and charities.

Holding Glo Dollars creates a virtuous cycle to grow ecosystems, instead of extracting yield for gains. By choosing Glo Dollar, you fund the causes that matter to you, at no cost. Organizations like Mento Labs, Gitcoin, and Polygon Labs are already embedding zero-cost philanthropy into their operations by holding part of their treasury in Glo Dollars.

Choosing the causes to support can be done from our dApp. In ENS DAO’s case, we’d suggest generating funds for Web3 Public Goods (other cause areas focus on poverty eradication and climate action).

Holding $920k in Glo Dollars, ENS DAO would generate up to ~$37,000 in public goods funding per year—this would be akin to funding an extra Small Grants Round at no cost to ENS DAO.

Glo Dollar is available on 7 chains: Ethereum, Celo, Polygon, Optimism, Arbitrum, Stellar, and Base.

How it works

What happens when you buy and hold Glo Dollars:

  1. The fiat backing Glo Dollar is invested and earns revenue (similar to other stablecoins).
  2. We donate 100% of our profits on these investments to public goods and charities.
  3. The user decides which public goods and charities we’ll fund. ENS DAO has the option to allocate all of its generated funds towards supporting Web3 Public Goods.
  4. ENS DAO is funding Web3 Public Goods at zero cost.

We call this Automatic Public Goods Funding, because it is:

  • Simple: just hold a stablecoin
  • Zero-cost: holding a stablecoin is free
  • Embeddable: in treasuries, payroll, card transactions, …

Glo Dollar’s Web3 Public Goods cause area

Right now, the Web3 Public Goods cause area generates funds for Gitcoin, Giveth, and Protocol Guild. We’ll be broadening support to include more initiatives on a rolling basis.

We’re eager to know if there are any specific Web3 Public Goods that ENS DAO would like us to add as a funding recipient.

Learn more about our Cause Areas and How we select Causes to support.

How we’re making Glo Dollar usage zero-cost and straightforward for ENS DAO

  • Swapping Glo Dollars for free. There are multiple routes for ENS DAO to swap USDC for Glo Dollars at zero fees. The Glo Foundation will assist in setting up the easiest route.
  • Direct offramps. We’re partnering with many offramp providers to make instant USDGLO offramps without intermediaries.

Other DAOs and organizations embedding zero-cost philanthropy into their treasury

Many other organizations are embedding philanthropy into their treasury with Glo Dollars, many of which are shown on this page.

Risks

Glo Dollar is 100% fiat-backed, always redeemable 1:1 for USD and USDC, issued and regulated in the United States, and receives monthly independent attestations.

In April, we received our Bluechip rating, with an initial B grade. This places us in the top 10 fiat-backed stablecoin, and we’re deemed safer than Tether’s USDT, FRAX, FDUSD, among others. Glo Dollar received the following assessments:

  • Stability: Stable
  • Management: Very low risk
  • Governance: Low risk

Glo Dollar is developed by the Glo Foundation and is issued by Brale. Brale is a US regulated money services business, which is the same regulatory framework under which Circle issues USDC.

Voting

The voting options will be:

  1. ‘Yes’ - Swap 20% of ENS DAO’s USDC into USDGLO.
  2. ‘No’ - Do not swap 20% of ENS DAO’s USDC into USDGLO.
  3. ‘Abstain’

Relevant links

3 Likes
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That assumes profits surely?

Theres a cost somewhere - who is taking on the risk?

ENS has a DAO funded Public Goods Working Group that does incredible work supporting public goods. I personally believe that all PG related activities should be directed through that working group.

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Thanks for the questions, @clowes.eth.

We profit up to $40k per $1M in USDGLO market cap per year.

Our profit model mirrors that of USDC by Circle. Part of our reserves are held in US Treasuries, which currently offer a yield of approximately 5%.

In the case of USDC, all profits go to Circle and none to the crypto ecosystem.

Given that ENS DAO’s wallet holds $4.6M in USDC, the DAO is currently funding Circle for ~$180,000 in yield/revenue per year.

By holding Glo Dollar (USDGLO) instead, ENS DAO would be generating funds for public goods and charities—at no cost to the DAO. We could use (part of) these funds to support the projects funded by the ENS Public Goods Working Group.

See the full flow of funds (and how Glo Dollar works) here.

The ‘cost’ is the same as holding USDC in your treasury: you’re missing out on directly holding US Treasuries yourself. So yes, there’s a cost, but no additional cost vs what’s currently happening.

These profits are profits that are currently going to Circle. So ENS DAO swapping USDC to Glo Dollar means a transfer of profits from Circle to public goods, at no (additional) cost to ENS.

Arguably, one downside of holding USDGLO over USDC is that, as a newer market entrant, it isn’t as widely accepted yet. You can, however, always swap USDGLO 1:1 through our minting / redemption portal and 5+ OTC partners.

We love the Public Goods Working Group, and want to see it succeed.

(Part of) the profits generated from the Glo Dollars held by the ENS DAO could be allocated to the projects funded by the Public Goods Working Group. This way, we can ensure that all activities related to public goods are directed through the working group.

This can be similar to how we’re funding Celo Public Goods with the Glo Dollars in the Mento Reserve.

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I would love to hear Karpatkey’s opinion, on all of this, but especially what I would like to propose…

I would love to see is for the DAO to hold a huge USDC/USDGLO liquidity pool so it could earn a small amount of trading fees while supporting USDGLO as well.

I LOVE USDGLO. If we are holding USDC, it is a no brainer to send it to Brale and get USDGLO back. There is almost no liquidity risk and the upside is funding public goods.

I have a small conflict of interest to declare, in that Glo Dollar has sponsored several QF Rounds on Giveth, and has donated some of the revenue generated to Giveth. Giveth may have received around $5000 in direct funding from those activities. But honestly that is negligible to our costs, and has nothing to do with why I am a big supporter of this proposal.

If we are holding stables, we should hold USDGLO.

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Hi Griff, here’s some data if it helps:

The largest single position of stables the DAO holds is in the DAO wallet and it’s currently at 3.4 million.

We had initially intended that the DAO hold 2 years expenses in stables. We had a discussion on that here. At the time, that two year runway required 16 million in stables.
That amount has been spent down to about 3.4 million now, and we’ve been in early talks to swap some of the 7k ETH in that wallet to ensure we maintain the runway. We also need to reevaluate the 16 million number because some scenarios that Labs has discussed would require more spend.

The other notable point to include is that the stream to ENS Labs is delivered in USDC. While that doesn’t make it undoable, it does mean that we need to contemplate that in any plans we make.

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From a financial perspective, incorporating a new stablecoin into ENS operations requires careful evaluation of several factors, including liquidity, potential volatility, associated risks, and operational considerations. While other important aspects, such as ENS’s support for public goods, are relevant, these can be better addressed by other community members. As @5pence.eth highlighted, the USDC held in the DAO’s wallet serves as a prudent reserve to cover ENS’s operational needs. Initially, it provided a two-year runway, but the current balance is low, and a top-up will soon be necessary. This financial situation should be carefully considered when deciding whether to move forward with this proposal. Additionally, the USDC in the DAO Treasury is specifically allocated to fund operational expenses, such as ENS Labs and Working Groups, which are denominated in USDC. Holding USDGLO to potentially cover USDC-denominated liabilities could create a mismatch, and this risk must be considered accordingly.

Regarding liquidity, USDGLO currently has a market cap of $3.4M, with the majority ($1.6M) on Celo and around $700k on Ethereum mainnet. Secondary liquidity is very limited, especially given the size of the ask ($920k). The largest liquidity pool is the $127k USDGLO/cUSD pool on Uniswap, also on Celo. Since the ENS DAO doesn’t hold funds outside Ethereum mainnet, this secondary liquidity would be inaccessible unless there is a deployment on Celo specifically to hold USDGLO. The proposal does mention alternative onramp/offramp solutions, stating:

You can, however, always swap USDGLO 1:1 through our minting / redemption portal and 5+ OTC partners.

Given the limited secondary liquidity, it’s crucial to understand more about this onramp/offramp process as well as other relevant factors. Key questions include:

  1. What operational procedures (KYC, AML, etc) are required to mint USDGLO?
  2. Are there any fees associated with minting or redeeming USDGLO?
  3. What is the expected timeline for receiving USDC after initiating a redemption?
  4. Are the reserves bankruptcy-remote from the issuer?
  5. What are the different steps of the process and what entities are involved in each one?

Should the DAO decide to move forward with this proposal, @griff’s idea is interesting. Instead of holding USDGLO idle in the wallet, the DAO could deploy it to provide liquidity on Uniswap v3 (mainnet), thereby improving onchain liquidity. However, this would require either minting 50% of the intended USDGLO and pairing it with an equivalent amount of USDC, or matching the full amount of USDGLO with USDC. The latter approach would effectively double the amount of funds committed to the proposal, which should be factored into the decision-making process.

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I support converting a portion of idle USDC to USDGLO; it’s a win-win. As 5pence.eth and karpatkey noted, some of the funds distributed by the DAO may now be in USDGLO instead of USDC, so having direct access to zero-fee offramps/redemption is crucial. Also interested in the key questions raised by karpatkey.

Disclosure: ETH Daily has previously received USDGLO via Giveth/Gitcoin matching.

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Hey everyone, taking over from @Bramglo here as he’s OOO this week.

For what it’s worth, Glo Dollar is supported on Superfluid on Optimism and support for mainnet could easily be added.

  1. To mint / redeem with our centralized minting portal we require businesses to go through a standard KYB procedure. Turn around time for this is low, typically taking only a few days. We are also available through OTC desks such as blockchain.com and Bitgo, both of which we can imagine ENS DAO and ENS Labs already work with.
  2. There are no fees when minting or redeeming USDGLO through our centralized minting portal. Through OTCs we cover the costs associated with minting / redemption with a fair use expectation.
  3. Small redemptions are near instant. Within 3 days for redemptions of any size.
  4. US Treasury debt and cash deposits are held in fully segregated accounts. Note that USDC’s bankruptcy-remote claims are unproven.
  5. To mint / redeem Glo Dollar:
    a. Onboard with our minting and redemption portal powered by Brale, Inc: https://brale.xyz/stablecoins/usdglo
    b. Deposit USDC or USD with Brale to mint Glo Dollar
    c. Transfer Glo Dollar to ENS DAO wallet
    d. Alternatively: onboard with OTC desk such as blockchain.com, Bitgo. Skyline Digital or 1Konto.

Of course we would very much welcome this!

3 Likes