GoodDollar, a decentralized protocol dedicated to providing Universal Basic Income (UBI) through blockchain technology, is introducing significant updates with GoodDollar V4. This new version will see a major shift in the protocol’s infrastructure, transitioning to the Celo blockchain and enhancing its economic model.
A key change in GoodDollar V4 is the replacement of the previously paused Ethereum Reserve with a new Celo Reserve. This transition aligns with community feedback and aims to improve accessibility, security, and sustainability. The Celo Reserve will use cUSD as its stablecoin, with predefined outflow limits of 40K cUSD per week and 80K cUSD per month to prevent depletion.
Bridging Infrastructure Enhancements
The protocol’s bridging mechanism is being upgraded to make Celo the primary source of G$ tokens. This includes reversing the bridge direction to ensure seamless transfers across Ethereum, Celo, and Fuse. These updates will create a more efficient and scalable infrastructure for the GoodDollar ecosystem.
Economic Adjustments
Several economic changes will be implemented in GoodDollar V4:
- A 10% exit fee will be introduced, which will gradually decrease if reserve outflows remain below 20% over two months. The minimum fee will be 5%.
- The initial value of 1 G$ will be set at $0.0001.
Security and Audits
To ensure the security and reliability of the updated protocol, GoodDollar V4 has undergone multiple audits by Sayfer and Sherlock. Additionally, the new smart contracts have been developed in collaboration with Mento Labs, a team specializing in decentralized financial infrastructure. These measures reinforce the integrity of the protocol’s upgrade.
Governance and Next Steps
The proposed protocol updates will be subject to a community vote on Snapshot, with final execution carried out on-chain by the GoodDollar Guardians. Governance migration to Celo will also require a separate proposal for review and approval. A comprehensive review of the DAO’s governance structure is planned, with expert guidance and community involvement to ensure a transparent and inclusive system.
Background and Rationale for GoodDollar V4
The transition to GoodDollar V4 follows the GoodDollar Reserve exploit in December, which resulted in the depletion of funds and the pausing of the Reserve contract. Key reasons for this upgrade include:
- Addressing past vulnerabilities and improving security.
- Enhancing user experience by making the Reserve more accessible.
- Transitioning to a sustainable Reserve model backed by a stable yield source.
Collaboration with Mento Labs
The new Reserve contracts have been developed in partnership with Mento Labs. Their expertise in decentralized financial infrastructure has played a crucial role in ensuring the security and efficiency of the new system. Future collaborations are also being explored.
Key Features of GoodDollar V4
The upgrades in GoodDollar V4 will:
- Deploy a new GoodDollar Reserve on the Celo blockchain.
- Transition minting and burning of G$ tokens to Celo.
- Maintain G$ availability across Ethereum, Celo, and Fuse, with UBI distribution primarily occurring on Celo.
- Discontinue G$ allocations to Fuse from the Celo Reserve, while Fuse will continue its independent UBI mechanism.
- Reinstate the minting of G$ UBI under a more sustainable and scalable model.
Comparison of GoodDollar V3 and V4
| Feature | GoodDollar V3 | GoodDollar V4 |
|---|---|---|
| Core Protocol Contracts | Ethereum | Celo |
| Mint/Burn G$ | Ethereum | Celo |
| Yield Source | 3rd party staking (Compound, Aave) | DAO-approved options |
| Reserve Currency | cDAI | cUSD |
| Bridging Infrastructure | Locked tokens on Ethereum | Locked tokens on Celo |
| Exit Fee | 3% (GDX holders exempt) | 10% (gradually reducing to 5%) |
| Initial G$ Price | Paused | $0.0001 |
Technical Updates and Required Actions
To facilitate the transition, the following technical updates will be executed:
- Assign minting rights to Mento Broker and Mento Expansion Controller.
- Establish a Mento G$/cUSD exchange to replace the Reserve.
- Upgrade the GoodDollar bridging infrastructure to align with the new Celo-based model.
- Shut down the legacy Ethereum-Fuse bridge and upgrade the Axelar/LayerZero bridge.
- Burn locked G$ tokens on Ethereum and migrate liquidity to Celo.
- Deploy a Celo Distribution Helper to manage G$ UBI allocations.
- Pause and upgrade obsolete Ethereum mainnet contracts.
Conclusion
GoodDollar V4 represents a major milestone in the protocol’s evolution, offering a more sustainable and secure model for UBI distribution. By transitioning to the Celo blockchain, upgrading bridging infrastructure, and refining its economic mechanisms, GoodDollar aims to enhance accessibility and long-term viability. The community’s involvement through governance voting will play a crucial role in shaping the protocol’s future. You can read more about this on their forum.
Creative web3 writer and blogger with over 6 years of experience.
Post Comment