Glo Dollar: a fiat-backed stablecoin embedded with philanthropy

Epoch Two Submission
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Project Description:

Glo Dollar ($USDGLO) is a fiat-backed stablecoin created to lift people out of extreme poverty. Like other fiat-backed stablecoins, USDGLO is minted when (and only when) an equivalent amount of USD is deposited into the reserve. USDGLO reserves are held 100% as US dollar deposits, US treasuries and cash equivalents that earn interest. Glo Dollar’s differentiator is that its creator, Glo Foundation, donates all of its earnings from the reserve to GiveDirectly, an NGO that makes basic income payments in developing countries. More about why we chose GiveDirectly here: Why Glo Foundation chose to donate to GiveDirectly

Through the adoption of a stablecoin, we seek to create a sustainable funding mechanism that can substantially scale up GiveDirectly’s basic income program for people in extreme poverty. At a $15M market cap and assuming a 4.5% yield, we conservatively expect to receive about $21k per month in revenue from the reserves of Glo Dollar, or $252k annualized, to donate. This would lift 525 people out of extreme poverty. If we capture 15% of the stablecoin market, ~1M people will be lifted out of extreme poverty. The basic math is that it costs $40/month to provide basic income to one person of $34/month (Basic Income for Liberia | GiveDirectly ). GIveDirectly finds that transfers of this size enable people to invest in assets, like livestock or a metal roof or a small business, that enable them to lift themselves out of poverty. More here: https://www.glodollar.org/articles/how-glo-works

Go Dollar is issued by Brale.xyz. Here’s more on why we chose Brale and what they do for us: https://www.glodollar.org/articles/brale-and-the-glo-foundation

Why it’s classified as a public good:

Glo Dollar provides four kinds of public goods (in the ‘non-rival’ and ‘non-exclusionary’ sense of the concept).

First, stablecoins are essential infrastructure for DeFi, and right now, an absurd percentage of the total stablecoin market cap is dominated by USDC and USDT. This creates singular points of failure, especially because the leading stablecoin is so transparently shaky on legal and financial grounds. The more we can introduce stability through diversification to the stablecoin ecosystem, the more the community benefits.

Second, reducing extreme poverty is a public good because it unlocks human capital by allowing people who are currently languishing in poverty to pursue their dreams. The more people we can empower to join the global economy, the more likely we are to solve our biggest collective problems.

Third, Glo Dollar generates positive reputational spillovers for crypto as a whole. We have a clear, easy-to-explain financial model that turns holding or using a stablecoin into an anti-poverty initiative. In general, we think there’s space for crypto projects that clearly benefit people who are not, themselves, hooked into web3, and we aim to fill that niche.

Fourth, we’re building open source tools that others in the ecosystem are free to use and remix. Our smart contract is available at Glo Dollar / usdglo · GitLab and the Glo app source code is available at GitHub - Glo-Foundation/glo-wallet.

What we have built (Social Credibility/development progress:)

Glo Dollar has since grown to a $1.4M market cap (as of 9/13/23)

You can view current market cap on the issuer’s website here: https://brale.xyz/stablecoins/USDGLO

To Date Project Funding Sources

Our project was seeded with a generous donation from the Sijbrandji Foundation for the purpose of launching USDGLO. Now that USDGLO is live, we are seeking donors to fund our team in their partnerships, business development, and marketing initiatives.

Donations are essential to our model. Our estimate is that a stablecoin in the $200M+ range can operate on about 1% of assets under management (i.e. about $2M), but generate sustainable revenue 3-5x that every year (i.e. $6-$10 million). Because we donate all the revenue we receive from the Glo Dollar to charity, once we reach that point, a donation to Glo Foundation will be a no-brainer – it will be a giving multiplier for one of the most effective basic income cash transfer programs to lift people out of extreme poverty. In other words, a dollar spent helping the Glo Foundation keep the lights on will generate $3-$5 of donations for GiveDirectly.

We’re asking for donations now, at this pre-scale stage, to help us get there.

The Sijbrandij Foundation will match all new donations received.

What’s next if we receive funding:
The Glo Foundation is a going concern and any funds received will go directly towards our operating expenses. We have a small team of paid employees working cross functionally on partnerships, business development, marketing and fundraising initiatives.

On the partnerships front, we’re focused on finding ecosystem partners that will integrate USDGLO alongside current stablecoin offerings in their products and services. This means getting USDGLO supported by crypto on/off ramp platforms and eventually, centralized exchanges.

On the business development front, we’re identifying and speaking to organizations that believe in our mission and are willing to hold some of their funds in USDGLO or accept payments in USDGLO.

On the marketing front, we’re raising awareness about USDGLO to a global audience to help drive adoption of USDGLO. The more we grow market cap, the more we’re able to donate to lift people out of extreme poverty.

Team Information, including backgrounds and roles:

Jeff Milewski, Co-founder & CEO, is an economist based in San Francisco. Prior to Glo, he was a research director and instructor of fintech at Creighton University. He also co-founded Funnel House, a consultancy that helps startups identify growth opportunities and necessary milestones to achieve success. Jeff holds an MSc from the London School of Economics.

Garm Lucassen, Co-founder & CTO, formerly worked as lead product manager of Secfi, a San Francisco-based fintech company. He co-founded CardanoSpace, the first NFT-powered dApp on the Cardano Blockchain, and TURF, a cartographic art NFT project that has had over 1300 pieces sold through payments processed by the VISA, Mastercard and Cardano networks. Garm holds a PhD in product management from the University of Utrecht.

Jasper Driessens, Co-founder & CMO, previously worked in marketing at Secfi, a San Fransisco-based fintech company, as well as founding ASIF Ventures, a pre-seed fund that has invested in 15 student startups, and CardanoSpace, the first NFT-powered dApp on the Cardano Blockchain. Jasper graduated cum laude from the University of Amsterdam with a master’s degree in Artificial Intelligence.

Marcia Blacken, Head of Operations, leads business development, partnerships and fundraising efforts as well as supports the incorporation of legal and compliance matters into marketing operations. Marcia has 10 years of experience working in the financial services industry, most recently overseeing client experience, custody and brokerage operations at Anchorage Digital, the first federally chartered digital asset bank. Her experience includes managing operations, investments, and client service and sales teams within highly regulated firms, including a broker-dealer, a registered investment advisor, and Bank of America.

We’re rounded out by 7 additional contributors that support marketing, community, finance, legal, and research initiatives.

Links and Resources:

Some questions we received (or expect) from the Octant Community

  • How does Glo Dollar compare to the other leading stablecoins?

Circle issues USDC under the cover of the same Money Transmitter Licenses (MTLs) as Brale.xyz issues USDGLO. Both issuers back their stablecoins with cash and short duration US Treasuries and cash equivalents (think money market funds holding short term treasuries).

Tether isn’t issuing in the United States and therefore isn’t subject to the same regulatory oversight companies that have been granted MTLs are subject to. It has broad discretion over what it can invest the reserves in.

  • How is Glo Dollar different from Good Dollar?

GoodDollar is a great project and we’re happy to see them in the current Octant round. There are two main differences between our projects. First, GoodDollar is a free-floating currency (rather than a stablecoin) whose market value is based on demand for the token. Glo Dollar, by contrast, will always be worth $1 by construction. Second, GoodDollar distributes basic income payments in its own cryptocurrency, while Glo Dollar generates money for GiveDirectly, who in turn send people money in recipients’ native fiat currency. This is an important philosophical difference. Our mission is to end extreme poverty, which means helping people live on less than $2.15/day. The vast majority of people living in extreme poverty don’t have regular internet access, and transacting in crypto is going to be very challenging for them for the foreseeable future (though Good Dollar is paving the way for those in developing countries to learn how to use crypto using $G as an incentive). That’s why we work with GiveDirectly to actually make the payments — they use pre-existing mobile money technology to make transfers and have already built up a robust distribution network for the poorest people on earth. (For more on how this work in practice, see FAQ | GiveDirectly (“How exactly is the transfer made?“).

  • Why did you go with a third-party issuer rather than issuing it yourself, and how did you select your issuance partner?

USDGLO is issued in the United States by Brale.xyz. The ability to issue stablecoins is dependent on the issuer obtaining Money Transmitter Licenses (MTL) from each state it issues/redeems and each state has prescribed “permissible investments,” which are generally highly liquid investments. In this case Brale.xyz holds and will continue to hold reserves as cash, short duration US Treasuries and cash equivalents (think money market funds holding short term treasuries). On average, the reserve is split into 20% cash and 80% investments in yield-earning instruments.

Brale is compensated for its role as issuer of the Glo Dollar through a revenue share on the earnings from the reserve. They earn 100% of the revenue from the reserve up to $2M. Beyond $2M, we start to take an increasing share of the earnings to donate. We currently have a $1.4M market cap so are not yet donating but our organization’s focus on partnerships, biz dev, and marketing is generating positive leads which gives us comfort in confidently projecting that we’ll reach $15M market cap by the end of Q1, where we would be realizing the earnings conservatively estimated in our project description that will flow to GiveDirectly.

  • It seems like Brale, a for profit entity, will be compensated handsomely for your efforts. How do you justify this?

Assuming we have at least a $2M market cap, 80% of that is invested in treasuries and earns 4.5% annualized then they are making $6k a month. This is far less than other potential issuers quoted us and with those issuers, we would actually have to pay out of our operating budget in addition to offering some nominal revenue share with the reserves.

The cost of directly running of stablecoin issuing business far exceeds what we could do on our own as a donor funded organization so we leverage Brale to serve as issuer and maintain the regulatory and compliance functions and scrutiny while we focus on growing market cap so that we can make substantial contributions to ending extreme poverty.

The more we grow, the more regulatory scrutiny Brale will be subject to and therefore, they get compensated for the risk they’re taking.

  • Are you a part of GiveDirectly?

No, we’re not under the GiveDirectly organizational umbrella but are affiliated with them by way of a Memorandum of Understanding where GiveDirectly has granted us license to state that GiveDirectly is the beneficiary of our reserve earnings provided that we actually distribute our earnings from the reserve once it starts coming in. At that point, we’ll formalize our relationship through a Commercial Co-Venture Agreement or Cause Marketing Relationship. USDGLO only became available to the public via Uniswap in August and so far has accumulated a $1.4M market cap.

Eligibility Criteria:

  • Do you have a commitment to open-source (i.e. every open-source license accepted by the Open-Source Initiative) technology and sharing results publicly?
  • Have you provided transparency about how exactly funding will be used?
  • Are you advancing values of freedom and privacy (no surveillance and handling of personal data)?
  • Are you supporting decentralization in various fields (for example building Web3 projects)?
  • Have you provided social media channels to the extent that we can confirm social proof of your project?
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Really appreciate the thorough post here @Marcia_GloDollar !! I have some questions about the future I was hoping you could help with:

While the project’s mission is noble, adoption is key for its success. How does Glo Dollar plan to encourage widespread adoption, especially given the dominance of established stablecoins like USDC and USDT?

Given the evolving regulatory landscape for stablecoins, how does Glo Dollar anticipate and prepare for potential regulatory challenges, especially in different jurisdictions?

How often will the reserves backing Glo Dollar be audited, and will these audit reports be made publicly available to ensure transparency?

Can you provide testimonials or endorsements from notable figures or organizations in the crypto or philanthropic space?

How does Glo Dollar plan to maintain and enhance its social credibility, especially as it scales?

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Great questions! Responses in-line below:

While the project’s mission is noble, adoption is key for its success. How does Glo Dollar plan to encourage widespread adoption, especially given the dominance of established stablecoins like USDC and USDT?

There’s going to be a proliferation of stablecoins in the near future all with different purposes but the one distinguishing factor is that ours is the only set up for a charitable purpose. We designed our organization to not be profit incentivized and therefore are less institutionally inclined to support risk-taking for higher returns with the assets in the reserves. By contractually engaging with Brale as issuer (whom we diligenced carefully before choosing) we have oversight and audit rights. If we find that they are not keeping with our values goals for USDGLO (Stability, Liquid, Available, Trusted, and Secure) they would be in danger of losing the privilege of issuing USDGLO. We have a community, mission and brand to protect.

We recognize that USDGLO has to be ubiquitous to succeed, so in addition to to being available on Uniswap with USDGLO<>USDC, USDGLO<>cUSD, USDGLO<>Celo, USDGLO<>$G trading pairs, we’ve also been working with builders to ensure USDGLO is prominently featured on their platforms and/or used as a means of payment in their day to day operations.

Integrating with existing organizations’ workflows takes work, so we are focused on the ones that have demonstrated through our interactions that they have and will through, because they are the most enthusiastic about our mission and dedicated to increasing USDGLO’s reach and utility.

Baseline support is just featuring USDGLO alongside other stablecoins on their platform. Wallets, trading platforms, etc…. Examples of success in this below:

We also recognize that for USDGLO to gain widespread adoption, we need to have more than just our charitable mission as the compelling argument to buy and use USDGLO. With that in mind, we’re seeking organizations that are open to providing preferred pricing for USDGLO transactions.

We have had some promising early successes, and we’re currently working on formal partnerships and announcements. These organizations have agreed to price USDGLO at a discount relative to other stablecoins, which provides an incentive for stablecoin holders to switch and adopt USDGLO. We hope to be able to name these groups ASAP, once the arrangements are formalized, but for example, we’re talking about:

  • An established institutional OTC desk that will provide a 25% discount on all USDGLO transactions
  • A financial services company whose primary client base is non-incorporated DAOs. This company provides them with tradfi payment rails for payments, meaning that DAOs can seamlessly execute USD, EUR, GBP, CHF and SGD payments using stablecoin holdings in their non-custodial wallets (such as safe). USDGLO transactions will be priced at a 20% discount vs. USDC, DAI and USDT transactions.
  • A law firm that primarily serves the crypto community providing a 5% discount on invoices if paid in USDGLO.
  • A top smart contract security audit firm that will provide a 2% on services rendered if paid in USDGLO.
  • An organization that provides provides on/off ramping from crypto to airtime credit and vice versa in close to a dozen countries in Africa to price USDGLO transactions at a discount to cUSD, USDC, and USDT

We’re doing cold outbounds and networking like crazy to find champions within larger organizations who think that USDGLO helps their companies fulfill their ESG mandates, or who are simply passionate about eradicating poverty. The pitch otherwise is simple: “if you provide discounts on USDGLO transactions for a period of 6 months, we’ll promote your platform in our community and network. If we don’t end up generating a lot of volume, then you haven’t lost out on much revenue. If we do end up driving traffic to your platform, then you’ll definitely want to keep this going.” Most can easily commit to 6 months of discounts to try this out. Most are already pitching potential clients about the savings & impact they would have by transacting with USDGLO on their platform.

In sum, we’re making USDGLO as ubiquitous as possible while creating economic incentives to hold and use USDGLO. As more organizations adopt USDGLO, more organizations and people will become accustomed to it as a means of payment.

This is time-consuming because we are diligencing the organizations before we can get behind promoting them, but we are in this for the long game.

Given the evolving regulatory landscape for stablecoins, how does Glo Dollar anticipate and prepare for potential regulatory challenges, especially in different jurisdictions?

We’re extremely proud to have USDGLO issued in the United States. It wasn’t easy and, as a donor-funded organization, we couldn’t justify raising money for the 1 to 2 year pursuit of obtaining Money Transmitter Licenses (MTLs) in all 50 states nor the overhead that would have been required to manage the ongoing relationships and compliance with the patchwork of requirements from each state.

USDGLO’s issuer, Brale, has followed the same playbook Circle did to issue USDC in terms of applying for state specific Money Transmitter Licenses and complying with each such state’s requirements. Brale has been successful at this in this current environment that I would describe as broken.

Fortunately, most of the legislation being considered in Congress for Stablecoins specifically will ultimately make it easier for companies like Brale because much of the current regulatory uncertainty would be resolved. Under certain proposed legislation, stablecoin issuers would be subject to the oversight of a single regulator and the exact requirements would be clearly outlined. This would offer better protections for consumers and put the United States in a position to set baseline standards for how USD backed stablecoins issuers operate, manage their reserves, and are examined.

I write about this here on LinkedIn here. Stablecoins issued offshore are generally subject to less regulator scrutiny than those issued in the United States (with the possible exception of Singapore and potentially Europe with MiCA moving through).

How often will the reserves backing Glo Dollar be audited, and will these audit reports be made publicly available to ensure transparency?

You can view Brale’s assertion of the USDGLO reserve holdings on this page, which also includes the breakdown of how the holdings are split between cash & cash equivalents and short term US Treasuries. Since the FTX collapse, many CPA firms have gotten cold feet about working with crypto companies, across the industry there have been unexpected challenges in finding reputable firms to audit the reserves. However, Brale is in the process of finalizing an engagement with a third party Certified Public Accountant (CPA) to perform monthly attestations. We expect that engagement to be finalized soon with attestations published by year end. The CPA firm will validate that assets equal to or greater than the issued amount of USDGLO are held in reserve, meaning they will confirm that for every 1 USDGLO in circulation, there is at least $1 of assets in reserve. These attestations will be published monthly and will include a breakdown of the reserve, meaning you can transparently expect to see $X in USD cash and cash equivalents and $Y in direct holdings of US government-backed debt such that the sum of these holdings is equal to or greater than the total amount of USDGLO.

Can you provide testimonials or endorsements from notable figures or organizations in the crypto or philanthropic space?

We’ve been fortunate to receive public support from a number of leaders in web3 broadly ReFi specifically. Those folks include Nevin Freeman, Kevin Owocki, Santi Siri, John Ellison and Griff Green. We have also received public support – beyond and distinct from the Sijbrandij Foundation’s initial donation – from Sid Sijbrandij, Founder and CEO of GitLab.

Beyond that, many organizations have opted to hold USDGLO as operating funds or as part of their treasury as a show of support… See examples below:

How does Glo Dollar plan to maintain and enhance its social credibility, especially as it scales?

Our mission is zero extreme poverty. We will maintain laser focus on this mission and it’s what motivates us to try to grow Glo Dollar’s market cap as much as possible. As Glo Dollar scales up, we aim to publish high-quality, actionable research on different anti-poverty strategies, as well as demonstrate how much impact Glo Dollar has had overall. We are big believers in cash transfers generally and GiveDirectly specifically, and we think that embedded philanthropy is perhaps the most promising way to radically scale up the funding available to such programs. So long as we stay focused on that mission,we think that credibility will follow naturally from our ability to generate life-changing cash transfers to people in extreme poverty.

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Got feedback from someone about being more supportive of Glo Dollar if our revenues would be used to fund public goods within the crypto/ethereum ecosystem rather than GiveDirectly and wanted to share our response to the wider community for visibility:

  1. Basic cash transfers have immediate utility for the recipients and provide for their basic necessities. More money going towards lifting people out of extreme poverty paves the way for them to have more time and resources for learning about and participating in Web3. The road to Web3 adoption does start with basic economic empowerment. If people don’t have their basic needs met or access to the internet they won’t be able to participate in the ecosystem we’re collectively building.

  2. GiveDirectly is an extremely well vetted organization who have delivered over $700 million in cash directly into the hands of over 1.5 million people already. But there’s more:

  • GiveDirectly receives top scores from charity evaluators.

  • 90% of the donations delivered to those in need, after costs (more here).

  • GiveDirectly is exceptionally transparent about finances and impact.

    We believe that the effectiveness, demonstrated by historical performance, of the distributing program—and making sure that as much money as possible is going toward the people living in the worst kinds of poverty—outweighs the factor of whether or not these donations are made on-chain.

  • If the Glo Foundation has more impact and proof that its model is working (and is lifting people out of extreme poverty), it will in turn lead to more people swapping their US dollars or other stablecoin holdings for Glo Dollars.

  1. We care about on-chain activity and adoption. As an organization, we want to focus as much as possible on adoption. If we would be creating distribution mechanisms on-chain, it would mean that we need to focus some of our efforts there, and cannot 100% focus on the growth of Glo Dollar’s market cap. That’s why we’ve chosen to fully outsource the distribution aspect and donate everything to GiveDirectly, so that we can continue onboarding new people into crypto.

  2. Lastly, I believe that using an on-chain model like Glo Dollars, and using it to create real-world impact, can be the gateway for non-crypto people into crypto.

    Decentralization, instant settlement and permissionless are too abstract sounding for non-crypto folk. So they need to see a crypto result that’s simple, concrete & undeniably positive. And lifting hundreds of thousands of people out of extreme poverty by funding basic incomes could be that result.