[GMD Ecosystem] [FINAL] [STIP - Round 1]

Archive Short Term Incentives Program (STIP) Round 1
1

[GMD Ecosystem] [DRAFT] [STIP - Round 1]

Intended for Community Feedback

SECTION 1: APPLICANT INFORMATION

Applicant Name: GMD Ecosystem
Project Name: GMD Protocol and GND Protocol.
Project Description:

GMD Ecosystem is an ecosystem of protocols focused on providing yield services through vaults and liquidity from Dexes and Perp Dexes on Arbitrum. GMD Protocol, the first project of our ecosystem, has consistently dominated the Delta-Neutral Vaults market on top of GMX on Arbitrum, and GND Protocol stands as a UniswapV3-based liquidity manager, orchestrating trade volume exceeding $150,000,000.

The two protocols are also among leaders on Arbitrum for the real-yield narrative, as GMD and GND Protocol have created and distributed close to 1000 $WETH in real-yield revenue for our users.

Team Members:

Saul Goodman: Tech Lead / Co-Founder (Core Member)

Crimson: Operations Lead / Co-Founder (Core Member)

Betsy Kettlemen: Marketing Lead / Co-Founder (Core Member)

Regex: Senior Developer (Core Member)

Lil’ W1nddd: Front-end Developer

Salted Hashbrown: Back-end and Contract Developer

Yohellosup: UI & Illustrator Designer

Project Links:

Website:
GMD Protocol: https://gmdprotocol.com/
GND Protocol: https://gndprotocol.com/

Twitter:
GMD Protocol: https://twitter.com/GMDprotocol/
GND Protocol: https://twitter.com/GNDProtocol/

Github:

Medium:

GMD Protocol: GMD Protocol – Medium
GND Protocol: GND Protocol – Medium

Contact Information: Crimson

TG: @gmdcrimson

Twitter: @GMD_Crimson

Email: gmdaoproject@gmail.com

Do You Acknowledge That Your Team Will Be Subject to a KYC Requirement?: Yes

SECTION 2: GRANT INFORMATION

Requested Grant Size:

800,000-1,050,000 $ARB

Grant Matching:

Yes, liquidity providers and vault depositors have been and will continue to earn a share from our platforms revenue.

Grant Breakdown:

The entirety of the grant will be allocated to enhance yield, user interaction, and community involvement on Arbitrum through GMD Protocol and GND Protocol

Total Allocation: 800,000-1,050,000 $ARB, including 450,000-600,000 $ARB for GMD Protocol (10m TVL) and 350,000-450,000 $ARB for GND Protocol (10m TVL). The grants will be used for the following purposes:

GMD (450,000-600,000 $ARB)

  1. 45% for GLP delta-neutral vaults incentives
  • We will use 202,500 - 270,000 $ARB to incentivize our GLP-based vaults by subsidizing the yields with $ARB for users who provide our vaults with USDC, USDT, BTC, and ETH assets.
  1. 55% for GMX V2 delta-neutral vaults incentives
  • We will use 247,500 - 330,000 $ARB to incentivize upcoming GMX V2 delta-neutral vaults by subsidizing the yields with $ARB for users who deposit into our vaults with USDC, BTC, ETH, ARB, and more assets.

GND (350-450,000 $ARB)

  1. Incentivizing Liquidity on GND Liquidity Farms
  • We allocate 100% of the grant funds to incentivize UniswapV3 liquidity with $ARB, in addition to current $GND and $xGND. This aims to maintain GND’s role as a strong provider to our partners’ UniswapV3 liquidity, simultaneously benefiting Arbitrum users.
  • Expected Outcomes: significantly increase efficiency in these pools, fostering deeper liquidity, higher trading volumes.
Funding Address:

0x73EaD57A47DcFecd87F15C8438b9eAbFDcCf5C5b

Funding Address Characteristics:

This is GMD Treasury Wallet, a 2 of 4 Gnosis Safe Wallet with each key held by a core team member

Contract Address:

0x73EaD57A47DcFecd87F15C8438b9eAbFDcCf5C5b

SECTION 3: GRANT OBJECTIVES AND EXECUTION

Objectives:

The principal aim of this grant is to empower the fortification of the position of the GMD Ecosystem and help enhance the attractiveness and competitiveness of Arbitrum across the DeFi space. focusing primarily on the following strategic objectives:

  • Significantly Increase Total Value Locked (TVL)
  • Expand User Base
  • Elevate User Interaction and Engagement on Arbitrum
  • Increase Trading Volume on Arbitrum
GMD Objectives: Strengthening Existing GLP Liquidity, Expanding to Deepen liquidity for GMX V2 Vaults
  1. GLP delta-neutral vaults incentives (45% of 450-600k $ARB)
  • We will use $ARB to incentivize our GLP-based vaults for users who provide our vaults with USDC, USDT, BTC, and ETH assets. This is to subsidize and further build on the underlying revenue-generating GLP assets of GMD Protocol.
  • The GLP Delta-neutral Vaults have been one of our core products throughout our entire existence and have always been able to attract a large amount of sticky liquidity. Even with the growing popularity of GMX V2, the demands of GLP for providing seamless large-volume trades would remain persistent
  • As such, the stability and enduring presence of GLP in the ecosystem make it a reliable choice for incentives, ensuring sustained relevance and continuous contribution to the ecosystem’s growth.
  • The inherent sticky liquidity within GLP vaults suggests that assets, once deposited, are likely to remain, providing a constant and stable source of liquidity, crucial for the stability and growth of GMD Protocol and the entire ecosystem.
  1. GMX V2 delta-neutral vaults incentives (55% of 450-600k $ARB)
  • GMX V2 is experiencing substantial growth, and the allocation of incentives can further accelerate this, providing an impetus for more users and liquidity to flow into the ecosystem.
  • Our GMX V2 delta-neutral vaults are in development phase (learn more through this Medium article) and is expected to be ready around early October
  • The vaults in GMX V2 are generating significant APR, acting as a magnet for liquidity providers and investors seeking optimum yield on their assets, thus enriching the user base of GMD, GMX, and Arbitrum as a whole
  • As we have seen with GLP vaults, we believe GMX V2 vaults will also attract very sticky liquidity, and the entirety of the grants will be to bootstrap and welcome said liquidity to deposits into our vaults, as high liquidity is pivotal for reducing slippage and improving transaction efficiency, enhancing the overall user experience.
GND Objectives: Fostering Sustainability and Resilience, Deepening UniV3 Trading Liquidity for Arbitrum, Solving Inefficiencies.

The GND protocol was launched at the end of April with the main goal to leverage Uniswap v3 LPs to create capital-efficient systems. In just four months, we’ve achieved remarkable milestones, like:

  • Amassing over $1.5 million in revenue in 4 months
  • Aligning different incentive programs to push locking of liquid token. Our supply decrease by 30% since genesis.
  • TVL consistently exceeding 10 million.

However, we’ve encountered some challenges along the way, including a decrease in Crypto and DeFi Volume, and challenges with LP ranges. As we transition to GNDv2, it represents a quantum leap from its predecessor.

GNDv2 Features:

  • Streamlined Emission Management: Removing xGND voting for pools streamlines the process of adjusting incentives, enhancing efficiency for LPs with higher fees.
  • Dynamic Emission Adjustment: GNDv2 adapts emissions to market conditions, reducing inflation during low-volume periods and attracting more liquidity when activity increases.
  • Partnership Expansion: Partnering with platforms like Kyberswap diversified revenue streams and leverages their incentive programs to generate higher revenue.
  • Resumed Buybacks: Ensuring project sustainability with buybacks during revenue declines, benefiting xGND takers as activity and volume recover.

With the basis for GNDv2 set and already being executed, the $ARB we apply for will go towards liquidity incentives to amplify the liquidity pools on GND Farm. We are targeting an increase of $10 million in actively used UniswapV3 liquidity.

Key Performance Indicators (KPIs):

Overall grant usage for KPI milestones

image
image700×334 19.9 KB

For GMD:

GLP Vaults Liquidity Growth KPIs:

  • Objective: Maintain and increase high volume of liquidity, and avoid cannibalism from V2 Vaults.

  • KPI: Maintain total GLP vaults TVL from 7-15 million

GMX V2 Vaults Liquidity Growth KPIs:

  • Objective: Bootstrap large liquidity for GMX V2 Vaults

  • KPI: Bootstrap 2.5+ million worth of TVL for various GM token assets

For GND:

Liquidity Growth KPIs:

  • Objective: Increase UniV3 in liquidity on GND Farm.

  • KPI: Achieve a $12.5+ million liquidity increase through ARB incentivization in liquidity over 4.5 months.

Sustainability KPIs:

  • Objective: Ensure the sustainability of GNDv2 Farm in the Ecosystem.

  • KPI: Maintain GND’s sustainability by effectively capturing market volume and mitigating the impact of low crypto market volumes on liquidity and TVL.

How will receiving a grant enable you to foster growth or innovation within the Arbitrum ecosystem?:
For GMD:
  1. Enhancement of Yield and Liquidity:
  • Optimized Yield Opportunities: The grant will enable GMD to develop and offer more optimized and diverse yield-generating opportunities, attracting a broader user base and encouraging more deposits into the protocol. This will, in turn, create a cycle of sustainable value creation and distribution within the ecosystem.
  • Ecosystem Synergy: Increased yield and liquidity will foster symbiotic relationships with other protocols and services within Arbitrum, enhancing interoperability and collaborative innovations, and contributing to a more cohesive and robust liquidity landscape within Arbitrum
  1. Attraction of Stable and Long-term Liquidity:
  • Sticky Liquidity Provision: The grant will empower GMD to create attractive and competitive liquidity pools, drawing in ‘sticky’ liquidity – long-term, stable funds from investors and users who are committed to the vaults for sustainable yield.
  • Enhanced User Confidence: Attracting stable liquidity will reinforce user confidence and trust in the protocol, creating a reliable and secure platform for users to interact with. This strengthened reliability can encourage more prolonged and substantial engagement from users not just for GMD but for Arbitrum collectively
  • Sustainable Growth Foundation: The infusion of stable and consistent liquidity will lay down a solid foundation for sustainable growth and expansion of GMD within Arbitrum. It will enable the continual refinement and introduction of innovative solutions and services, fostering an evolving and adaptive ecosystem that caters to diverse users trading and yield services needs.
For GND:
  1. Liquidity Provision:

  • GND Protocol has a backstage role in hosting large Uniswap V3 liquidity and volume. Here’s a snapshot of GND’s liquidity contribution to Arbitrum’s most influential protocols:

    800×500 144 KB

    At an average of 1% fee, GND’s $1,500,000 in revenue means we have hosted an est. $150,000,000 in volume.

  • As most DeFi users use Uniswap as their go-to dex, we’re able to directly influencing the trading experience for most Arbitrum participants.

  • The distribution of $ARB, in the case that our proposal goes through, will form a system where value is transferred between users and LPs. The transition between various user bases:

  1. LPs will earn $ARB incentives for their participation.
  2. LPs will recoup fees through staking xGND.
  3. The value will be transferred to Arbitrum users, the majority of whom use UniswapV3.
  • In light of the challenging times marked by low DeFi TVL and yields, there’s a concerning reverse flywheel effect where users are increasingly unstaking their LPs, making liquidity thinner for swappers. The Arb grant becomes a beacon of hope in these trying times, injecting much-needed vitality into the ecosystem. GND’s continued commitment and strategic allocation of resources will play a pivotal role in reversing this trend and revitalizing liquidity on Arbitrum, ensuring a more vibrant and sustainable DeFi landscape for all participants.
Justification for the size of the grant:

Currently, GMD Ecosystem projects, including GMD and GND Protocol, collectively boast a total of over 21 million in TVL and we have just surpassed one year since our initial deployment on Arbitrum.

Other than TVL metrics, we also have a strong dedication towards Real-Yield generation, which would in turn create positive-sum yields for our users and the Arbitrum ecosystem. Over the course of GMD and GND existence, we have distributed close to 1000 $WETH in revenue generated from our yield products and services:

  • For GMD: we distributed more than 317 $WETH in real-yield revenue for our stakers
  • For GND: we distributed more than 640 $WETH in real-yield revenue for our stakers
Execution Strategy:

For GMD:

  • GLP and GMX V2 Vault Incentivization:
    • We will build out a contract on top of the underlying delta-neutral vaults that will enable $ARB emissions for users who deposit their assets into the vaults. The $ARB emissions will have stable and attractive APR to last through the end of the incentives period

For GND:

  • Incentivizing Liquidity
    • In a situation-dependent but diligent approach, we allocate Arbitrum (Arb) to the pool generating the highest fees, thus optimizing incentives for fee generation.
      Incentives will exclusively be assigned to markets that satisfy the following criteria:
    • Utilization of dependable price oracles.
Grant Timeline:

Our plan for both GMD and GND Protocol is to distribute the incentives linearly over a 3.5 months period, starting October 15, 2023 and ending January 31, 2024.

Do you accept the funding of your grant streamed linearly for the duration of your grant proposal, and that the multisig holds the power to halt your stream? Yes
SECTION 4: PROTOCOL DETAILS
Is the Protocol Native to Arbitrum? Yes
On what other networks is the protocol deployed? Avalanche, Base
What date did you deploy on Arbitrum?

GMD Protocol products and services have been present on Arbitrum since September 2022. GND Protocol products and services have been present on Arbitrum since February 2023.

Protocol Performance and Roadmap:

For GMD:

Throughout our past year of existence, GMD Protocol has been one of the leaders in the Arbitrum ecosystem, showcasing a relentless commitment to innovation and user-centric services. As the dominant player in the delta-neutral vaults market on Arbitrum, we have also shown an extreme focus on sustainable Real-Yield generation and how well we are able to do so. We have been able to achieve the following:

  • Our GLP Vaults, a pivotal component of GMD, has been one of the largest and most efficient vaults services available on Arbitrum. The vaults service has solidified its position as a leading vault provider on Arbitrum and currently managing ~$10 million in TVL. Our GMX V2 Vaults will expect to vastly increase the existing TVL.
  • GMD also places a strong focus in the real-yield narrative. It has efficiently generated and distributed 320 WETH in real-yield dividends to stakers
  • GMD’s introduction of incubator and launchpad programs has played a crucial role in the development and sustenance of multiple projects, channeling millions in volume into Arbitrum

For GND:

We’ll initiate development 2 weeks before to be ready:

  • Emissions Ratio Switch + Buyback Resumption + Temporary LPs reconstruct: September 24-25. (Completed)

  • zGND Conclusion: September 27. (Completed)

  • Arbitrum Incentivizes + Removing Voting: A new farm contract will be deployed in early October, and LPs will gradually transition from the old contract to the new one over the following weeks. The old farming contract will remain active until most LPs have migrated.

  • Bonds: Late October

Audit History:

GMD Protocol Ecosystem Projects have been audited multiple times by trusted services.

GMD:
Audit 1: GMDAO Vault Smart Contract Audit by SourceHat (formerly Solidity Finance)
Audit 2: https://github.com/pashov/audits/blob/master/solo/GMD-security-review.md

GND:
Audit 1: GND Smart Contract Audit by SourceHat (formerly Solidity Finance)
Audit 2: gETH.md ¡ GitHub

SECTION 5: Data and Reporting

Is your team prepared to create Dune Dashboards according to program requirements for your incentive program?

Yes, we will have a dedicated team engaged to develop a Dune Dashboard or a similar dashboard on our own platform that conveys equivalent information.

Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread?

Certainly! We are committed to providing bi-weekly program updates on the Arbitrum Forum thread. Our initial strategy will be to utilize Dune Dashboard to convey the most precise and accurate real-time pieces of information, ensuring transparency and clarity for all stakeholders involved.

Does your team acknowledge that failure to comply with any of the above requests can result in the halting of the program’s funding stream?:

Yes

3 Likes
2

Hello @gmdprotocol thank you for your application! Your submission meets all requirements to be considered for a snapshot vote.

2 Likes
3

Reserved for comments for GMD and GND Protocol

4

There are admittedly some hiccups here and there with GMD, I think the protocols are still one of the most solid on Arbitrum.

2 Likes
6

Sorry but most of this proposal is revolved around giving rewards to GMD and GND holders… this should not be acceptable as part of these grants.

This means that over 400,000 ARB is going to GND/GMD token holders and NOT the ecosystem. This does not generate value for the DAO.

  1. esGMD conversion incentives (100,000 $ARB)
  2. Stakers revenue incentives (80,000 $ARB)
  3. 30%: Incentivizing locking of xGND & GNDv2 upgrade (225,000 $ARB)

These applications should be about bringing in new users and growing the ecosystem, therefore incentivising your own token should not be allowed, regardless of it is GMD or anyone else.

6 Likes
7

Hi, thank you so much for the feedback.

We do share your belief that the grant money should be towards bringing in new users and growing the ecosystem. As an answer to your inquiry, we agree that we need to adjust the Stakers Revenue Incentives.

On the other hand, however, the esGMD conversion incentives and the Incentivizing locking of xGND & GNDv2 upgrade actually would bring about significant new users not just for GMD and GND, but for the Arbitrum ecosystem as a whole. We hold this belief because we have tested out these incentivizations:

  • GMD has done 2 airdrops with our previous ARB incentives, round 1 yielded more than 15,000 $GMD locked into $esGMD, and round 2 (which has just concluded https://x.com/GMDprotocol/status/1706473664080994651?s=20) yielded 6,000 $GMD locked into $esGMD. Bear in mind, most of these lockers are new users, and their liquidity will become extremely sticky.
  • GND has tested out the same model with cashback of 5-15% for those who lock from $GND into $xGND, and has also yielded significant new users and sticky liquidity into GND Protocol

Even with history of proven performance on these, we will also want to make you, and more importantly the DAO, assured, we will put an APR Cap on these conversion incentives, and if we do not meet the intended amount of new liquidity locked into both of our Protocols, we will return the $ARB that has not been efficiently used.

2 Likes
8

Full support for this grant. GMD as a native team and the building on top of other protocols narrative can def help the chain

3 Likes
9

I believe GMD’s request is quite fair. GMD’s strategy appears to hold great potential for increasing total value locked (TVL) and user engagement in various activities.

4 Likes
10

in my own experience, i must say that, if i didn’t know about GMD, i wouldn’t have used Arbitrum as much as i’m doing right now. I was already using Arb before discovering GMD in December 2022, but just a little bit (most of my activity was on GMX), and my activity was declining; After, i got more involved in the Arb ecosystem and almost totally left Mainnet to migrate 95% of my funds on Arb, and, just in the GMD ecosystem, i have more than 100k $ “invested”, plus through their apps i got more involved in other protocols and mechanisms that i wouldn’t have known, or cared to know, before. And frankly, without this experience, i would have kept rolling on Mainnet for the majority of my activity.
But i understand what you mean, my comment is just to give my perspective as a relatively “new user” at the time, that stayed on Arb because of them.

2 Likes
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I share the previous concern about direct token incentives, though I greatly appreciate your provision of test data.

May I ask what method was used to identify the majority of these lockers as new users? I hope that there is not an assumption that all new wallets are new users, and that checks were at least made to exclude cases where there was a matched flow of capital out of the protocol (as might represent existing liquidity making a circular move to take advantage of a newly offered incentive).

3 Likes
12

Hello. Thank you very much for the response!

We are aware that new wallets do not necessarily mean new users and your prescribed method is one of the ideal ways to get true new users. However, most of our most thorough coding experiences are being used to build out our MUX and GMX V2 vaults. We do apologize that we have not gone this far to acquire these numbers.

However, our method was not without careful consideration. We detected the new wallets who buy and lock these GMD into $esGMD and very conservatively predicted and assumed around 65-75% of these new wallets were new users

1 Like
13

After valuable feedback from the community, we have made the following key changes to our proposal:

For GMD:

  • We have reduced the total ask from a firm 750,000 $ARB to a range from 450,000 to 600,000 $ARB based on the successful completions of our KPI

  • We decided to funnel 100% the allocation into incentivizations for our existing GLP and upcoming GMX V2 vault, thus reducing the incentives for locking from GMD to esGMD.

For GND:

  • We have also reduced the total ask from a firm 750,000 $ARB to a range from 450,000 to 600,000 $ARB based on the successful completions of our KPI

Within this revised funding range

  • 90% of the allocation will be dedicated to incentivizing UniswapV3 liquidity providers on the GNDv2 Farm.
  • 10% will bootstrap the GNDv2 Sustainable model, which operates at 100% efficiency and with minimized emissions during periods of low volume. We ensure that with this small portion of the funds, we can significantly contribute to the protocol’s long-term sustainability, ensuring its liquidity support for UniswapV3 in the Arbitrum Ecosystem.
2 Likes
15

These are great modifications that address some “fears” that have been expressed by some members (even tho i didn’t feel the same way)

2 Likes
16

Hello @gmdprotocol ,

Now that your application has been marked eligible, please be advised of the remaining steps in the application process to be completed prior to the Review Period Deadline:

Please complete the following steps required for your application to proceed to Snapshot:

To change your proposal to final, please tag an Arbitrum Foundation Forum Moderator (@ stonecoldpat @ cliffton.eth @ eli_defi) by the Review Period deadline to notify them of your proposal’s readiness to proceed from [Draft] to [Final] status.

Once notified, the Arbitrum Foundation Forum Moderator will adjust your title from [Draft] to [Final] status. Once marked as [FInal], your application post will be locked by moderators and you will no longer be able to edit your proposal.

3 Likes
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Firstly, thank you for submitting your detailed proposal and for your enthusiasm about the Arbitrum ecosystem.

Introduction and Rationale

GMD are seeking a grant of between 900,000 and 1,200,000 ARB for the GMD and GND Protocols. These protocols, focused on yield services and liquidity management, have shown promise despite recent declines in TVL. GMD Protocol has notably dominated the Delta-Neutral Vaults market on GMX, while GND has orchestrated substantial trade volumes. They’ve offered a comprehensive proposal, detailing incentives that could fuel growth. However, we believe that a more focused approach might yield better results.

Major Concerns

Concern Regarding Grant Allocation

  • It’s unclear what percentage of the grant will incentivize xGND locking and the GNDv2 upgrade.
  • Using the grant for the GNDv2 upgrade would make allocation opaque.
  • In general, we disagree with using the grant to incentivize your own token.
  • Our recommendation for change: Please clarify the distribution of funds and consider avoiding the use of grant funds for your own token incentives.

Minor Concerns

  • The amount of ARB requested seems disproportionate to the current TVL, especially given recent declines.
  • We would prefer to see a more focused allocation of incentives towards yield sources that have demonstrated a good product-market fit.
  • Our recommendation for change: Consider reducing the grant request and focusing on proven yield sources to maximize the impact of the grant.

Summary

Castle Capital appreciates the initiatives put forth by GMD and GND Protocols, and the innovation they bring to Arbitrum’s financial ecosystem. However, in its current form, we cannot fully support the proposal moving forward.

Namely, we recommend refining the proposal in terms of grant allocation and reducing the size of the grant request. This would align it more closely with what we see as its potential for positive impact.

We hope our feedback is constructive and contributes to the future success of your protocols in the Arbitrum ecosystem. Thank you for your attention and continued commitment to making Arbitrum a better place for all.

2 Likes
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Hey @gmdprotocol , a pleasure to greet

What is the exact event that causes your grant to go from 450K to 600K ARB?

would you specify this? the sum of the items does not seem to give 90%

I also can’t find any indications regarding how much $GND, and $xGND will accompany the grant.

1 Like
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Thank you for taking the time to share your thoughts on our proposal.

Aligning token incentives is fundamental to the long-term sustainability of any protocol. Over the past 11 months of operating GMD and 6 months of GND, we have been dedicated to this principle, and it has guided our decision-making process.

In light of your comments and to further align the KPIs of the incentive program, we do think it makes sense. As such, we have decided to warrant the request to reduce the ask and to remove incentives to lock GNDv2 and any incentives for xGND to make this proposal better for the Arbitrum Ecosystem as a whole.
We will explore alternative incentivization methods to promote a sustainable tokenomics model that will contribute to the overall sustainability of our protocol.

2 Likes
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Hi, sorry for the mistake. We have now fixed it so it makes more sense.

Please also check our KPI section, we have included a graph to detail the milestone we must reach based on a 12-week timeline to determine the amount we use for both GMD and GND

1 Like
21

you must indicate a certain fact; “if we feel we are not successfully reaching the KPI” is too subjective, as well as ambiguous

tell me the answer here please

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22

$GND and $xGND are existing rewards emissions from our existing tokenomics and business model. We are simply stating that these rewards emissions will continue even with a grant incoming.

We also agree that “if we feel we are not successfully reaching the KPI” is too subjective, as well as ambiguous. That is why, per our last reply, we have indicated to you that we attached a table in the KPI section that points out specific KPI points to reach.

1 Like