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- Time & Date: 18:00 UTC November 15, 2021.
- Place: xDai < > Gnosis AMA Channel in xDai Discord. Discord invite link
- AMA on YouTube
Representatives from xDai (Igor Barinov) and Gnosis (Stefan George) answered questions about the proposed merger. Questions were also collected throughout the past week and some are listed below. Questions below the AMA video give some additional context and see responses to popular questions that may not have been raised during the call.
Questions from the Community
We include some questions and answers here from the initial form sent out to the community. Some questions were redundant and not included, or edited for clarity. We will update with the recording and other relevant questions after the AMA.
1. What motivated the developers to propose this?
Both teams have worked together for some time, and looking ahead there are some big changes coming to Ethereum and associated scaling solutions. To come from a position of strength, it makes sense to combine forces and consolidate resources when two conditions are met:
- The teams share the same values in building technically excellent products in the spirit of open innovation. Both Gnosis and xDai are committed to fostering network effects without locking users in. Both Gnosis and xDai champion self-sovereign network participants.
- The technology stacks being developed by both teams compliment each other and together provide a comprehensive scaling solution for users.
2. Are the holdings of the developers in GNO and STAKE made public?
The initial STAKE distribution for the xDai team and investors is available here. These tokens have mostly been distributed and team holdings besides the distributions remaining to the ecosystem fund have been dispersed.
A partnership announced between the teams last year resulted a Gnosis investment in xDai for 250K STAKE.
Beyond these distributions STAKE tokens are held by the greater community and all trades are transparent on BlockScout & Etherscan. The following includes contracts holding STAKE as well as EOAs.
3. While Gnosis is planning to split the governance power of GNO into COW and SAFE for their other products, do you think it is reasonable to proceed with the merger based on the current value of GNO (which actually includes the governance value of their products that will likely have a separate governance token)? Why not wait for their token splits from GNO?
Gnosis holders will benefit significantly from the launch of the COW and SAFE tokens, both directly via an airdrop and a much coveted investment opportunity into the projects. The value of GNO is additionally backed by 700M in crypto assets (excluding GNO) that are in the process of being move to the DAO (and under the direct control of the GNO token holders)
Related: Assuming GNO stops having flagship products such as Safe and Cowswap under its control why should the current value of GNO be relevant at the time of the merge when it is currently still bundling the governance control of these products?
- GNO holders will benefit directly from the token launches of the spin-off projects.
- GNO holders control a very significant treasury (USD 700M in ETH and other tokens, excluding GNO).
4. What changes will be made to the GNO issuance policy and distribution methodology?
400k GNO held by the DAO (currently ~190m USD) will be used to incentivize adoption of Gnosis Chain. The DAO (i.e. all current GNO holders) holds 8m GNO. It is likely that the DAO will decide to burn some of these tokens.
5. How can the merge benefit the xDai community with respect to the STAKE holders?
In the event of a merge, STAKE holders will become GNO holders and retain the ability to voice opinions and steer directions for the chain. STAKE holders will hold 20% of the GNO in circulation at the proposed token merge rate. The idea is that combining forces of these 2 projects will result in a stronger and more complete entity, with the hope that the market would acknowledge this and the Gnosis Chain & GNO would benefit accordingly.
6. How will the chain be secured? If only 1 Gno is req for running a node, the price of Gno needs to have a big upside or the chain can be easy overtaken by others? How will it be decentralized?
There will be many more validators with the beacon chain, along with random validator shuffling to prevent attacks and collusion. This is a good resource to understand how the validator and proposer functionality works and what to expect with the beacon chain (this is for the ETH Beacon chain but methods will work similarly on the mirrored beacon-chain https://ethos.dev/beacon-chain/. The chain has the potential to be much more decentralized as many more regular users around the world can participate with a lower economic barrier to entry. There are some ideas to subsidize hardware to encourage participation.
7. What exactly are the metrics/statistics of some of the 'marketing objectives' / branding strength is Gnosis offering?
These types of metrics will be developed by a newly created team dedicated to marketing and project/application growth. There will be a strong commitment to growing and promoting the chain. Expect marketing initiatives with defined, transparent goals that have not been possible so far with xDai’s limited marketing resources.
8. How would the merge affect the existing projects like xDai Punks, xDai Tigers or even De-Fi Platforms like Agave and 1Hive ?
GnosisDAO will reserve 400k GNO (~$190 million) to develop the Gnosis Chain ecosystem and incentivize usage. GnosisDAO can consider adding liquidity to various DeFi protocols on the xDAI chain to support their adoption, including Agave and 1Hive. Aspiring NFT projects like xDai Punks, xDai Tigers and xDai Bots may consider rebranding to support the Gnosis brand (although xDai will still be the native transactional token, so no changes are required).
Related: What will be the native/gas token of the Gnosis Chain?
The base currency will remain as xDai, with all the benefits of a stable token. Transaction fees will still be paid with xDai. Governance and staking on the beacon chain will use GNO.
9. Seeing as xDai chain has the potential to offer the Ethereum ecosystem as a cheap and fast scalability solution, why is XDAI team going ahead with this merger proposal at a low conversion rate? All our price discovery potential is ahead of us, why is the team and Gnosis setting a 14-day TWAP price right before token price potentially goes exponential?
Unfortunately there is no crystal ball, so it's hard to say if the token price was headed in one direction or another. The community expectations for items like the London HF activation or rebranding initiatives (comparing the effort to the Matic -> Polygon rebrand) were likely not in alignment with the reality of the situation.
- So far, less than 0.20 xDai has been burned with London activated for 3 days. This will increase if chain usage increases, however at this time the amount burned is insignificant and will not result in any tangible results from associated STAKE burn.
- The branding refresh by RaidGuild is nearly finished with the purpose of clearing up confusion among the community and users. There was no planned name change etc. The primary goals include explaining dual token mode, purpose of the STAKE token in the ecosystem, creating new logos which are currently absent, etc.
10. If the xDai community isn't behind this trade will it be forced through by the team and Gnosis? Gnosis holds many hundreds of thousands of STAKE and we know which way they will vote, will they be ruled out of voting on this proposal so that we can see what the xdai community actually wants?
The GnosisDAO holds 250K STAKE, which makes them part of the community. Signaling snapshot vote is used to capture the sentiment of all STAKE holders. We also plan to potentially prepare multiple signaling snapshot votes to capture community sentiment as much as possible.
Technically STAKE holders cannot stop the swap from happening if GnosisDAO decides to create the swap contract. However, going against the xDai community is not in the interest of GnosisDAO.
Currently it is impossible to discern how STAKE holders are feeling about the proposal overall, there is a very vocal group concerned about the conversion rate. How big this group is and what the sentiment is overall amongst STAKE holders will be captured in the snapshot vote.
11. As far as I got it, the validation till SBC will be done as it is now by using Stake in the Validator pools. So the merger will happen when SBC goes live?
The current plan is to merge xDai into the Stake/Gnosis Beacon Chain one week ahead of the ETH mainnet merge. Until then the network will be working as it is working now; secured by POSDAO consensus.
Beacon chain will be launched only with the GNO token so everyone interested to be a validator will need to swap STAKE into GNO once the swap contract is live. The current proposal is that the swap contract will be live for 6 months, however this may be subject to refinement based on tax implications or other concerns. The endpoint/timeline can be changed if there is support and reasoning to extend or shorten the deadline.
12. Who's idea was this - xDai or Gnosis? How much did the Gnosis team pay the xdai team for this? Do they get the same swap value or did they get other monetary compensation as well?
All terms of the proposal are public and published on the Gnosis and xDai forums. xDai team is not receiving any payments or incentives. xDai team members who hold STAKE have the same swap rate as other holders.
xDai team has been looking for investors/partners to support the Eth 2.0 roadmap and accelerate the growth of the chain via new partnerships, marketing, and listings. Gnosis’s investment and partnership can fuel xDai’s expansion by helping the chain grow and optimize its ecosystem and increase its community.
13. Incentive programs using STAKE, like on Agave, have really helped push liquidity to projects and have helped positively increase mindshare for xdai as a whole. Would there be replacement incentive programs to take place for those done with STAKE to now use GNO instead?
There will definitely be some incentives programs from the GNO side, with a much larger infusion of incentives than have occurred previously. Lack of liquidity has been an ongoing issue for DEXs and other projects deploying on xDai, and has led to users fleeing to other chains with higher liquidity. Referencing the current proposal, GnosisDAO will reserve 400k GNO (~$190 million) to develop the Gnosis Chain ecosystem and incentivize usage.
14. Which network in your opinion would benefit the most with the merge? xDai or Gnosis?
Our hope is that both orgs, along with users of the new chain, will benefit. In this alliance based on merged branding and shared tokenomics, marketing will increase, incentives and liquidity will increase, more projects will deploy and greater alignment with the Eth2 ecosystem will be achieved. The xDai team will remain autonomous but have access to more resources, and the Gnosis team will benefit by expanding into a comprehensive & scalable environment.
15. Which unique aspects of the counterparty's chain do you value the most?
xDai: Gnosis safe has been a huge benefit to the blockchain space. So many projects and DAOs use it for multi-sig governance. Looking forward, Circles may prove to be something that goes beyond blockchain to help level the playing field for society with a Universal Basic Income. It’s a huge idea and one that Gnosis is committed to. It’s very exciting and potentially life-changing for many people.
Gnosis: xDai has been committed to building excellent technology that makes Ethereum compatibility scaleable from the get go and is fully aligned with the Gnosis values of fostering network effects without locking users in. Both xDai and Gnosis believe in the power of decentralized technology to empower individuals. However, with the gas price development on Eth1 as it stands, the once very inclusive Ethereum needs compatible layer ones to not price out all users but the biggest whales. To us, xDai is that solution.
16. I would like to know why Gnosis? In addition to providing money, Gnosis has other ways to raise the STAKE ecosystem? Who will be the CEO after the merger? Will the STAKE team stay in the new company? Does the merger affect the original ecosystem projects - for example SUSHI?
In addition to providing money, Gnosis has other ways to raise the STAKE ecosystem?
A new BizDev unit will be established to drive business development and marketing activities of the Gnosis Chain. Such activities will include attracting well-performing and well-known multi-chain protocols to launch on the Gnosis Chain. Gnosis Chain will cover the costs associated with such deployments. A new marketing unit will also be implemented to drive marketing activities of the Gnosis Chain.
Who will be the CEO after the merger? Will the STAKE team stay in the new company?
GnosisDAO (the entity governed by GNO holders that holds Gnosis assets) does not have a CEO. The CEO for Gnosis the company will continue to be Martin. Igor will remain the "CEO" of xDai. Both entities will render services to the Gnosis\DAO.
How do both teams (xDAI and Gnosis) see a successful cooperation in the time after the merger? Will team members be swapped or maybe leave?
There are no organizational changes planned in the xDai core and dev teams. RnD teams in both organizations will remain autonomous. New autonomous units will be created for BizDev and Marketing. All dev talents on the xDai team will be encouraged to stay.
Does the merger affect the original ecological project? For example SUSHI?
GnosisDAO can consider adding liquidity to the various DeFi protocols on the xDAI chain to support their adoption using the 400k GNO (~$190 million) fund reserved for that purpose.
17. How do you imagine attracting new dev talents to the chain?
Gnosis team has a well-defined and successful recruiting process and is committed to help hire new developers for the chain and other associated products. Additional units such as BizDev and Marketing will be established to drive adoption of Gnosis chain including a push to hire top talent.
18. Will you keep the goals (becoming an official ETH testnet with real value in stake) of xDai?
Gnosis Chain will continue xDai’s intent to follow the Ethereum roadmap as closely as possible. Future goals include:
- Offer the highest degree of compatibility between Gnosis Chain and Ethereum
- Set up a Gnosis Beacon Chain (in preparation of a later merge)
- Develop over time a role similar to what Kusama is to Polkadot