Introducing the Goldfinch Protocol token, GFI
The Goldfinch Protocol token, GFI, is now live! This marks a major milestone for the community and brings us a big step closer towards our mission of expanding financial inclusion with a decentralized credit protocol.
- The token has been deployed to Ethereum at 0xdab396ccf3d84cf2d07c4454e10c8a6f5b008d2b
- The protocol is now governed by the community via the Goldfinch Council and the community can actively participate in governance at gov.goldfinch.finance
- Tokens have been allocated to over 13K participants in the protocol, including retroactive distributions for Liquidity Providers in the Senior Pool and Flight Academy participants
- GFI tokens are claimable at app.goldfinch.finance/gfi
- Ongoing Senior Pool liquidity mining is now live
As we’ve shared from the outset, Goldfinch is focused on the crucial missing piece in DeFi of loans without collateral. The vast majority of borrowers in the world can’t actually borrow on DeFi today because it requires overcollateralization with crypto. By removing that collateral, the Goldfinch protocol can unlock an entirely new level of borrower capacity. This is what will finally allow crypto to break out into global debt markets.
We’re already seeing the beginnings of this. Active loans on the protocol doubled every two months in 2021, up 154X from $250K a year ago to now $39M that is financing 200K+ borrowers across 18 countries. This capital is being used for a wide range of productive uses from motorcycle taxis in Kenya, to small businesses in Brazil, to eco-friendly cookstoves for low-income households in India — just to name a few.
All of this growth is thanks to the incredible Goldfinch community. To date, 35K+ people have completed KYC and 5K+ people are actively participating as Liquidity Providers and Backers through the protocol. Plus, the Goldfinch Discord has quickly grown to a lively community of 45K+ people from all over the world.
And Goldfinch is just getting started. The functionality that GFI enables will help scale the protocol to a new stage as we continue building it together.
Introducing the GFI Token
As described in the whitepaper, the GFI token is a core component of the protocol that is used for many functions. They include:
- Community Governance: GFI holders participate in governance to decide on the direction of the protocol. This is now live at gov.goldfinch.finance. Community votes will guide the decisions of the Goldfinch Council, described in more detail below.
- Backer Staking: Backers can stake their GFI tokens on particular Backers in order to signal consensus ahead of time when those Backers participate in borrower pools. This GFI also serves as a backstop against potential loan defaults.
- Auditor Votes: Auditor votes are required to grant Borrowers permission to borrow from the protocol. Borrowers pay for these votes with the GFI token.
- Auditor Staking: Auditors stake the GFI token in order to be selected to participate in Auditor Votes.
- Participant Incentives: All participants receive ongoing distributions to incentivize their participation. This includes Liquidity Providers who supply to the Senior Pool, Backers who both supply to Borrower Pools and stake on other Backers, Auditors who stake to participate in votes, and Borrowers who successfully repay their pools.
- Community Grants: The community can decide to provide grants to participants that meaningfully contribute to the Goldfinch protocol and ecosystem.
The GFI token is immediately live for community governance and Senior Pool liquidity mining, and the additional functionalities are expected to go live over the coming months, pending proposals and approvals from the community.
The allocations of GFI should reflect the value of contributors thus far while incentivizing all participants in the community to help grow the protocol. The initial allocation of the total supply of GFI are as follows:
Liquidity Providers (16.2%)
4.2% — Early Liquidity Provider program: These tokens are allocated to the early Liquidity Provider program, which incentivized the very first participants to supply capital to the protocol. These allocations unlock over 6 months beginning today, with a 12-month transfer restriction for U.S. participants.
4.0% — Retroactive Liquidity Provider distribution: These tokens are allocated to all 5,157 liquidity providers as of a Dec 14 snapshot, excluding the Early Liquidity Provider program above. These distributions are only for non-U.S. persons and unlock over a range of 0 to 12 months, depending on the contribution amount and earliest contribution date. This distribution is described in more detail below.
8.0% — Senior Pool liquidity mining: These tokens are allocated to ongoing liquidity mining, beginning immediately. Senior Pool liquidity mining is described in more detail below.
3.0% — Flight Academy: These tokens are allocated to the 10,182 non-U.S. participants in Flight Academy. 2.85% are distributed according to the tiers described in this post, with an unlock schedule ranging from 0 to 24 months. The remaining 0.15% are allocated to future participants.
2.0% — Backer Pool Liquidity Mining: These tokens are allocated for Backers who participate in Borrower pools. Pending community approval, the Backer Pool liquidity mining system will grant tokens to Backers as interest payments are made into Borrower pools. Additionally, there will be retroactive distributions for existing Backers who have already supplied to Borrower pools. This is not yet live, but we expect the community to introduce and vote on a proposal for this in the coming months.
3.0% — Backer Staking: These tokens are allocated for Backers who stake GFI on other Backers, as described in the whitepaper. This is not yet live, but we expect the community to introduce and vote on a proposal for this in the coming months.
3.0% of tokens are set aside for auditors, for any future auditor system launched by the protocol through decentralized community governance. An auditor system is not yet live, but we expect the community to introduce and vote on a proposal for one in the coming months.
3.0% of tokens are set aside for Borrowers, for when and if the community decides to implement a future distribution system for Borrowers.
0.65% is allocated to contributors who have already significantly contributed to the community and protocol, either through a management role in the community Discord, by creating great art or memes, or through contracting agreements with the Foundation. Contributors who participated in Flight Academy will receive Flight Academy rewards as part of this category. These distributions generally follow the same unlock schedule as the Flight Academy distributions.
Community Treasury (14.8%)
14.8% is allocated to the community’s treasury, which the community can decide to use for purposes such as grants to developers and contributors, adjustments to protocol distribution mechanics, and coverage for potential loan defaults.
Early and Future Team (28.4%)
28.4% is allocated to the early Goldfinch team of 25+ employees, advisors, and contractors. Full-time contributors are subject to 4 or 6 year unlock schedules, and part-time contributors are subject to 3-year unlock schedules, all with initial 6-month lock-ups and 12-month transfer restrictions.
Warbler Labs (4.4%)
As shared previously, Warbler Labs has spun out into a separate organization contributing to the Goldfinch community and broader DeFi ecosystem, alongside the rest of the community and contributors. The tokens are subject to a 3-year unlock schedule with an initial 6-month lock-up and 12-month transfer restriction.
Early Supporters (21.6%)
A group of 60+ early supporters invested $37M to help build the protocol. These supporters are all long-term oriented and have 3-year unlock schedules, as well as an initial 6-month lock-up and 12-month transfer restriction.
Total Token Supply
The initial token supply is capped at 114,285,715 tokens. Here is the aggregate liquid supply of these tokens over the next 3 years:
There is currently no inflation, but we expect it will be beneficial for the protocol to incorporate modest inflation after 3 years in order to incentivize future active participants. Ultimately this will be up to the community to discuss and decide.
Retroactive Senior Pool Distributions
4.0% of tokens are distributed to all 5,157 non-U.S. liquidity providers in the senior pool, as of a snapshot taken on Dec 14 (block 13805859). They are allocated in two parts:
- 2.15% are allocated based on the same $98M valuation as the earlier seed round, up to a cap of $750 supplied per person. For example, someone who contributed $500 will receive 114.29M * 500 / 98M = 583 tokens. These distributions are available immediately (no lock-up).
- The remaining 1.85% are allocated proportionally to how much FIDU each person holds as of the snapshot. For participants with less than 9,500 FIDU, their distribution is available immediately (no lock-up). For participants with more FIDU, their distributions unlock monthly until the one-year anniversary of their first contribution — for example, if someone first contributed last August, their distribution will unlock over 7 months from today until this coming August.
The difference in unlock schedules helps mitigate the gas fees for smaller token holders while maintaining longer-term unlock schedules for larger token holders.
How Senior Pool Liquidity Mining Works
8.0% of tokens are allocated to ongoing Senior Pool liquidity mining. Every block, GFI is allocated proportionally to all staked FIDU according to the distribution rate.
The distribution rate is dynamically set by the protocol based on how much capital is in the Senior Pool relative to the target. To start, the target is currently set at 100M FIDU. When the Senior Pool is below the target, the distribution rate increases up to a maximum rate, currently set at 0.5% of GFI per month. When the senior pool is above the target, the distribution rate gradually decreases, reaching 0 when the pool is 2X the Target. Governance can adjust all of these parameters.
Importantly, to incentivize long-term aligned Liquidity Providers, these distributions unlock over 12 months. Liquidity Providers can always unstake and withdraw at any time. If they do so before the full 12 month unlock period, they will receive a percentage of their distribution proportional to how many of the 12 months they have staked, and forfeit the rest.
Beginning immediately, all participants in the Senior Pool can receive ongoing distributions by staking their FIDU. Current FIDU holders can do this by staking FIDU from the Senior Pool page. New Liquidity Providers can select to automatically stake FIDU in the same transaction when they supply capital.
You can find more detail about Senior Pool liquidity mining in the docs.
Governance and the Goldfinch Council
The vision of Goldfinch is to be fully community owned and operated. We have now taken several critical steps to do this. First, we’ve set up a community governance portal and process at gov.goldfinch.finance, where the community can make proposals and use their GFI to participate in Snapshot votes. Second, we’re excited to announce the Goldfinch Council, which will execute limited types of on-chain transactions based on the community Snapshot votes. Third, as previously announced, the Goldfinch Foundation has been established to help steward the protocol and serves as a legal entity that is accountable to the Goldfinch Council.
An exciting aspect of Goldfinch community governance is that it uses quadratic voting. Quadratic voting works by weighing votes by the square root of the amount of GFI used. This helps expand the voice and influence of smaller holders on vote results, while preventing outsized influence from larger holders. Quadratic voting has been a popular topic of discussion in the crypto community for years, with early examples like Gitcoin’s grant funding rounds. Now that Unique Identity (UID) provides an on-chain way to prevent sybil attacks, we’re excited that Goldfinch is able to implement it, making it the first to use quadratic voting with entirely on-chain data!
The Goldfinch Council is a 6-of-10 multisig with 10 members who represent all stakeholders of the protocol. The members are:
- Borrower — Gautam Ivatury, Managing Partner at Almavest, one of the early Borrowers on Goldfinch. Almavest provides debt capital to high-performing companies in a variety of sectors globally.
- Borrower — Alexandre Liege, CEO of Cauris, one of the early Borrowers on Goldfinch. Cauris is a credit fund created to bring decentralized financing to fintechs in emerging markets.
- LP/Backer — Deltatiger.eth, an early Liquidity Provider and Backer on Goldfinch. Deltatiger designed the Synthetix monetary policy and is an active participant in many other protocols, including on the core team and multisig at boot.finance.
- LP/Backer — Andrei Ansimov, an early Liquidity Provider and Backer on Goldfinch. Andrei is also an early Flashbots contributor and active participant in many protocols.
- Crypto Community — Manish Adhikari, Goldfinch Discord Community Manager, and blockchain enthusiast.
- Crypto Community — Viktor Bunin, Protocol Specialist at Coinbase Cloud and active contributor to many crypto communities.
- Crypto Community — Nat Robinson, Co-Founder & CEO of Leaf Global Fintech, a company using crypto to provide affordable financial services for refugees in Rwanda, Uganda, and Kenya.
- Early Team — Mike Sall, Cofounder of Warbler Labs, which is part of the Goldfinch community and supports the growth and development of the Goldfinch ecosystem and broader DeFi space.
- Early Team — Blake West, Cofounder of Warbler Labs, which is part of the Goldfinch community and supports the growth and development of the Goldfinch ecosystem and broader DeFi space.
- Early Team — Andrew Huelsenbeck, Head of Operations at Warbler Labs, which is part of the Goldfinch community and supports the growth and development of the Goldfinch ecosystem and broader DeFi space.
How to Access Your GFI
All GFI distributions can be viewed at app.goldfinch.finance/gfi. For distributions that have an unlock schedule, you will need to first “accept” the distribution, which mints an NFT representing your distribution, which allows you to claim portions over time. For distributions that do not have any unlock schedule, you can immediately claim them.