[GNS]: Redirection of Revenue from BB&B to SSS

Proposals
1

Overview

This proposal champions the transition from the buyback-and-burn (BB&B) model back to a single-sided-staking (SSS) tokenomics model. Under this proposal, all protocol revenue currently directed toward BB&B would shift toward SSS rewards for $GNS stakers.
We are proposing amendments to the old model to enforce a withdrawal timer for staked $GNS (similar to gToken vaults) and staking rewards distributed as gTokens for autocompounding within the vaults.

Justification and Rationale

  1. Following the transition to the BB&B tokenomics model as suggested by the original and amended governance proposals in November and December of 2024, Gains Network has burned 9.07 million $GNS tokens, representing a ~26.6% reduction in the supply in just under a year and a half.

  2. Though this model originally supported the price of $GNS tokens in a bear market, falling protocol volumes and suspected price manipulation by centralized exchanges have eroded the sentiment of the community, with many long-term holders making public their decision to sell.

  3. The decision to redirect protocol revenues toward SSS rewards represents a benefit in ways including, but not limited to, the following:

    • Relief to $GNS token holders in the form of stablecoin yield through staking
    • Further alignment of team incentives with those of the protocol owners ($GNS holders)
    • Increased investment appeal of the $GNS token to outside investors

  4. The integration of a withdrawal timer and rewards distributed as gTokens incentivizes $GNS stakers to keep their rewards in the Gains Network protocol, bolstering the health of the vaults.

Impact Analysis

The proposers expect that follow-through on this proposal will have the following impacts:

  1. $GNS holders will withdraw their tokens from centralized exchanges in favor of receiving staking rewards on-chain.

    • Notably, the current $GNS supply is lower than the maximum number of staked tokens observed (at 27.1MM). Assuming a similar staked-to-supply ratio of ~80%, the burn achieved during by the BB&B campaign represents a ~36% increase in the rewards earned per $GNS token.
    • Currently, Binance offers yield to $GNS holders on their platform in the form of $GNS tokens. This allows the exchange to short the price of $GNS, buy the token back at lower prices, then distribute the $GNS yield to holders on their platform

  2. A renewed interest in $GNS from outside investors

    • With the prospect of earning stablecoin (and $ETH) yield by staking $GNS, now increasingly rare within the crypto ecosystem, the proposers anticipate increased interest in the $GNS token from outside investors.
    • Alongside the marketing campaigns for the upcoming trading competitions, this represents a strategic opportunity for the community to attract new investors with the promise of earning yield on the elevated volume during this time.

Risks and Mitigations

  1. Further $GNS burn will be limited to trader losses from vaults.

    • It must be noted that the prices of $GNS make continuation of the BB&B model attractive as a long-term path. However, trader losses will continue to apply negative pressure to the supply. The proposers expect that switching to the SSS model is in the best interest of the health of the community and protocol long-term.

  2. Protocol revenues leaking

    • A large critique of the SSS model was that it allowed for protocol revenues to be siphoned out of the protocol and to be largely unproductive for the growth of the product. The proposers anticipate that introduction of a withdrawal timer, along with distribution of rewards as gTokens will mitigate this effect and further contribute to the health of the protocol.

Following a successful period of enhancing token scarcity, we expect that re-introducing SSS to Gains Network will have a profound impact on the competitive positioning and community sentiment of the protocol. We are excited to hear your thoughts in the discussion forum. Some potential points of discussion:

  • Length of withdrawal timers for $GNS stakers
  • Pushback on redirection of revenue
  • Diverting a percentage of revenue from BB&B to SSS
2

My thoughts on the points I believe need addressing:

  • Withdrawal timers should follow the epoch system currently in-place with gToken vaults, but could be dynamic in the same way depending on the staked-to-supply ratio (e.g. a higher amount of staked $GNS reduces the number of epochs waited for withdrawal)
  • It’s my opinion that diverting a only a portion of revenue from BB&B → SSS would represent a weaker APY and reduce the appeal to investors that diverting all revenue would. I think this should be an all-or-nothing decision until the protocol begins to observe elevated volumes once more.
3

Three big things I see immediately,

  1. What kind of consideration has been given for the tax implications this would impose in most jurisdictions (staking income vs asset appreciation). From the way I see it, this would probably make the token less attractive to investors, particularly large ones that have to seriously consider the effect of taxes.

  2. Somewhat related to 1, but what about the losses suffered by investors from being unable to compound? BBB compounds as efficiently as possible, whereas having to manually sell the USDC (or whatever token is paid out, be it gUSDC, ETH, etc.) to buy GNS both slows down compounding, and adds in a lot of transaction fees to the process.

  3. What happens to the Gains trading pool? If users all stake tokens, then there’s no incentive to keep GNS in the trading pool (as the current APR is much lower then any potential staking pool would have)

4

I appreciate the proposal and the effort behind it, and I do think it is good that the community is discussing different options. That said, in my view, it is still too early to make this kind of change.

As investors, we have already endured a lot through this period. We stayed through the bear market, through low volumes, and through the pain that came with it. For me, that is exactly why now is not the right time to switch direction. A bear market with weak volume is the worst possible environment to make a major tokenomics change. If a switch ever happens, it should happen during a full bull market with strong activity, where it can have maximum impact and attract the most attention. Doing it now feels premature.

The buyback and burn model has already achieved a lot. A significant amount of supply has been removed, and I do not think we should stop that process too early. We still need to keep reducing circulating supply. Many OG holders who sold have already made that decision, and in my opinion it is too late to start changing the whole strategy because of that. We need to stay focused, continue burning, and be patient.

I also want to ask for more clarity on the part about changing team incentives. What exactly would that look like? I do think revisiting team incentives is a good idea, especially now that the team has been reduced significantly. If the team is smaller, but incentives remain broadly the same, then it is fair for the community to ask questions.

Personally, I would support a structure where the team has much more visible skin in the game. Something closer to a high-performance, milestone-based model would make sense to me. Set ambitious targets, and if those targets are achieved, then the team gets rewarded in a meaningful way. For example, incentives could increase if the protocol achieves sustained volume milestones, such as $1 billion in volume over a week, or if price and growth milestones are reached. That would send a very strong message to the community and to new investors that the team is fully aligned with outcomes.

So overall, I am not against discussing changes. But for me, the timing is wrong. BBB has done a great job, and I think we need to stay patient, focus on rebuilding volume, and continue strengthening scarcity. If staking is reintroduced, it should be done later, when volumes recover and the broader market is in a much stronger position. That is when the switch would have real strategic impact, not now.

5

At this stage, considering the market and the need to drive volume back to the platform, revenue from the protocol should be dedicated to investing for growth. It shouldn’t flow to buybacks or staking revenue.

The graveyard is full of companies who bought back their stock until they went bankrupt instead of investing in their business