GNS Token Redesign

The GNS tokens that can be redeemed by NFT holders can either be claimed immediately while incurring a 25% penalty, or be vested linearly over 6 months with no penalty. The GNS being minted to the dev fund, which is essentially the protocol founder’s allocation, will vest linearly over 1 year. The total inflation represents ~14% of the current supply, which could have a negative price impact as early users/builders look to cash out. However, Gains Network recently launched a formal governance process, fiat onboarding features, a decentralized front end, and more. Despite the consistent shipping throughout the bear market, GTrade trading volume has been in a downward trend since the beginning of 2023. 

The GNS staking yield, which is currently hovering between 4-5% on Polygon and Arbitrum, is poised to jump to roughly 7-8% assuming similar daily trading volume. GNS stakers pay the price in the case of gDAI vault under collateralization through newly minted GNS that is sold OTC, so a ‘measly’ 7-8% yield may not be enough to attract new GNS demand. The recently approved 50M ARB incentives proposal was passed through Arbitrum governance and will be kicking off over the coming weeks, so it is worth keeping an eye on Gains Network’s incentive allocation (if the DAO applies for one at all). If trading volume climbs on the back of ARB incentives, and the GNS staking yield returns to its January highs in the 15-20% range, this could represent a solid way to gain exposure to the Arbitrum ecosystem.

The insights, views, and outlooks presented in the report are not to be taken as financial advice. Blockworks Research analysts are not registered broker/dealers or financial advisors. Blockworks Research analysts may hold assets mentioned in this report, further outlined in the Firm’s Financial Disclosures.