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Arca Updated Proposal to Gnosis

August, 2020
(Follow up to Original Meeting on June 10, 2020)

Strictly Confidential. Not for Distribution.


Disclaimer

This presentation is not an offer to sell securities of any investment fund or a solicitation of offers to buy any such securities. Securities of collective investment vehicles
(the “Funds”) managed by Arca (the “General Partner”) are offered to selected investors only by means of a complete offering memorandum and related subscription
materials which contain significant additional information about the terms of an investment in the Funds (such documents, the “Offering Documents”). Any decision to
invest must be based solely upon the information set forth in the Offering Documents, regardless of any information investors may have been otherwise furnished,
including this presentation.

An investment in any strategy, including any strategy described herein, involves a high degree of risk. There is no guarantee that the investment objective will be
achieved. Past performance of these strategies is not necessarily indicative of future results. There is the possibility of loss and all investment involves risk including the
loss of principal. Securities of the Funds are not registered with any regulatory authority, are offered pursuant to exemptions from such registration, and are subject to
significant restrictions.

The information in this presentation was prepared by the General Partner and is believed by the General Partner to be reliable and has been obtained from public sources
believed to be reliable. General Partner makes no representation as to the accuracy or completeness of such information. Opinions, estimates and projections in this
presentation constitute the current judgment of General Partner and are subject to change without notice. Any projections, forecasts and estimates contained in this
presentation are necessarily speculative in nature and are based upon certain assumptions. It can be expected that some or all of such assumptions will not materialize or
will vary significantly from actual results. Accordingly, any projections are only estimates and actual results will differ and may vary substantially from the projections or
estimates shown. This presentation is not intended as a recommendation to purchase or sell any commodity or security. The General Partner has no obligation to update,
modify or amend this presentation or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, project on, forecast or estimate set
forth herein, changes or subsequently becomes inaccurate.

This presentation is strictly confidential and may not be reproduced or redistributed in whole or in part nor may its contents be disclosed to any other person without the
express consent of Arca.

The description herein of the approach of Arca and the targeted characteristics of its strategies and investments is based on current expectations and should not be
considered definitive or a guarantee that the approaches, strategies, and investment portfolio will, in fact, possess these characteristics. These descriptions are based on
information available as of the date of preparation of this document, and the description may change over time. Past performance of these strategies is not necessarily
indicative of future results. There is the possibility of loss and all investment involves risk including the loss of principal.

Any holdings identified herein do not represent all of the securities purchased, sold, or recommended by Arca. It should not be assumed that recommendations made in
the future will be profitable or will equal the performance of the investment in this report. Past performance does not guarantee future results. Specific companies
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Strictly Confidential. Not for Distribution.


Background - Arca Team

Founded by three Wall Street veterans, the Arca team has combined decades of product creation,
investment management, risk management, and compliance experience.

Rayne Steinberg Jeff Dorman, CFA


CHIEF EXECUTIVE OFFICER CHIEF INVESTMENT OFFICER
●CoFounder, Wisdom Tree- raised $50bn+ in ●Trader, Merrill Lynch, Lehman Brothers, Citadel
AUM and built and oversaw sales team Securities & Brencourt Advisors
●First-in-market to build and manage own index ●Launched first-in-market financial content
product platform as Harvest Exchange COO

Phil Liu Katie Talati


CHIEF LEGAL OFFICER VP, RESEARCH
●General Counsel, Equinox Funds- responsible ●Head of Research, Blockchain Industries-
for product structuring responsible for all cryptocurrency analysis
●Legally structured the first actively-managed ●Early employee of Crowdfunder where she
futures mutual fund oversaw due diligence

Hassan Bassiri, CFA Alex Woodard


PORTFOLIO MANAGER Research Analyst
●KPMG Mergers & Acquisitions Team ●BA in Economics from Whitman College
responsible for sourcing deals & valuations ●President of Whitman Investment Club,
●Licensed attorney with deep understanding of managed portion of the college’s endowment
risk assessments

Strictly Confidential. Not for Distribution.


Background - About Arca

Legal & Arca brings interdisciplinary expertise to


Regulatory
the research-intensive crypto-investing
process.
Crypto Innovative
Industry Asset The team’s knowledge base in both
Insights Evaluation
traditional finance and digital assets
allow the team to properly source and
Blockchain analyze new opportunities.
Technology

Strictly Confidential. Not for Distribution.


Executive Summary

Strictly Confidential. Not for Distribution.


Executive Summary: Overview

We identified the Gnosis project for its talented team and


mission of a redistributed future.

To date, Gnosis has made a number of contributions to the Ethereum


ecosystem with its products and research and we want to support these
endeavours going forward.

However, the GNO token is not utilized in any value accreting way in the suite
of Gnosis products. It also trades at a significant discount to book value.

Gnosis now has the opportunity to reinvigorate its community and work
towards building financially sustainable products with active user bases, while
returning value to GNO token holders.

Strictly Confidential. Not for Distribution.


Executive Summary: A Broken Community

We believe that Gnosis has had ample time to develop integral


Ethereum based protocols but has strayed from their initial promises
and disappointed their community with the products it has delivered
to date:

ISSUE PROBLEM

2017 ICO Mismanaged Allocation

Decentralized Exchanges Low Usage

Prediction Market Little Traction

Finances High Burn & Unexplained


Spending

Strictly Confidential. Not for Distribution.


Executive Summary: Token Performance

The GNO token has underperformed its benchmarks, and has failed to
deliver value to ICO participants

GNO Returns
Data Calculated through August 20th, 20201

Gnosis ICO Price: $28.90


Return: 48.78%
Gnosis Market Opening Price: $74.82
Return: -42.53%
Gnosis All Time High: $441.99
Return: -90.27%

GNO vs ETH
Data Calculated through August 20th, 2020

GNO/ETH Return:
Since ICO -82.28%
Since Gnosis Market Open -88.56%

Sources: 1. CoinMarketCap Strictly Confidential. Not for Distribution.


Executive Summary: Arca’s Proposal

Tender Offer of Circulating Tokens

1. Using cash on balance sheet that exceeds token market cap, institute a tender offer
for circulating tokens, returning money to GNO token holders that was lent to
Gnosis 3+ years ago. Those who do not tender and who believe in Gnosis's future
should be rewarded with more GNO tokens via a 10:1 token split.

2. Institute revenue generating and strategic cost cutting plan, consistent with
Gnosis' statement of becoming Free Cash Flow positive, removing reliance on
Treasury assets contributed by GNO token holders

3. Develop clear milestones and issue quarterly reports, making Gnosis an industry
leader in disclosures

Strictly Confidential. Not for Distribution.


History of Gnosis’s Issues

I. 2017 ICO
II. Decentralized Exchange
III. Prediction Market
IV. Finances

Strictly Confidential. Not for Distribution.


2017 ICO: What Happened?

The Gnosis Dutch auction created a centralized supply for GNO tokens,
with no clear path on how or when that supply would be distributed.
Gnosis chose to conduct its ICO in April of 2017 using a Dutch auction in order to make the
sale more fair by preventing large investors from buying a majority of the supply allowing for
distribution of the tokens in a decentralized fashion.

The auction was designed to either raise $12.5m or sell 90% of the supply, with the team
retaining the remaining tokens.

However, buyers did not bid low for the token and the auction ended in 15 mins, raising
$12.5m but only selling ~400k tokens1

According to an analysis of the token sale, 2 addresses purchased 40% of the tokens - i.e.,
160,000 of the of the original 400,000 - despite the 1,000 addresses that participated in total.

2017 ICO
Total Supply: 10,000,000 (pre-mined)
Tokens Sold in ICO: 460,0002
Price per token sold: $28.90
Current Price: $42.99 (48.78%)

Sources:
1.Messari.io, Gnosis Profile
2.Mesari Mainnet Presentation on June 3, 2020
Strictly Confidential. Not for Distribution.
2017 ICO: Aftermath

The Gnosis Team kept the remaining 95% of the supply. This did not
adhere to industry best practices and raised questions about the
decentralized nature of the project.

A few days after the sale, Mark Koppelmann announced that 10% of the tokens
would be retained for the team and ConsenSys, and of the remaining tokens,
99% of the supply would be locked:

Of the additional tokens retained by the Gnosis company we have visibly


locked 99% for at least a one year period... Following this time period, we intend
to lock a significant portion for longer still, but are not currently committing to
any fixed number to be able to react to the situation one year from now in the
most appropriate way. These tokens are held for the purposes of incentivizing
projects building on top of Gnosis and to bring in additional funding or token
distribution for the project if necessary.

Source: Gnosis Medium Blog


Strictly Confidential. Not for Distribution.
2017 ICO: Result

The Gnosis team could have redone the


sale, airdropped additional tokens or
burned all remaining tokens.

Due to the execution of the ICO, Gnosis’


community lost faith in the project.
Token holders and valuable community
supporters felt burned following the ICO.
As the team has not communicated their plan
to decentralize the token, the large supply held
by Gnosis has been a constant overhang on the
project.
The constant risk of dilution from the Gnosis
team is reflected in the token price and weighs
over the Gnosis community.

Sources:
Gnosis Medium Blog
Gnosis Token Sale Analysis
Twitter Strictly Confidential. Not for Distribution.
Decentralized Exchange: DutchX

The DutchX Exchange became a misallocation of capital and a deviation


from the original white paper’s promises and descriptions.

In the original white paper, published in April 2017, building a decentralized exchange is
only mentioned in one short snippet:

GNODEX will be the decentralized, scalable state channel based exchange to trade
predictive assets. The development already started, however, due to its complexity it is
expected that an MVP will take at least a year of development. Gnosis seeks to combine
forces with other teams to build the basic layers required to offer a decentralized exchange,
with Gnosis adding layers required to offer trading of prediction market outcomes.1

However, the white paper was then updated in December 2017 and discusses the
DutchX Exchange as a major focus of development, with the purpose of the dex
changing completely:

Another project we have been devoted to in 2017 is the implementation of a decentralized


exchange for ERC-20 tokens based on the Dutch auction principle. We strongly believe that
adapting this mechanism will lead to fair market prices.2

Source:
1. Gnosis White Paper Published April 2017
2.Gnosis White Paper Published December 201 Strictly Confidential. Not for Distribution.
Decentralized Exchange: DutchX

Compared to competitors, DutchX has been unable to


capture market share.1

Source:
1.Dapp Radar Strictly Confidential. Not for Distribution.
Decentralized Exchange: DutchX

After spending over a year to build and launch this exchange, including
seeding projects to build user interfaces for the exchange (such as Fairdex),
the project was declared dead by the team itself.

While we’re glad the DutchX trading


protocol’s use continues with the
dxDAO, we did not find the user
base we anticipated while designing
the protocol. This launch was
ultimately our most valuable lesson
of the year, reinforcing the need to
build more modular tools that are
more closely aligned with the
community’s needs.

Source:
Twitter
Gnosis Medium Blog Strictly Confidential. Not for Distribution.
Decentralized Exchange: Take Two

After deciding that DutchX would not receive adoption, Gnosis has
moved on to building a new decentralized exchange.1

● With non-custodial and DEX volumes at all-time highs2, hitting $668m in


March, Gnosis is behind in a very crowded pack.

● Originally dubbed the "dFusion protocol", the new dex was recently
launched in April and rebranded as the "Gnosis Protocol”

● Though Gnosis Protocol offers unique features compared to their


competitors such as ring trading and limit orders leading to minimal
slippage, the new protocol does not require GNO.

○ With fees deducted from the token being traded, this has clear advantages in
ease of use, yet then converting fees to OWL is unnecessary friction

Source:
1.Twitter
2. The Block Strictly Confidential. Not for Distribution.
Decentralized Exchange: Gnosis Protocol

Gnosis Protocol’s volumes have been below expectations,


underperforming competitors

While July saw record DEX volumes, totaling $4.3b, Gnosis


Protocol only managed to capture $44m of that.

Source:
1.Dune Analytics Strictly Confidential. Not for Distribution.
Decentralized Exchange: Gnosis Protocol

Additionally, Gnosis Protocol has very little volume outside of


Initial Dex Offerings (IDOs)

DMG IDO MTA IDO DIA IDO

These IDOs have not created customer acquisition or customer


retention for Gnosis Protocol and therefore provide little long term
value.

Source:
1.Dune Analytics Strictly Confidential. Not for Distribution.
Prediction Market: Little Traction

After three years of development, Gnosis just launched the prediction market product
promised in the initial white paper. Since inception, Omen has seen just $1,144,515 in
total volume and 1,115 total users.

The majority of this volume is from the release at the beginning of July. The
average daily volume since launch is only $13,737.06.1
Source:
1. Dune Analytics, Digital Assets Data

Strictly Confidential. Not for Distribution.


Finances: High Burn & Unexplained Spending

Gnosis has a high burn rate for a non-revenue producing company. These projections are
based on Arca’s prior understanding of Gnosis’s expenses ($6m), although now we
understand it to be higher ($7.5m).
GNO 2019 Estimated Burn

$3,588,966.08 Employee Salaries

$250,000.00 Employee Benefits

$255,000.00 2019 GECO Grants

$60,000.00 Bug Bounties (max. distributed)

$50,000.00 Cost of 2019 DappCon

$0.00 Full Node coworking space

$1,796,033.92 Other Operational Overhead

$6,000,000.00 Total Annual Burn

Early-stage startups typically only require 15-18 months of runway.


Anything more than 2 years takes the urgency out of your daily actions
because you feel like you have tons of time to show progress.
- Mark Suster, UpFront Ventures
Source:
1.Mark Suster, UpFront Ventures
Gnosis Medium
Mesari Mainnet Presentation on June 3, 2020 Strictly Confidential. Not for Distribution.
Finances: Unexplained Spending

Gnosis used ICO funds to participate in equity and token investments

● DaoStack (invested in Jan 2018) creator of the dxDao used by the DutchX
Exchange (which was eventually spun out)

● Zerion (invested in Dec 2019) is a DeFi aggregator

● IDEX 2.0 (invested in Aug 2020) is a decentralized exchange and


competitor

Unlike its other business activities, Gnosis has not reported these investments
publicly nor shared their reasons for investing, as is typical with VC
investments.

Source: Zerion Blog Post, Pitchbook, The Block


Strictly Confidential. Not for Distribution.
Finances: Unexplained Spending

The Gnosis team actively uses their Gnosis: MultiSig 3 Wallet for
activities that are well outside industry treasury management best
practices.

● Participated in Raiden (RDN) ICO. Gnosis is down -31.74% on their initial


investment.
● Additionally Gnosis is down -94.75% from RDN’s all time high for a total
dollar value loss of -$13,096,119.50. This is due to poor treasury
management.
● Participated in Liquidity mining on Compound*
● Traded decentralized options on Opyn, which was recently hacked

Aside from risking ICO funds in decentralized protocols, Gnosis’s spending


shows the necessity for external governance and oversight.

*Given Gnosis’ Ethereum address, we believe they likely participated in Compound’s initial
liquidity mining

Sources: Etherscan: Raiden, Compound 1 and 2, Opyn, Messari Strictly Confidential. Not for Distribution.
Progress to Date - Does This Add Value?

I. Gnosis Safe Wallet


II. Sight Prediction Market
III. Additional Business Lines

Strictly Confidential. Not for Distribution.


Gnosis Safe Wallet

The Gnosis Safe Multisignature (Multisig) Wallet is the most successful


product by usage that Gnosis has produced.

Gnosis Safe Multisigs have seen


exceptional growth throughout 2019 and
2020 YTD.

● Total ETH locked is currently 272,418


representing a USD value of $114,690,230
(as of August 20th, 2020).

● Transaction volume within the Gnosis


Safe Multisigs has also seen increased
growth over the course of 2019 and YTD.

● 2019 growth in ETH deposited: 3681.29%

A great product, but again, it does


NOT require the GNO token to use.

Sources:
Dune Analytics Strictly Confidential. Not for Distribution.
Gnosis Safe Wallet (Cont’d)

Multisig wallets are an oversaturated market -- one dominated by


open-source software. There are very few paths to revenue on these products
outside of third-party affiliate fees without the risk of losing customers by
adding fees.

We see Multisig wallets as an oversaturated market facing pressure from


multiple areas:
1. Top-rated Wallets
a. There are over 20 web browsing wallets currently live such as Metamask.io and
MyEtherWallet
2. Exchanges
a. Investors more likely to hold crypto on exchanges due to ease of use over
crypto wallets
3. Optionality Between other Wallet Types
a. Software wallets are one of the many wallet categories; users have the option
to use hardware and mobile wallets
b. Each wallet offering has different benefits such as security or ease of use

Strictly Confidential. Not for Distribution.


Gnosis Safe Wallet (Cont’d)

The Gnosis Safe is the only successful


Gnosis product to gain traction, but it is
NOT the core product promised in the
white paper.

The Gnosis CEO has referred to the wallet as


“more of a contribution to the ecosystem”1.
Gnosis’s Product Manager has stated it is “the
main gateway to using other Gnosis products
such as prediction markets and exchanges.”2
Though we applaud the wallet’s success, with
the abandonment of the DutchX exchange, and
inability to use the wallet with the new Gnosis
Protocol DEX, there is nowhere to drive wallet
users to.

Sources:
1.Twitter
2.DefiPrime Blog, Q&A Strictly Confidential. Not for Distribution.
Omen Prediction Market: Little Traction

Long-term, Gnosis’ Omen Prediction Market has little chance of


success. Augur, which launched two years ago, has gained no traction
to date, boasting a handful of users and low volume.

Omen is already following the same pattern.

Source:
1.DappRadar
2.Dune Analytics Strictly Confidential. Not for Distribution.
Sight Prediction Market: Little Traction (Cont’d)

Broadly, centralized and decentralized prediction markets have shown time


and time again that they do not work, either due to regulation or poor design.
● Prediction markets in the past such as Intrade and iPredict were shut down by
regulators.

● “Successful” prediction markets include the Hollywood Stock Exchange and the
Iowa Electronic Market, of which the former does not use real money and the latter
is an ongoing research project with CFTC approval.

● Smith & Crown Research sums up the problem with prediction markets as an
information aggregation and forecasting tool: “While prediction markets, like polls
or surveys, are a promising, perhaps even superior, tool for aggregating
information and generating forecasts, providing someone a tool does not alone
confer the know-how required to properly utilize it. Pollsters conducting polls or
psychologists employing surveys arguably better know how to properly apply
these tools for ends of inquiry, and better understand their tools’ limitations.”1

In essence, prediction markets have not proven successful outside the realm
of gambling, and those that do exist to service those markets face stiff
regulatory action.

Source:
1.Smith & Crown research Strictly Confidential. Not for Distribution.
Additional Business and Product Lines

● Gnosis Ecosystem Fund (GECO)


○ The fund issued $255,000 in grants in 2019 through its first two funds, but no
grants were handed out for Fund III as none of the projects that applied met
expectations. These grants are clearly not stimulating the necessary growth
and funds and resources can be redirected elsewhere.

● DappCon - Annual Conference in Berlin


○ This is cited as an expense item that Gnosis supports with its runway - a
conference of this size (700+) with paying attendees (300EUR / ticket) and
sponsors (packages start at 1,000EUR) should breakeven at the worst.

● FullNode - Coworking Space


○ This should be a breakeven cost or a source of revenue - 20 companies work
out of Full Node with 100 person capacity where memberships start at 150EUR
per month

These ancillary products drive no value for Gnosis or token holders.

Source:
Feb 2019 Fund 1 Update
May 2019 Fund II Update
Aug 2019 Fund III Update
Radial systems event space
Full Node Coworking
Strictly Confidential. Not for Distribution.
Arca’s Proposal

I. Tender Offer for Circulating Tokens


II. Comparable Industry Analysis
III. Net Asset Value Calculations
IV. Conclusion
V. Next Steps

Strictly Confidential. Not for Distribution.


Arca’s Proposal: Execute Tender Offer For Circulating GNO

We propose that Gnosis take a similar approach as DigixDao and Contents


Protocol. The team should execute a tender offer for the circulating GNO at
NAV value of Cash and ETH treasury balances, reserving one year of runway.

Gnosis Supply Metrics Ethereum & Cash Balance


Calculated August 20th, 2020

Supply Metrics
Total GNO: 10,000,000.00 100.00% Current Assets
Allocation to Founders + Consensys 800,000.00 8.00% USD Cash Balance $9,125,000.00
Allocation to Team 400,000.00 4.00% ETH Balance $66,892,800
Tokens sold in public ICO at $28.90 460,000.00 4.60% Total Treasury $76,017,800.00
"To create Network Effects" 40,000.00 0.40%
Gnosis Foundation 8,300,000.00 83%

This will allow Gnosis to run as a lean startup, rework the token’s use
cases and redistribute the remaining tokens in order to create network
effects on existing products.

Source:
Etherscan
Messari.io, Gnosis Profile
Mesari Mainnet Presentation on June 3, 2020. Strictly Confidential. Not for Distribution.
Arca’s Proposal: Comparable Industry Analysis

Most GNO competitors in the Prediction Market and DEX Sectors trade well
above NAV of their treasury with the clear exception of Gnosis.

NAV Multiples in Sector


Token Ticker Price Circulating Supply Market Cap of Float Percentage of Market Treasury Balance NAV Multiple
0x ZRX $0.63 655,127,320 $411,476,953.04 36.39% $5,759,070.85 71.45
Kyber Network KNC $1.71 179,465,042 $306,885,221.82 27.14% $34,362,851.73 8.93
Bancor BNT $2.31 69,750,368 $161,123,350.08 14.25% $4,771,436.93 33.77
Augur REP $20.84 11,000,000 $229,240,000.00 20.28% $254,241.90 901.66
Gnosis GNO $47.62 460,000.00 $21,905,200.00 1.94% $75,688,200.00 0.29

Sum $1,130,630,724.94 Weighted Average NAV Multiple 33.24

Growth companies typically trade at a high multiple to their balance


sheet if token holders believe that management can deliver a high
ROI or if the token has clear merit.

Sources:
CoinMarketCap
Arca internal Calculations.
Strictly Confidential. Not for Distribution.
Arca’s Proposal: NAV Calculation

The Net Asset Value of Gnosis’s ETH & Cash Reserves is $75,525,000.00
(calculated August 20th, 2020). Subtracting one year of runway, this
leads to a value of $89.12
per token.
NAV Calculations Per Share
USD Value of Gnosis's Ethereum Treasury
Calculated August 20th, 2020 $66,400,000.00
Gnosis Cash Balances + $9,125,000.00

Total Value of Gnosis's Treasury $75,525,000.00


Less One Year Runway - $7,500,000.00

Total Treasury allocated towards tender offer $68,025,000.00

Current Circulating Supply of Gnosis 460,000.00


Present Value of Tokens Distributed to Team + 303,262.94

Total GNO Tokens Available to Tender 763,262.94

Net Asset Value Per Token $89.12


Arca’s Plan

We believe in rewarding team members who have spent years building


products -- we encourage any Gnosis team members to contribute their vested
tokens, and unvested tokens at the current Present Value, to the pool to be paid
out along with GNO token holders who paid for their tokens.

Sources:
Proposed token distribution, Appendix II
Etherscan
Mesari Mainnet Presentation on June 3, 2020. Strictly Confidential. Not for Distribution.
Arca’s Proposal: Conclusion

Those who believes in Gnosis’s future, and choose not to tender, should be rewarded
with more GNO tokens via a 10:1 token split. Doing so will allow Gnosis to solve a number
of its problems:

● Allows for distribution of Treasury tokens after the tender, for which there is
currently no plan, without the market punishing GNO holders
● Begins process of decentralizing project’s ownership
● Rewards those that do not tender, as the token price will unlikely fall more than the
amount of the split
● Shows the market that Gnosis plans on being more forthcoming and transparent
about future plans
● Demonstrates confidence to the market that Gnosis believes its tokens are
undervalued
● Holds Gnosis accountable to rework the economics of the remaining tokens to
incorporate GNO into its products

Source:
Messari Mainnet Presentation on June 3, 2020. Strictly Confidential. Not for Distribution.
Next Steps

In the spirit of ConsenSys’s goals, we believe Gnosis should adapt:

Whereas previously “it was good enough to do cool


projects,”….ConsenSys 2.0 will be different: “We are going to focus
much more rigorously across the different business lines on
accountability, that includes financial sustainability.”
- Joseph Lubin, December 2018

Source:
Coindesk Strictly Confidential. Not for Distribution.
Appendix

I. Redistribution of Team Tokens


II. Cost Cutting

Strictly Confidential. Not for Distribution.


Appendix I. Redistribution of Tokens to Team

The redistribution of tokens will act as a bonus to the Gnosis team and
allows them to participate in the proposed token buyback.

Supply Metrics Proposal Supply Metrics


Total GNO: 10,000,000.00 100.00% Total GNO: 10,000,000.00 100.00%
Allocation to Founders + Consensys 800,000.00 8.00% Tokens sold in ICO available for Tender Offer 460000 4.60%
Allocation to Team 400,000.00 4.00% Tokens allocated for team available for Tender
Tokens sold in public ICO at $28.90 460,000.00 4.60% Offer 303,262.94 3.03%
"To create Network Effects" 40,000.00 0.40% Tokens Held by Gnosis for redistribution 9,236,737.06 92.37%
Gnosis Foundation 8,300,000.00 83%
Total Circulating Supply 460,000.00 4.60%

Strictly Confidential. Not for Distribution.


Appendix I. Redistribution of Tokens to Team

We used the present value of the tokens being distributed to the team
over the next 5 years for the supply side of the NAV calculation.

PV calculation for team


Year 1 2 3 4 5
Tokens Released 80,000.00 80,000.00 80,000.00 80,000.00 80,000.00
Present Value (in Tokens) 72,727.27 66,115.70 60,105.18 54,641.08 49,673.71

Present Value (GNO) 303,262.94

It is unclear whether the team tokens will be vested on a yearly basis or a lump sum at
the end of the 5 years. We used the yearly basis in our PV calculation as it is more
beneficial for the team and a discount rate of 10% in our calculation.

Strictly Confidential. Not for Distribution.


Appendix II. Arca’s Proposed Cuts to Expense Line Items

These projections are based on Arca’s prior understanding of Gnosis’s expenses.


Once we understand the breakdown of the current $7.5m burn we can better
advise on a cost cutting plan.

GNO 2019 Estimated Burn Arca’s Proposed Cost Cutting

$3,588,966.08 Employee Salaries $3,588,966.08 Employee Salaries

$250,000.00 Employee Benefits $250,000.00 Employee Benefits

$255,000.00 2019 GECO Grants $0.00 2019 GECO Grants

$60,000.00 Bug Bounties (max. distributed) $60,000.00 Bug Bounties (max. distributed)

$50,000.00 Cost of 2019 DappCon $0.00 Cost of 2019 DappCon

$0.00 Full Node coworking space $0.00 Full Node coworking space

$1,796,033.92 Other Operational Overhead $300,000.00 Other Operational Overhead


$4,198,966.08 Total Annual Burn
$6,000,000.00 Total Annual Burn

Strictly Confidential. Not for Distribution.

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