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Please note: the calculations used in this article specifically paint the picture of Glo Dollar in its high impact phase. Learn more about the difference between our bootstrap and high impact phase.
Glo Dollar’s unit economics
To understand how much money Glo Dollar will generate as a % of its market cap, 3 numbers are important:
- We’re expecting a 4% annual yield on the reserves backing Glo Dollar during our high impact phase.
- Eventually, our aim is that ~80% of the reserves backing Glo Dollar will be invested during our high impact phase.
- During our high impact phase, we aim to get around a 75% revenue share.
If we multiply these numbers (4% * 80% * 75%), it follows that in our high impact phase, every 2.4% of Glo Dollar market cap would be donated to GiveDirectly’s basic income program.
Glo Dollar impact for different amounts
This implies that, in our high impact phase, holding…
- $1 in Glo Dollar would generate $0.024 per year.
- $100 in Glo Dollar would generate $2.40 per year.
- $10,000 in Glo Dollar would generate $240.00 per year.
Eventually, every $20,000 in Glo Dollar should lift one person out of extreme poverty
In our high impact phase, we aim to lift one person out of extreme poverty for every $20,000 held in Glo Dollar. We estimate this using the following figures:
- GiveDirectly lifts one person out of extreme poverty for $480 annually.
- ~ This already accounts for GiveDirectly’s operating costs (around 10% of the donations made to GiveDirectly).
- Using the previously mentioned 2.4% annual yield, and taking that as a % of $20,000 ($20,000 * 2.4%) = $480.
The tangible impact of smaller amounts held in Glo Dollar
We encourage users to hold any amount in Glo Dollar. To illustrate the impact amounts lower than $20,000 in Glo Dollar would have, we’ve created the Impact calculator shown on our homepage.
In particular, we share specific items (such as a school uniform or a fishing net) that recipients could buy based on the amount held in Glo Dollar. The way we calculate this is as follows:
- We’re taking a cost estimate of the item from GDLive, a feed where recipients of cash transfers can share how it’s going.
- ~ For example, construction materials to build a house cost $227.
- We then take the aspiring 2.4% and divide the cost estimate by this number.
- ~ For example, if the construction materials to build a house cost $227, we divide this by 2.4% = $9548.
- We then also account for GiveDirectly’s operating expenses (the inverse of 90% efficiency).
- ~ For example, we take $9548 * 1.11 = $10,509.
Using the above calculations, every $10,509 would be enough to provide one recipient with the cost of construction materials to build a house.
The different items and the cost estimates we’re using
- 10x 20 litre jerrican of water - $0.30
- 1kg maize in Kenya, - $0.95
- School textbook for grade 6 - $1.22
- School uniform - $3.24
- Kienyeji chicken in Kenya - $12
- Fishing net - $100
- Saanen dairy goat in Kenya - $121
- Starting a kiosk in the village (income generating activity) - $162
- Dairy calf or cow - $200
- Construction materials for a house - $227
- Land (0.02 acres) to farm and produce food - $300
The easiest way to estimate the impact your Glo Dollar holdings could have is to play around with the impact calculator on our homepage.