The price of Gnosis Token GNO jumped 20% in three days following an announcement by Thanefield Capital of a $30 billion buyback proposal.
On the date of the announcement, May 17, the GNO token was pegged at $266 before climbing to $320 three days later. However, the token had dropped to $311 by time of writing this article. The digital asset is rated at 111 on global cryptocurrency with a daily average trading volume of $8.9 million.
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Transaction to Align Token with Its Value
Now a crypto fund plans a large-scale share buyback to realign its market value with its intrinsic book value. Thanefield Capital proposed that Gnosis DAO deploy $30 million from its treasury, over six months. According to the fund, the transaction is expected to boost the GNO’s token value, which they say is undervalued relative to its book value.
“To address this, we propose initiating a large-scale buyback program. Our plan involves deploying $30 million, representing about 5% of the estimated assets of Gnosis DAO, over a six-month period,” reads part of Thanefield’s proposal.
“We propose initiating a substantial buyback program to correct this disparity,” added Thanefield Capital.
Gnosis holds $630 million in non-GNO liquid assets, according to Thanefield Capital, and $100 million in some venture capital investment. On the contrary, the total market value for GNO is about $424 million, on the basis of its circulating 1.53 million tokens.
Gnosis Community Approves Transaction
Already, the proposal has received a thumps up from the Gnosis community. The majority, that is 12 out of the 14 governance forum voters were in favor of the transaction. Martin Köppelmann, Gnosis co-founder also endorsed the proposal. He highlighted the need to link the buyback to a growth strategy.
“I favor this proposal if it connects to a growth program where the GNO acquired in a buyback is consequently used to attract more users,” commented Köppelmann.
Once approved, the buyback program is expected to follow a two-pronged strategy. According to Thanefield Capital, the first approach will allocate $15 million for the purchase of GNO tokens over a six-month period, which is expected to “exert a daily buy pressure of approximately $83,333.”
The second approach will be discretionary. It will entail an allocation of $15 million to optimize purchases based on market conditions. According to the fund, an on-chain asset management project, Karpatkey will manage the transaction.
Plan to Benefit GNO Holders
The Gnosis DAO also manages other initiatives like Gnosis Chain and CoW protocol with a substantial stake in an Ethereum multisig provider – Safe. Although it holds such assets, Thanefield Capital indicated that long-term GNO holders have not gained significantly from Gnosis DAO’s product developments, investments, and treasury management.
However, a successful implementation of the proposal, according to Thanefield Capital might help realign the GNO market value and boost market perception as well as benefit long-term holders.
By end of May 20, an estimated 50,000 DAOs collectively held $30 billion assets. According to Beincrypto, Gnosis is ranked the fifth biggest DAO by treasury size with over $630 million in assets. This is “second to Mantle in non-native marketable tokens.”
Cryptopolitan Reporting By Enacy Mapakeme