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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.
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