Glo is a non-profit stablecoin that generates basic income for people in extreme poverty. It's pegged to the US dollar and fully backed by a fiat reserve. We invest the reserve in US treasuries, and donate the interest to GiveDirectly, who distribute it as basic income.
Let's talk numbers. How many people can Glo lift out of poverty?
There is virtually no limit to how many people Glo can help. It depends only on adoption. If we come together with enough people and businesses, we should be able to generate enough money to eradicate extreme poverty around the world.
But Glo changes lives at any rate of adoption—planetary scale is not required. To get a sense of what's achievable, here are some scenarios at various levels of success.
To estimate our impact, we'll make some assumptions which we discuss at the end of this article:
- It costs $420/year to provide a $30/month basic income, including delivery.
- A basic income of $30/month can lift one person out of extreme poverty.
- Our annual reserve yield is 2.5%, so $1000 of Glo generates $25 per year.
- At extremely high Glo adoption, we'll assume 3% yield (explained below).
Based on these assumptions, we can make some rough estimates:
Every $17,000 of Glo generates $425 per year, lifting one person out of extreme poverty.
Here's what that means in practice:
- The average US citizen has $41,600 in savings. Converted to Glo, this would lift 2.5 people out of poverty.
- The entire stablecoin market is $150 billion. Converted to Glo, this would lift 9 million people out of poverty.
- Apple holds $203 billion in cash and cash equivalents. If they'd convert it all to Glo, this would lift 12 million people out of poverty.
- 5% of all US savings deposits amounts to $531.5 billion. Converted to Glo, this would lift 32 million people out of poverty.
What would it take to completely eradicate extreme poverty?
This is a rough estimate, but:
- 659 million people live in extreme poverty
- At $420 per person, we need $276.8 billion per year to give them all a basic income
- At a 3% yield, to generate $276.8 billion, the total amount of Glo would need to be $9.2 trillion
- The total amount of money in the world is $138 trillion [source 1, source 2], so that's 6.7% of all money
We'll round that 6.7% up and say that...
To end extreme poverty, Glo would need to replace 7% of all the money in the world.
While ambitious, this is not impossible:
- We'd be at 100% of our goal if 87% of US savings deposits ($10.6 trillion) were converted to Glo
- We'd be at 63% of our goal if all cash held by US companies ($5.8 trillion) were converted to Glo
If enough people come together, we can actually do this. Here's how you can help.
These are all very rough estimates—the actual numbers depend on several uncertain factors.
The uncertainty comes from:
- The actual yield on 3-month T-bills
- The percentage of the Glo reserve we can invest in T-bills
- The cost of providing basic income to one person living in extreme poverty
The 3-month T-bill yield is the most uncertain factor. At the time of writing, it's 3.09%. Historically, it's been 3.37% on average. But that's, indeed, average—it has ranged anywhere between 0% and 15%.
Then there's the fact that we will never actually hold 100% of the Glo reserve in T-bills. Since holders of Glo should be able to redeem their Glo for US dollars whenever they want, a portion of the Glo reserve needs to be actual cash. The percentage of cash will depend. To get an idea, we can look at Circle (USDC), one of our for-profit competitors. They currently hold 20% of their reserve as cash.
A reserve consisting for 80% of 3-month T-bills would, going by the historical average of 3.37%, yield 2.7% per year in total. Throughout the website and whitepaper, when we're making numerical estimates, we'll round that down and will assume a 2.5% yield on the Glo reserve.
Things will look very different when Glo reaches planetary scale. if Glo reaches trillions of dollars of market cap, we’re most likely operating in a world where we issue multiple stablecoins in different currencies. Each reserve would then be backed by government bonds denominated in each stablecoin’s currency. Still, for simplicity, we'll be conservative and assume a Glo reserve consisting almost completely of 3-month T-bills. Again, these yield 3.37% historically. We'll round this down to 3%.
Lastly, in all of our estimates we're assuming that the cost of providing a basic income for one person living in extreme poverty is $35/month. The reason for this assumption is that that's currently the estimated cost at which GiveDirectly can do that in Liberia and Kenya. It's very likely that at much larger scales, when we need to reach people in many more countries, these numbers don't hold up.