What is Gnosis? (GNO)
The Beginner’s Guide
Gnosis aims to provide an open-source infrastructure for prediction markets built on Ethereum.
If you’re unfamiliar, a prediction market is a type of marketplace, not unlike an exchange, except instead of trading assets, users trade the outcome of events. Often restricted by regulators, it is believed cryptocurrencies hold the potential to decentralize the operation of prediction markets, opening their access across the globe.
This is the idea behind the Gnosis prediction market platform, a blockchain enabling users to trade cryptocurrencies that are representative of event outcomes on an open market.
As the events unfold and outcomes become clear, Gnosis tokens gain or lose value depending on what was predicted by the user.
Gnosis’ goal is to build an infrastructure for many decentralized applications that can act as forecasting tools, sources of information and standards for predictive assets in this market.
By allowing access from any party to its platform and aggregating public opinion in an uncensored source, Gnosis believes it can build a reliable forecasting tool that could have applications for decision-makers in finance, government and insurance, among other sectors.
The Gnosis software uses two cryptocurrencies, GNO and OWL, both of which help ensure its transactions are reliable and distributed. Today, Gnosis continues to make progress toward its ambitious goals, but it is by no means alone, facing market competitors like Augur (REP).
Who created Gnosis?
Founded in 2015 by Martin Koeppelmann and Stefan George, the Gnosis prediction market platform was one of the first projects backed by the Ethereum-focused incubator, ConsenSys.
Prior to Gnosis, George founded a centralized Bitcoin prediction market, fairlay.com.
In 2017, an initial coin offering (ICO) for the GNO cryptocurrency, raised 250,000 ETH (roughly $12.5 million) by selling 4 percent of its supply. The sale ended in under 15 minutes.
Later in 2017, Gnosis would launch Olympia, a test version of its prediction market platform. In 2018, the project launched Apollo, version 1.0 of its platform, and DutchX, a decentralized exchange.
By the end of 2018, Gnosis had also launched its wallet platform, Gnosis Safe.
How does Gnosis work?
Gnosis uses three separate platforms to achieve its vision.
Apollo – A prediction market platform where users can create their own tokens (tokens that represent information, incentives or ideas)
DutchX – A decentralized exchange where users can trade and auction off their tokens
Gnosis Safe – A cryptocurrency wallet and a browser that interacts with ethereum apps.
Additionally, there are three layers to Gnosis’ architecture that unites these platforms together.
Core Layer – The foundation of the platform, it contains the smart contracts powering the events, the outcome tokens, the settlements and the market mechanisms
Service Layer – Offers additional services such as chatbots, payment processor integration and stablecoins. This later also controls its trading fee model. Gnosis anticipates most consumer applications will interact with features on this layer.
Applications Layer – Contains the prediction market dapps built on Gnosis. While Gnosis builds some applications for prediction markets, the majority of applications accessible in this layer are built by third-parties who can charge users for their services.
What are GNO tokens?
The Gnosis cryptocurrency, GNO, is an Ethereum-based token sold during the Gnosis ICO. The primary use case of GNO is for generating OWL tokens via staking.
Users can lock GNO for a certain amount of time (up to one year) to earn rewards. (The amount of OWL received is calculated based on the length of the staking period.)
The total supply of GNO is fixed at 10 million tokens.
What are OWL tokens?
OWL tokens are used to pay fees on the Gnosis prediction market platform. Eventually, Gnosis will also allow OWL to be spent on trading fees in its predictions market.
OWL tokens are pegged to the US dollar, so that every OWL token is worth $1. Gnosis will adjust the OWL distribution in order to maintain its peg.
Importantly, users can also pay fees with various Ethereum tokens rather than in OWL.
All fees not paid for in OWL are collected, sold for GNO and burned. Previously named WIZ tokens, Gnosis rebranded to OWL tokens with the redesigning of their website.
Why do GNO and OWL have value?
Both GNO and OWL tokens derive value from their roles in facilitating the operation of the decentralized Gnosis network. Both work in different, complementary ways.
First, users need to stake GNO cryptocurrency to generate OWL tokens (which are needed to pay fees on the platform). Additionally, the maximum supply of GNO tokens is fixed at 10 million GNO, meaning GNO tokens may hold value for anyone looking to enter Gnosis markets.
Users are incentivized to pay fees in OWL (rather than another token), as it is built for the platform and works in conjunction with GNO. Second, for every OWL token used, the GNO locked up in staking contracts will generate new OWL.
Lastly, there is a built-in penalty if OWL is not used, as more OWL tokens will be created if less than 90 percent of Gnosis fees are paid with OWL.
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- What is Gnosis? (GNO)
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Why should I use Gnosis?
Investors may want to add GNO to their portfolio should they believe the predictions market will become an essential tool in the capital and data science markets.
Likewise, Gnosis adds to the cryptocurrency ecosystem by allowing users to trade for the outcomes of certain events. These can range from predicting the price of a certain asset to betting on the outcome of elections.
So, users who believe in the long-term value of driving change with prediction markets may also want to support the platform and its larger mission.
Now you are ready to buy some Gnosis!