Gnosis was founded in 2015 by Martin Köppelmann and Stefan George. It is a modular, Ethereum-based coin that acts as a decentralized predictions market. In other words, third-party developers can use Gnosis to create betting applications that receive data from Gnosis users.
Practically, Gnosis can be used to forecast things like the weather, to election results, and stock values; sports betting and crypto values are also within the realm of possibility.
Gnosis can also be used as a tool for insurance markets, financial instruments, governance, and general information. It is similar to Augur, which can also act as a predictions market. Gnosis uses “crowd sourced wisdom” to form predictions. Users create “events” with possible outcomes on the Gnosis platform.
Other users are then able to take part in the event by betting on its outcome. The data collected through this process of betting is then optimized to create a prediction. Gnosis also offers incentives to users who can “train the market” to produce more reliable predictions.
Users who bet on an outcome will receive payout if their bet is the correct one. These payouts come in the form of “Outcome Tokens”, which are created as a part of each event. This incentivizes users to participate in predictions. The more users that participate, the more accurate the predictions become.
Gnosis Value, Market Cap and Volume
As of November 17, 2017 Gnosis had a circulating supply of 1,104,590 GNO coins. In total, there will only be a maximum number of 10,000,000 Gnosis coins ever released. Daily trading across all cryptocurrency exchanges for GNO can range from lower than $500,000 USD to as high as $40,000,000 USD depending on market conditions.
The daily trading volume is much lower than some other coins, like Ethereum and Bitcoin Cash for example, but is still respectable. At this time, Gnosis was ranked in the top 100 cryptocurrencies based on market cap.
How Does Gnosis Work?
Gnosis’s platform uses four layers that work in conjunction with one another. Layers are the most important aspect of the Gnosis platform and they include the Ethereum blockchain, the “Core” layer, the “Services” layer, and the “Application” layer.
The Core layer will always be free and open for all users. The Core layer is where events and their corresponding tokens are created. This is also where payouts are distributed after betting markets close. The Core layer employs a management interface for ease of use.
The Services layer contains the Gnosis’s Oracle platform, the Futarchy, and the State channels. These kinds of capabilities are only available for a fee, which is paid in WIZ tokens.
The Oracle part of the Services layer allows users to integrate new types of Oracles into Gnosis and offer them throughout the Gnosis community. An oracle is any prediction-making entity. Any Ethereum account holder can become an oracle.
The state channels are a system of payment channels that allows thousands of transactions to happen each second, very similarly to the Lightning Network. With state channels, users in a dapp send messages and transactions to one another that update the state without publishing the transactions to the blockchain.
The state can be finalized by being published to the blockchain at any time. This prevents participants in any transaction from trying to cheat one another. Gnosis will use Ethereum’s state channels as the means to allow users to make predictions.
Futarchy is a sort of eGovernance that uses predictions and event outcomes to make governance decisions. The example provided on the Gnosis website is that of a company’s decision whether or not to fire its CEO. Predictions about the company’s stock value based on whether the CEO stays or goes can be made on the Gnosis platform. Two markets would be created–one for each possible outcome. Upon the closure of those markets, the more successful one would decide the fate of the company (and its CEO).
The application layer consists of three main parts: insurance, information sales, and betting. According to the Gnosis website, applications built on this layer “are primarily front-ends that target a particular prediction market use case and or customer segment.”
So far, Gnosis has been used to create applications like the Hunch Game (a pop culture prediction app). These apps have the options of charging their own fees, which can be paid in GNO, WIZ, BTC, or ETH tokens.
Tokens on Gnosis
In addition to BTC and ETH, there are two kinds of tokens that exist on the Gnosis platform: GNO and WIZ. Users on Gnosis can user WIZ tokens to pay fees in the Services or Applications layers on the platform. WIZ tokens are generated by GNO tokens through a smart contract.
The smart contract asks GNO holders to “lock” their tokens for a period of anywhere between 30-365 days. Having tokens locked within the Gnosis ecosystem increases the stability of the coin, which is good for the network’s value and functionality as a whole. After the agreed upon amount of time has passed, users get their GNO tokens back along with the additional WIZ tokens.
WIZ tokens can be used to pay trading fees. They can also be used by market creators to subsidize fees for their users, and to incentivize users to provide insights when answering questions.
Gnosis as an Investment
Gnosis has included some information about the industries that it hopes to be adopted by in its white paper. For example, Gnosis’s whitepaper states that the worldwide gambling market exceeds US$5452 billion. The “betting” market makes up 36% of the gambling industry as a whole. Gnosis is well-positioned to become an integral part of the betting market.
Right now, people who participate in betting have to rely on centralized sources of information–often people like William Hill, the top bookmaker in the UK. Gnosis, as a decentralized entity, has the possibility of providing predictions that are much more reliable and that come at a much smaller cost–betting applications would exist in Gnosis’s Core layer, which is free and open to everyone.
History of Gnosis
Gnosis was founded in 2015, but its ICO took place on April 24th, 2017. The ICO pulled in 250,000 ETH tokens (about US$12.5 million–at the time, a record-breaking figure). At the time, single Gnosis token was worth .6ETH (about US$30).
Gnosis’s ICO was a “modified Dutch auction”. This is a kind of ICO in which tokens start at a higher price, and gradually decrease in value. Therefore, investors benefited more from waiting until the later stages of the ICO.
When the coin was launched to the public in May of 2017, a single token was US$51.64. It hit its peak value in June (~US$350). Since then, it has had quite a haircut. At the time of writing, a single Gnosis token costs ~US$180, with a slightly bearish trend. It has the 40th-highest coin market cap.
Buying and Storing Gnosis
Gnosis is available for purchase on most of the major exchanges, including Poloniex, Bittrex, Kraken, Liqui, HitBTC, BX Thailand, EtherDelta, Mercatox, and Cryptopia.
Gnosis can be stored in the well-known Exodus wallet, and its own native wallet.
Future of Gnosis
On the Gnosis board are some crypto “superstars”–Vitalik Buterin (co-founder of Ethereum and Ethereum chief scientist), Joe Lubin (co-founder of Ethereum and founder of ConsenSys), and Jeremy Millar (Founding Board Member of Enterprise Ethereum Alliance).
While how actually involved these three are in Gnosis’s development is unknown, their presence here is a very positive indicator that the Gnosis project is on the right track to becoming a viable technological tool as well as an investment with the potential for high returns.
Gnosis is a coin that is actually actively executing what it has set out to use–its markets are live, and it is already being used to develop applications and predict outcomes.