What is Gnosis?
Gnosis is a decentralized prediction market that is created and run on the Ethereum protocol. The platform is open-source and allows users to create markets and interested people to predict the outcomes of various events.
The project was created by Martin Koppelman and Stefan George who had earlier founded another project referred to as Fairlay.com.
Prediction markets allow users to buy or trade positions on outcomes of major events. Speculative markets are like information institutions that induce people to get info, share it through trades, and collect it into consensus prices that persuade larger audiences.
Gnosis, as a prediction market, provides more accurate oracle for future events outcomes. This is inclusive of outcomes reporting from part events.
Now, Gnosis is going further than simply being a platform for prediction markets. It is creating an infrastructure layer that allows users to build their own prediction market.
This implies that you no longer have to look at the prediction markets and wonder how they did it. You have the opportunity to create such markets and reap big from them.
What is the problem that Gnosis solves?
The biggest issue with the prediction markets is that it is highly centralized. Most people joining these markets only participate passively. This means that they can only buy positions after the markets have been created but cannot be part of the designing platforms.
Prediction market centralization further implies that a lot of trust is bestowed on the admin. This leaves the markets at great risk of manipulation. Some of the prediction market platforms are carefully designed to optimize profits for the owners. They are, therefore, open to theft and open corruption with users having no clearly set mechanisms for redress. These are the problems that Gnosis aims to address.
How does Gnosis solve the problem
Gnosis addresses the above issues by adopting a completely decentralized model that allows anybody in its network to create markets and sell positions. To demonstrate this, here is an example;
a) A demonstration of Gnosis Market prediction model
The market starts with the user identifying an event of interest and crafting a question on it. This could be anything from sports, business, or political events. For example; who will win the Russia World Cup 2018; France or Croatia? Another question might be; where will Alibaba base its US head office; New York, California, or New Jersey or other. Note that ‘Other’ is included in most questions to ensure that the answers add up to 100%. The answers are quantified into positions that users buy based on the expected outcome.
When the experts review the final lineup for the World Cup and indicate about the high chances of Croatia clinching the cup, the value of tokens in favor of Croatia will go up. Note that some people still cash their tokens at this point to those who want to reap more when the final event closes.
After the final tournament, and France is announced the winner, the France token holders can claim the full rewards. Those who predicted otherwise will lose the value of the tokens.
b) The Gnosis system
To facilitate the peer2peer market prediction, Gnosis is designed in layers. These are aimed at making it easy new markets creation and flow of information.
- The Gnosis Core Layer: This is the foundation layer that operates on the basis of smart contracts factoring the market mechanisms, events, outcome tokens, and settlements. The charge levies at this layer is 0.5% to the users who buy the outcome tokens from the market maker. The Gnosis team indicated they will work to clear this fee.
- The service layer: This is an important layer in the Gnosis ecosystem because it offers important services such as stable coins and chatbots.
- The application layer: This is a layer that targets to promote the development of third-party applications. It is designed on top of the Service and Core Gnosis layers. Gnosis will also contribute to the apps going into the application layer.
c) The Gnosis tokens
Gnosis is a unique platform that targets not just to facilitate people to effectively use its prediction markets, but to also help with value transfer.
This implies that you can use the platform’s to send funds across the globe the same way Ether or Bitcoin works. The Gnosis platform features two tokens.
The main Gnosis token is referred to as GNO. The tokens were released on April 2017 during the Gnosis ICO and are ERC20 compatible. The total number of GNO tokens is 10 million. People with GNO can trade them in the cryptocurrency exchanges by forming trading pairs in the same way it happens in the forex markets.
The other token on the platform is OWL. The token is used as a stabilizing coin to help Gnosis weather the high volatility of the cryptocurrency market. To achieve this, it is pegged to the US dollar at a ratio of 1:1 (1 OWL=1 USD).
OWL tokens are generated from GNO tokens. This is done through the use of smart contracts where the GNO holder accepts to lock GNO tokens for a period of 30-365 days. A multiplier is added to motivate the users in the Gnosis ecosystem.
What makes Gnosis better than it’s competitors?
- Unlike the conventional prediction markets that only allow the platform owners or admin to create markets, Gnosis is a decentralized system that makes it possible for users to create the markets. Whether it is in sports, political event or even a major business event, you can easily create binary positions in Gnosis to sell and make profits.
- Gnosis has a diversity of markets that helps to draw a lot of users. Unlike the centralized platforms where administrations select the markets they believe are popular Gnosis is always overflowing with new event ideas. People will have markets even in areas outside the common sports and political areas. For example, people can target price movement in cryptocurrencies, businesses operations, and even weather.
- In addition to prediction markets, Gnosis has an app development layer. This layer is expected to help with the progressive development of the Gnosis system to improve the user experience at Gnosis. Because it is open source, the chances are that the development will be rapid making the growth or Gnosis faster and increasing the use cases.
- Unlike other cryptocurrencies such as Augur, Ethereum or Bitcoin that are highly susceptible to high volatility, Gnosis has two tokens in its system, GNO and OWL. OWL is aimed at helping Gnosis beat cryptocurrency volatility. One OWL is equal to one USD. This means that when you use the token or lock funds, they will be less susceptible to extreme price swings. This has made it a great option for saving funds without worrying about value loss.
How can Gnosis be categorized?
Gnosis is one of the high potential peer2peer and decentralized prediction markets that could help the industry grow to the next level. Its design, tokens, and focus on motivation aims at helping the prediction market diversify while protecting users from extreme price volatility. For most people, Gnosis is helping them get the best of both sides; the cryptocurrency and prediction markets.
The most enthralling component is the stabilizing coin, OWL, that has worked magic to help keep the value of the network stable, grow its value, and attract more users. Now, it is not just those with interest in prediction markets who are coming to Gnosis. Investors, people interested in savings, and app developers are all interested in the platform.
What’s Gnosis’s vision on Security?
Gnosis vision on security is providing users with the most secure prediction markets and stability. The development team does not stop at anything in ensuring that the platform is secure and users can operate without worrying about attacks. Here are some of the things used to secure the network.
- Regular updates. The Gnosis development team progressively works on new updates that help to fix gaps and bugs found in the network.
- Gnosis operates as an open-source platform that allows developers to come up with apps that can help them address issues and security gaps. The apps are also very useful in advancing the Gnosis system to other areas.
- All details in the Gnosis system including the user details, their keys, and predictions are encrypted so that no one can follow back and unmask you. Even when you send value using GNO, the miners in the Ethereum system can only follow the public address to check the balance of the user.
While the Gnosis system and the development team work tirelessly to hit the security target, those on the platform have to also play their part. As a high potential crypto network, Gnosis coins are of huge interest to attackers. Therefore, here are the recommended tips to stay safe on the network.
- Make sure to triple check the public address before sending value.
- Only trade the Gnosis tokens on secure cryptocurrencies.
- Always store Gnosis in cold storage when not trading them in the exchanges.
- Ensure to always keep the computer hosting the Gnosis client and the Gnosis client up-to-date all the time.
Examples of Gnosis use cases / applications.
The Gnosis prediction market utilizes the wisdom of the crowd where a group of people pools its knowledge on a subject so that it is considered more accurate compared to an individual’s stand. There is no end to the number of scenarios that people can predict on in markets. From climate change to sports, you only need to have the right questions to establish whether a specific result will be achieved or not achieved. You can even set a market to predict whether an event will occur or not occur.
- Today, people are opting to use prediction markets to harness the wisdom of the crowd in making business decisions. For example, investors can use market prediction to determine which city is better for a business to grow faster compared to another.
- The financial sector has found the prediction markets very helpful in determining the shifts in financial assets. Whether you are an investor in the financial sector or want to trade in different currencies, prediction markets will help you to correctly get the price shifts. Many financial markets are also using the markets for policy changes especially with regard to inflation.
- In property markets, prediction markets have become an important tool especially when the prices are approaching the extremes. For example, traders who want to optimize profits by selling their property when the price hits the peak just before the slowdown and recession commences.
- In sports, Gnosis can be used to predict the outcome of individual competitions or even a set of tournaments. For example, you can predict the outcome of the English premier league, NFL, or other games at home or internationally. You can even tailor the questions targeting individual players. Note that the options in sports are endless because sports competitions such as skating, skiing, soccer, horse racing, or others are can be selected all year round.
- Gnosis has also become a great tool for weather prediction. Whether you want to know how the weather will be in the next few months or climate change, the wisdom of the cloud will give near perfect results. Indeed, you can even predict occurrences of various weather phenomenon such as tornadoes.
- Like other cryptocurrencies, GNO token can also be used for trading in the exchanges, paying trading fees, and even on e-commerce stores that accept it.
- Because of its stable coin, OWL, Gnosis has become a highly reliable option for people who want to save funds without worrying of price fluctuations. This option is considered better compared to others because it is decentralized and users’ accounts are encrypted. Therefore, your funds will be away from the public eyes and cannot be reached by third parties or frozen even by courts of law.
- Gnosis tokens, like others such as Ripple and NXT, can also be used for sending value across the globe. GNO, an Ethereum based token can be sent to other people who are in the Gnosis network across the globe. In some decentralized exchanges, it is possible to send value even to those in different networks.
References
https://coincheckup.com/coins/Gnosis
https://gnosis.pm/
https://blog.gnosis.pm/
https://forum.gnosis.pm/t/gnosis-faq/259
https://gnosis.pm/resources/default/pdf/gnosis_whitepaper.pdf