Gnosis (GNO) is a decentralized, open source prediction market on the Blockchain. By utilizing Smart Contracts, the Gnosis platform enables its users to create an event for voting or betting or to participate in others. It has its own native cryptocurrency called the Gnosis token (GNO), which is traded on some of the most well-known cryptocurrency exchanges and can be used for online payments.
History of Gnosis
Backed by ConsenSys, Gnosis was created in 2015 by Martin Köppelmann and Stefan George. Their vision was to create an effective forecasting market with easy access for users, that will provide more accurate information, driven by the incentive of profit. With a total supply of 10 million pre-mined GNOs, Gnosis conducted an ICO token sale in April 2017 using the “Dutch method,” where they managed to raise $12.5 million by selling all the available tokens, in only 12 minutes. After the end of the ICO, the market cap was valued at $312.8 million and the GNO market price was set at $31.28, respectively.
Built on the Ethereum Blockchain, Gnosis uses the Proof-of-Stake transaction method. The platform of Gnosis consists of three layers: the core layer - where Smart Contracts are executed, the services layer - related to developers, and a third layer where third-party applications are built.
What is a Predictions Market?
According to the Financial Times lexicon, prediction markets essentially allow participants to stake bets on the likelihood of various events taking place:
“These events include things such as elections. They also include predictions on the outcome of a sporting event, in which case the use of a prediction market is like a form of spread betting. Prediction markets also offer trade in possible future outcomes on securities markets, in which case participants who use it are buying something like a futures contract.”
How Does it Work?
Eliminating the need for an authoritative service (e.g. a betting company), Gnosis’ users can trade binary positions on a wide variety of event outcomes. For example, voting for Presidential elections, or betting on who the winner of a TV talent show or game will be. For the stakes, users have to dedicate an amount of WIZ through a Smart Contract. WIZ is a GNO-generated internal token that functions as transactional collateral during prediction events and reflects a value of $1 that can be used to pay service fees. On the side, Bitcoin and Ether can also be accepted for the same purpose in the Gnosis platform. Successful predictions are awarded the previously dedicated WIZ, which if not further consumed after the event has finished, they are converted back to GNO and credited to the user.
The amount of WIZ earned by the token holder is preset and proportionate to the duration of a Smart Contract. Generally, the longer a Smart Contract lasts, the higher the number of WIZ tokens awarded. 30% of the WIZ are distributed to the token holder at the beginning of a Smart Contract, while the remaining 70% is dispersed over the Smart Contract’s duration.
At the outset of Gnosis, all the available tokens were pre-mined and only 5% of them were offered to investors. Due to the unique nature of the ICO, Gnosis sold all the tokens at a premium that artificially boosted its market capitalization at $300 million. With the remaining 95% locked by the company, Gnosis shows a low trading volume and liquidity; however, the technical analysis shows a bullish trend in the long term. Gnosis tokens can be purchased at reputable exchanges for basic cryptocurrencies (Bitcoin or Ethereum) and fiat money (USD or EUR).