The Gnosis Project (GNO) is a blockchain project to design a decentralized oracle platform that runs on top of Ethereum (ETH).
LThe idea is to use the powerful Ethereum smart contracts to create a system capable of using and interconnecting off-chain information with the on-chain projects that need that information. In this way, Gnosis creates a system capable of providing access to off-chain information, within a decentralized data market.
History and Origin of Gnosis
The Gnosis project began its development in 2015 at the hands of Martin Köppelmann and Stefan George, after Joe Lubin invited them to be part of ConsenSys, where he would have resources for the development of Gnosis. In fact, during an interview with the specialized medium The Defiant, Stefan George commented that:
“I got into blockchain as early as 2013, when together with Martin, my co-founder, we created a company based on Bitcoin. At that time, we basically created a prediction market for Bitcoin. Then in 2015 we realized that Ethereum has better capabilities to offer this fully decentralized, and we met Joe Lubin from ConsenSys, and Joe convinced us to do this as part of ConsenSys.”
Within ConsenSys, Martin and Stefan worked on the development of everything necessary for the project, but in April 2017 Gnosis prepared an ICO to raise funds and separated from ConsenSys, becoming a separate project. A total of 10 million GNO tokens were made available in the ICO, raising $12,5 million to develop this idea.
The first functions
At this point, the development of the Gnosis Protocol would begin and along with it they will also start a series of interesting projects supported by their technology. The first of these projects is the dxdao, which began operations in May 2019. DXdao is a decentralized governance system that sought to integrate the community interested in the Gnosis Protocol and its developers. The idea sought not only to decide the future of the Gnosis Protocol, but also other DeFi projects that could use the capabilities of this protocol for their operation.
Later, on April 15, 2020, would present finally the final version of the Gnosis Protocol, which would become a decentralized exchange protocol (DEX) that works under a mechanism known as ring trades that seeks to maximize liquidity and allow operations with the minimum incidence on prices. The idea of this system is to create a trading mechanism that improves the liquidity of illiquid or “long tail” tokens, such as prediction market outcome tokens, by facilitating trades that are not normally possible in traditional trading protocols. . In a nutshell, the Gnosis Protocol would be able to create more friendly trading markets for trades related to prediction markets.
To finalize the system, on November 23, 2020, presents the GnosisDAO, which would be the decentralized governance system that would control the development and functions of the Gnosis Protocol. With this, the Gnosis Protocol would already begin its journey as a complete protocol with unique capabilities for the DeFi ecosystem within Ethereum.
Gnosis Objective
The goal of Gnosis is to be a prediction market. This type of markets allows any participant to bet on the results of different events. For example, you can participate in whether a sports team will win or lose a game. But of course this is not limited to these types of stocks, as a prediction market has much higher returns.
Perhaps at this point, a good example of the usefulness of Gnosis would be to know if the bitcoin market will continue to grow in the next month. This can include such interesting data as: what percentage is going to grow, what will be its price at the beginning and end of the month, and with all this data, investors who use bitcoin and other cryptocurrencies can project their growth to adjust their strategies. . In this example, Gnosis would be the marketplace providing this information. A decentralized market where many people stake a certain number of tokens and strengthen a position. Thus, in case that position is correct, all those who have bet on it will receive a payment according to their bet. If it is incorrect, they lose the position (or part of it).
The best thing is that this entire mechanism works based on smart contracts, there is no one intervening in the market, and everything is done according to the participation of its users. In addition, the protocol and its evolution is controlled by the community itself through a DAO, thus guaranteeing the complete decentralization of the platform.
How does Gnosis (GNO) work?
The operation of Gnosis relies on its architecture, which is divided into three levels or layers:
Core layer or Core layer
The first layer is the Core Layer or Core Layer, which is made up of all the smart contracts that control the events, tokens, settlement and market mechanisms of Gnosis.
In total, this platform is made up of a group of more than 25 smart contracts created in Solidity, and its access and use is free of charge. In fact, each of these contracts are licensed under GPLv3, which allows you, as a developer, to take them, reuse them or improve them in other projects.
However, in the Core the main contracts are the Event Contract and the Market Contract. It is these two contracts that mostly handle the load of the Core Layer, since they handle the interaction between the off-chain world and the on-chain world (oracle), the interactions with the platform users, the creation and dynamics of the markets.
Service Layer or Service Layer
The service layer or Service Layer is a layer that uses the Core Layer to create services that use the capabilities of the base Gnosis Protocol. The services include the implementation of a state channel (for fast operations), market mechanisms, payment processor integrations, integration with DeFi, DApps and NFTs.
Application Layer or App Layer
Custom front-end applications built on top of the Service and Core layers. Gnosis will create some apps, but most will be from third parties that you charge to use their services. A good example of this is SAFE gnosis, a multisig wallet for Ethereum that is built on top of the aforementioned layers. Another good example of this layer is Kitchen, a decentralized exchange that allows quick and easy exchanges using the Gnosis Protocol.
Other Gnosis Features
Gnosis and its conditional tokens
Gnosis also has an interesting option within its Core Layer and that is the ability to develop so-called “conditional tokens”. Conditional tokens are actually tokens that seek to better represent a prediction market. Let us remember that prediction markets are stock markets in which individuals bet on the outcome of an event. The results of this event are future events of which we cannot know for sure the results. In that sense, each bet placed in the system is made in contracts in the form of event contracts.
These contracts specify the different possible outcomes of a future event, as well as a payment structure based on those outcomes and the outcome date of the event. Unlike financial markets, such as stocks or commodities, which traders use to hedge against risk (for example, farmers use futures markets to hedge against low crop prices), stock markets prediction mainly seek to aggregate information on topics of particular interest.
Thus, the main informative value of a prediction market lies in the price of the futures themselves, that not only represent the average assessment of the market participants on the probability of the outcome of an event, but also the level of confidence that the different participants have in their predictions.
In that sense, conditional tokens seek to allow:
- Simple markets can be created on the probability of a given event.
- Enable the ability to create complex markets on how the probability of one event is affected by any other event.
- Trade any asset under the condition that a specific event occurs. For market watchers, these markets will surge asset prices in different possible futures.
Gnosis Safe
Gnosis SAFE is a cryptocurrency wallet designed for tokens on the Ethereum network. The idea of this wallet is to create a multisig environment, where ownership of the wallet is divided between the people you choose and the Gnosis Safe smart contracts. This provides enormous security compared to MetaMask-type wallets, without having to give up, for example, the ability to integrate with DeFi or NFT DApps within the Ethereum ecosystem.
Token inside Gnosis
Gnosis uses the GNO token (ERC-20 type token) to operate its platform and governance. The GNO tokens were created during the ICO and have a maximum limit of 10 million tokens. Its ownership allows Gnosis users to participate in the prediction market, receive rewards and vote on the governance of the protocol. Its issuance is inflationary with a strong control, and the issuance is controlled by the governance to keep it to a minimum.
Gnosis Governance
GnosisDAO it is the DAO that enables governance over the Gnosis Protocol. To participate in the GnosisDAO you must go to its forum and start the registration. From there, you can present your proposals and participate in the debates that take place in said forum. In fact, each proposal within the GnosisDAO begins its life within the forum, where anyone can participate.
If a proposal is accepted, then it becomes a GIP (Gnosis Improvements Proposals). At this point all the technical and code part of the improvement is defined. At this point, a survey on GIP is carried out in the forum, where a majority must be obtained to proceed to the final phase. Finally, the last phase only applies to GNO token holders where they are the ones who decide whether or not to accept the new improvement. This last phase takes place on the platform Snapshot, which is the one that handles the final DAO of Gnosis.
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