Gnosis

What is Gnosis (GNO)?

Gnosis is a blockchain infrastructure provider developing new market mechanisms for decentralized finance. Gnosis’ three interoperable product lines allow users to securely trade, create, and hold digital assets on Ethereum.

Gnosis began in the realm of predictive markets, intending to create an impartial exchange for information aggregation to quantify the future. This was based on efficient forecasting tools, customized information searches, and a standard for predictive assets.

Referring to this predictive market model as “crowdsourced wisdom,” Gnosis has iterated multiple times. In addition to the variety of products under the Gnosis umbrella, the platform adopted a Decentralized Autonomous Organization (DAO) for governance.

Now, Gnosis even has its own blockchain in partnership with xDAI. Named Gnosis Chain, this sidechain serves as an execution-layer Ethereum Virtual Machine chain addressing Ethereum scaling.

When Was Gnosis Launched?

Gnosis was one of the first projects backed by Ethereum-focused incubator ConsenSys, meaning that it dates all the way back to 2015.

The Gnosis platform launched independently in 2017 following two years of development, releasing a whitepaper focused on predictive markets, and conducting an ICO that same year.

The Gnosis ICO raised around $12.5 million in ETH with just 4% of its 10 million GNO total supply. Since then, Gnosis has been developing a set of blockchain infrastructure tools.

Gnosis transitioned to a DAO in late 2020, and less than a year later, the GnosisDAO community voted to combine its ecosystem with that of xDAI. This resulted in the creation of the Gnosis Chain, which is one of many scaling solutions for Ethereum.

Who are the Founders of Gnosis?

Gnosis was founded by Martin Köppelmann, the CEO of Gibraltar-registered Gnosis Limited, and Stefan George, the company’s CTO.

Köppelmann and George met during their time at the Hasso-Plattner Institute as graduate students and worked together on projects as part of their Computer Science studies. In 2012, they decided to apply the concept of prediction markets to Bitcoin’s decentralized network.

Köppelman gave a presentation on building predictive markets on Bitcoin in 2014 in New York, following which he was introduced to ConsenSys and the freshly ICO’d Ethereum blockchain.

This led to the pair joining ConsenSys as two of its first employees, marking the genesis of Gnosis.

How Does Gnosis Work?

While originally positioned as a predictive markets platform, Gnosis is now considered a blockchain infrastructure provider. As such, Gnosis offers an entire suite of products, including the Gnosis Protocol (also called CowSwap) and the Safe Fund Management Solution family.

The Gnosis Protocol, or CowSwap, is a permissionless decentralized exchange now in its second version as of August 2021.

Gnosis Protocol V1 was launched in 2020 and enabled ring trades to enhance liquidity. 2021’s V2 upgrade saw Gnosis join forces with Balancer. The updated protocol leverages batch auctions to provide Maximal Extractable Value protection and uses the Balancer v2 single Vault architecture.

What Makes Gnosis Unique?

Gnosis is perhaps best known for its Gnosis Safe platform for managing digital assets on Ethereum.

Gnosis Safe, or simply “Safe,” is considered one of the most trusted and safe ways to manage on-chain assets and is used by a variety of enterprises and organizations. It also supports various networks beyond just Ethereum, including Avalanche, Binance Smart Chain, Polygon, Optimism, Arbitrum, Gnosis Chain, Aurora, and Energy Web.

Safe is a smart contract wallet that requires a minimum number of people or wallets to approve a transaction before it can occur. Safe also gives users, whether individuals or organizations, complete self-custody of their own funds.

How is the Gnosis Network Secured?

Gnosis and the GNO token are built on Ethereum. This means that transactions, computing, and account balances are taken care of by Ethereum, although Gnosis Chain does play a part.

Both blockchains are secured by proof-of-stake (PoS) consensus. While proof-of-work relies on a vast amount of computing power to secure the network, PoS does so with a system of incentives.

Network validators who behave according to the protocol and maintain consistent uptime are rewarded with native tokens proportional to their stake. While Gnosis Chain has a low minimum amount required for staking and validation, Ethereum requires a significant investment.

While this reward mechanism gives participants a significant reason to perform, there’s also a penalty system called “slashing” in play. A validator with a lot of downtimes or a record of malicious behavior can be slashed, which means that they lose their stake. This has the potential to be a significant loss of investment.

What is the Use of GNO?

The GNO token has two main uses in the Gnosis ecosystem: governance and staking. Gnosis has defined a 1 GNO minimum for both of these, making it relatively affordable, especially in comparison to the likes of Ethereum’s 32 ETH minimum stake.

While there are ways to stake much smaller amounts on most other chains, as long as you aren’t trying to be a validator, 1 GNO is all that’s needed to validate on the Gnosis Chain. Rewards are proportional to the amount staked, though, and may vary depending on how many active validators there are at the time.

Who Controls Gnosis?

Gnosis is controlled by the GnosisDAO, which went live in November 2020. Billed as a prediction market-driven collective, GnosisDAO handed governance of the platform over to GNO token holders.

A minimum of 1 GNO is required to participate in GnosisDAO governance, which operates via submission and voting on proposals. As is common, the governance process involves a system whereby the voting power of an individual is directly proportional to the size of their GNO holdings.

If you want to get involved with GnosisDAO and have your say in the direction of the protocol, Gnosis’ blog features a detailed tutorial on the governance process.

How Much GNO is In Circulation?

Gnosis has a total supply of 10 million GNO, with over 2.575 million GNO tokens already in circulation.

Upon initialization in late 2020, GnosisDAO took custody of 8 million GNO tokens and has since begun distribution of GNO to active protocol participants. These 8 million GNO tokens were vested linearly for 8 years beginning in November 2020.

Half a million GNO tokens were also used to finance the operation of Gnosis Limited, with the provision that the company continues to develop software for GnosisDAO. These tokens, intended primarily for staff incentivization, were vested for 5 years.

How Do You Buy GNO?

GNO is an ERC-20 token on the Ethereum blockchain, so it is very easy to buy. Decentralized exchanges like Uniswap and Sushiswap provide plenty of liquidity for the GNO token. You can also use Balancer, Honeyswap, and various other DEX platforms.

Of course, you could also simply use Gnosis’ own product, CowSwap. All you need to do is connect your Ethereum wallet to the CowSwap platform, and you can swap a variety of Ethereum-based tokens for GNO.

If you prefer using centralized exchange platforms, you’ll find GNO listed on many of them, including most of the top-tier exchanges. Among other things, this reflects GNO’s time in the market and reputation in the industry.

Is It Possible to Buy GNO Instantly?

Users of centralized exchanges will find that it is possible to buy GNO instantly, but the actual settlement is far from instant. Centralized exchanges give you convenience when you want to speculate or day trade and are faster for these activities than DEX platforms.

However, centralized exchanges can often go down at the most inopportune moments and can even choose to disallow the withdrawal of funds. This is a major risk, especially in light of multiple major centralized platform failures in 2022.

How Do You Store GNO?

In crypto, the old adage “not your keys, not your coins” definitely holds true. While you certainly could store your GNO tokens on a centralized exchange you think you can trust, self-custody is also a very viable option.

As an ERC-20, GNO is very easy to store. Any Ethereum-compatible wallet will do the job, including the likes of Metamask, Trust Wallet, Ledger, and Trezor.

Self-custody or a non-custodial, or private, wallet might be the option for you if you want to make the most of your GNO, including participating in Gnosis governance.

Again, Gnosis’ own Safe product might be an excellent option to consider when shopping around for a GNO wallet. While it tends to be used by organizations, so multiple people have to sign transactions, you can set it up individually with multiple signing wallets of your own.

Gnosis Energy Consumption

Gnosis Chain is a proof-of-stake sidechain, which means that it isn’t necessarily a big contributor to energy demand. PoS blockchains tend to be far less demanding on hardware and, by extension, electricity since they rely on economic incentives rather than raw computing power.

This is true of Ethereum as well, which plays host to the GNO token and much of the protocol’s infrastructure. Following Ethereum’s shift from proof-of-work to PoS, the Ethereum Foundation has reported energy savings in the region of 99.95%.

Is GNO a Good Investment?

The GNO token has two main use cases, staking, and governance. Both of these tend to incentivize GNO holders to take long positions on GNO rather than sell quickly, so the GNO token does have some fundamental value.

There’s also the fact that Gnosis is a recognizable name in blockchain, especially for its Safe multisig, which is often considered best-in-class. As a provider of blockchain tools and products, Gnosis can be considered in the higher echelons.

As such, the governance aspect of holding GNO becomes even more exciting. The chance to be part of GnosisDAO and have a say in the direction of a well-known name in blockchain could be very hard to turn down.