Gnosis Token Crowd Sourced Wisdom
Platform, or “app,” tokens in decentralized networks can be distributed in a variety of ways. In the Bitcoin and altcoin model these tokens are distributed gradually via a proof of work or proof of stake mechanism. There are variations within these mechanisms which are primarily dependent on the supply curve. This curve determines the rate of dispersion of the total coin supply. Over the last two years, an informal standard for the token purchase mechanism has emerged. In this mechanism, cryptocurrency is sent to an address in exchange for some amount of app tokens. These launches typically run for approximately a thirty day period. The rate of conversion between the sent cryptocurrency and the received app tokens decreases over this thirty day period (i.e. fewer tokens per unit of cryptocurrency). For example, the rate during the first two weeks may remain at 1 ETH for 200 Tokens and then decrease linearly to 1.5 ETH for 200 Tokens and below over the open period. The amount of tokens created is often wholly dependent on the amount of cryptocurrency sent in. If the rate is 1 ETH for 200 tokens and 1M ETH is sent, 200M tokens will be created. This model causes friction for purchasers in that they are compelled to purchase app tokens earlier than they feel is justified for fear of price increases. The uncertainty in token creation may also potentially lessen the utility of the app tokens themselves.
In the Gnosis launch, 10 million Gnosis tokens (GNO) will be created and a percentage of them will be distributed through the token launch. The launch period will end when either of the following ending criterion is met: 1.5M ETH worth of GNO is sold, or 9 million GNO tokens are sold. During the launch, participants will be able to send Ether to a token launch address, committing to buy GNO at or below the current price at the time of their purchase. The price of GNO will be determined by a falling, as compared to the current trend of rising, price specification. The price of GNO will decrease every block that elapses during the launch. The price per GNO sold in the final block, when either ending criterion is satisfied, is the price that will be applied to all preceding sales during the launch period. Therefore, token launch participants are committing to a maximum price per Gnosis token and will receive tokens at this rate or lower.
Example user experience
For example, Gnosis creates 10M tokens and begins the token launch. Alice sends 1 ETH to the token launch address while the rate is at 1 GNO for 1 ETH. The token launch process continues, with the price per GNO lowering each block. 1.5M ETH worth of GNO is sold on the 7th day of the launch. On the ending block, tokens were sold at a rate of 1 GNO for 0.5 ETH. The token launch concludes, and every participant gets tokens equal to the amount of Ether that they sent, at the rate of 1 GNO for 0.5 ETH (the price when the ending criterion triggered). Alice, who contributed 1 ETH on day one, would therefore receive 2 GNO, applying the final sale price to her 1 ETH purchase. Again, participants declare the maximum price they are willing to pay for GNO, but ultimately receive the lowest price that any purchaser pays for GNO as the final sale price is applied to all purchasers.
Gnosis Prediction Market Introduction
Economic theory dictates that purchasers should participate only when GNO tokens reach a price they feel is representative of their utility in the Gnosis ecosystem. Tokens will sell for a very high price on the initial blocks, representing high demand for the product. If a buyer believes the price is fair, economic theory would encourage participation. If not, economic theory dictates buyers should wait until GNO reaches a price they feel is warranted by GNO’s functionality in the platform. It is important to emphasize that our token launch model is significantly different from previous models. Participating early provides no special benefits.
Origin of this mechanism
Alex van de Sande, seeking out a model that better enabled participation and eliminated some of the aforementioned friction created by existing mechanisms, originally proposed this auction mechanism. We agreed with his suggestion and following the initial idea, we worked with Alex and Vitalik Buterin, who also supported this design, to create the mechanism that we have now settled on.
Stefan George, technical co-founder of Gnosis has released our smart contract source code along with the code for our token launch mechanisms.
Additionally, his multisig wallet, recently used by Golem, is also available for review.
Here are links to the code:
THE HUNCH GAME
The Hunch Game is a gamified prediction market for celebrity and media gossip. It is our first foray into building apps on top of Gnosis. Hunch Game provides an example of a customized application built on Gnosis, and highlights the need for such interfaces. Although celebrity gossip is outside of our interest comfort zone, we feel that it is incredibly important to understand and cater to the needs of users outside of the crypto space. The Hunch Game is nearly ready and can be launched in the first half of 2017 as an example Gnosis app.
predART is an early stage idea to create prediction markets for pre-auction art valuation. We have received insights that such an application would be very useful for auction houses. These houses can save billions of dollars with prediction market insights into variables such as where to begin auction pricing, and how much profit to guarantee to sellers. We are excited to see and support a vast array of information gathering applications for industries.
How to Gnosis
quick guide on using the test (real ether) markets at admin.gnosis.pm
The guys at Gnosis have created two new markets for us to play with in the lead up to their highly anticipated token launch. Given the Gnosis Dapp is still a very raw beta product, I thought I’d quick up a quite review on how it works.
Step 1: Have a web3 browser!
There are several options for web3 capable browsers on the main net; MIST, Parity, and Metamask are the three that immediately spring to mind. (I would normally add Status.im to that list, but they aren’t on main net just yet).
For this example I’m using Metamask, just because it’s the most accessible for anyone who hasn’t touched ethereum before. It’s pretty self explanatory to set up, but if you would like someone to walk you through it, check out this guide first.
Step 2: Head over to the Gnosis beta Dapp at admin.gnosis.pm.
Step 3: Deposit ether.
Plug in how much ether you would like to deposit. Remember, no more than
you are willing to lose as is this an experimental Dapp still in Beta.
If everything looks right, accept the Metamask confirmation.
As soon as your transaction is confirmed, you’ll be able to buy shares in markets.
Step 4: Pick your market.
Head back to the market list and pick a market.
Step 5: Buy shares in the position you think is correct.
Hit the buy shares button.
Choose the number of shares you would like to buy and in which outcome. Choose whether or not to pre-approve the contract for future transaction (this is to cut down on the number of transactions for frequent traders). Since this is a once off transaction, I’ve left it toggled to “No”. Then hit confirm. Confirm that you really want to buy shares in the market. Again, if everything looks good, approve the Metamask transaction and wait for your transaction to confirm on the network.
Congratulations! Now you have shares in a market on Gnosis! Woo! As demand for different positions changes so too will the price, and when the market resolves ether will be paid out to addresses relative to the shares they hold in that particular position.
From here you can have a play with some of the other features like selling your shares, buying positions in all of the outcomes, and short selling shares.
Disclaimer: This is absolutely not investment advice. The Gnosis beta is an experimental Dapp and it is highly likely that you will lose anything you put into it, so please treat it as such.
This is a main network test with a rudimentary interface. There may be bugs. Markets will be funded with small amounts and there will not be much liquidity because of this. Please act accordingly and do not risk much funds.