Gnosis believes prediction markets are a potentially game-changing new tool for effectively aggregating information. Compared to similar existing tools, such as polls and surveys, prediction markets differ in that they utilize market forces to incentivize participants to ‘share information’ via buying stakes in possible outcomes, with the aggregate outcome price reflecting participants’ various dispersed knowledge.
Co-founded by Martin Koppelmann, creator of the Bitcoin prediction market Fairlay, and Stefan George, Gnosis is developing an open-source, Ethereum-based platform that enables users to aggregate information via prediction markets. A smart contract ecosystem rewards users who successfully predict the outcome of a given event, with buy-in costs disincentivizing guessing and deception. Gnosis also offers developer tools for Dapps that build on the platform by integrating information generated from a prediction market and suggests several use cases.
Gnosis operates on a three-token model. One token, OWL, functions similar to a payment token and can be used to pay for platform fees, with one OWL being equivalent to $1 USD in fees. The GNO token, sold to investors, has one purpose on the platform: generating OWL tokens. Users generate OWL by locking a certain portion of their GNO tokens in a smart contract for a specified period of time. The longer the period and the greater the number of GNO tokens, the more OWL tokens the user earns. The final token, MGN, is designed to be used internally on Gnosis’ DutchX exchange as both an inflationary mechanism and reward for early, frequent exchange users. One MGN is generated for trading one ETH worth of any token and is automatically credited to users.