[Japanese translation] Gnosis Feature: Episode 2 "Introduction to Gnosis Tokens (GNO and WIZ)"

Gnosis is a decentralized prediction market built on Ethereum. It provides an open platform where anyone can forecast the outcomes of events and aims to significantly simplify the development of customized prediction market applications. The cornerstone token crowdfunding (ICO) has been delayed repeatedly since 2016, and as of now it seems likely that it will be around April at the earliest...

This is the second feature in a series continuing from the previous installment. Let’s read the translated article now.

Introduction to Gnosis Tokens (GNO and WIZ)

In the first post, we provided an overview of the functions of our tokens. In this article, we aim to further elucidate the rationale and justification behind the design decisions.

Background

One of the key innovations of Bitcoin was introducing an incentive model into a peer-to-peer network protocol. By using a native currency and a distributed Proof of Work mechanism, Bitcoin rewarded those who contributed to it, enabling various participants to collaborate toward a common goal without conflicts. Furthermore, using a native currency enables monetization of the protocol itself.

For example, with SMTP, most work occurs at the protocol layer, but all value is created at the application layer. The rapidly advancing cryptocurrency industry has quickly evolved this concept into token models for various applications and protocols. In the early stages of these token models, tokens are distributed similarly to Bitcoin, and their intrinsic uses do not exist within the network.

More recently, protocols with their own applications have employed new distributed mechanisms and coin usage within the protocol to iterate on this design. Gnosis has adopted this approach and plans to add several new features of our own.

Building a sustainable ecosystem for token holders, participants, and application developers on a platform-level crypto-economy is a difficult task. Smart contracts are only valuable if people trust the performance of verifiable contracts.

To gain this trust, the code must almost always be open source. Even if not immediately open-sourced, once deployed on the Ethereum network, the bytecode can be read or decompiled. If the code is open-sourced, it can be easily copied and deployed with its own incentive model. This creates a dilemma.

So how can we motivate new participants to use existing networks rather than copying the code to eliminate (or set their own) fees?

As a solution to this problem, a network effect is emerging. We use Bitcoin and Ethereum and do not rely on derivatives from those protocols, but the benefits come from interoperability with other applications, services, and participants on the network.

This discussion extends beyond cryptocurrency economics to markets and finance in general. Money and markets become more competitive as more people use them, increasing convenience. Ebay charges exorbitant fees, but there remains overwhelming user adoption on that platform, so buyers and sellers continue to use it. This network effect enables bringing together buyers and sellers across a diverse range of products.

Network effects serve as a fundamental factor driving Gnosis’s platform, but we believe it is important to push this idea one step further.

Gnosis’s platform will consist of three main layers: the core, the services, and the applications.