Gnosis to launch futarchy-based DAO tied to prediction markets

The Gnosis team announced the launch of GnosisDAO, based on the ideas of futarchy within a decentralized autonomous organization (DAO). It posits that any protocol change becomes a prediction market, acting as a barometer of assessment and influencing users’ ultimate decision.

Announcing GnosisDAO

The prediction market-driven collectivehttps://t.co/NMgdIEygLc

— Gnosis (@gnosisPM) November 23, 2020

The futarchy model was first described by economist Robin Hanson of George Mason University. It envisions a two-stage voting process, where initially there is support/opposition to an initiative, and then — a vote on the set of actions required to implement it.

In the second stage, two prediction markets are created, each containing a single asset: one market corresponding to adoption of the measure, and the other — its rejection.

If the proposal is adopted, all trades on the rejection market are cancelled, and on the acceptance market after some time each user receives a certain amount of tokens, based on the futarchy-chosen success metric. And vice versa — if the proposal is rejected.

Markets can operate for some time, with the policy having the higher average token price ultimately winning. A similar algorithm was described by Vitalik Buterin in 2014.

“Users can influence [the vote] with their trading decisions: will they buy or sell the Gnosis token (GNO) if the proposal is implemented. In essence, this is a direct way to obtain the market’s ‘feedback on the proposal'”, — explained CoinDesk in an interview withCoinDesk by Gnosis cofounder Martin Kepplmann.

According to him, DAO voting proposals can be diverse: changes to the roadmap, reserve management, launching new initiatives, and funding public goods. This form opens broad space for collaboration and experimentation, he added.

The team will allocate for such markets from the GnosisDAO reserves 150 000 ETH and 8 000 000 GNO with an eight-year vesting period. In the initial phase — 1 000 ETH and 20 000 GNO.

The DAO will launch with three proposals:

• the creation of the second version of the Gnosis protocol;
• the creation of a governance token for the DAO named SAFE;
• the execution of an airdrop amounting to 5% of GNO for active participants in GnosisDAO.

Earlier in July, the Gnosis protocol launched the Omen prediction markets platform.

In September, the cryptocurrency hedge fund Arca proposed to the Gnosis team to return funds to investors after reviewing the results of its activity.

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