What is Gnosis Safe?
Gnosis Safe is the equivalent of multi-sig wallets, probably one of the most important infrastructure in the world of DeFi. You see, in the world of crypto, assets are often stored on centralized exchanges, which are like banks with really weak security systems. This makes them easy targets for bad actors who want to steal users' hard-earned crypto.
Enter multi-sig wallets, the wonders of the DeFi world. With multi-sig wallets, users can store their crypto assets in a secure and decentralized environment, where it would take a team of hackers working around the clock to breach it.
Multi-sig wallets, also known as multi-signature wallets, have been around in the crypto space since the early days of Bitcoin. The first multi-sig wallets were created in 2013, and were designed as a way to add an extra layer of security to Bitcoin transactions.
The idea behind multi-sig wallets is simple: instead of requiring just one signature (aka the user's private key) to perform a transaction, multi-sig wallets require multiple signatures from different users. This added layer of security helps to prevent unauthorized access to users' funds, and makes it much more difficult for hackers to steal users' crypto assets.
Since their invention, multi-sig wallets have become an increasingly popular tool for managing and storing crypto assets. They are widely used by individuals, DeFi protocols, and even governments, who value the added security and peace of mind that multi-sig wallets provide.
If you are looking for a safe mechanism to store your assets, multi-sig wallets are the Fort Knox of security. Gnosis Safe has focused on Ethereum-based assets such as ERC-20 tokens and NFTs.
Gnosis Safe is a decentralized platform, which means that users' assets are stored on a decentralized network, rather than on a centralized server. This helps to prevent hacking and data breaches, as there is no central point of failure. Furthermore, the bad guys can't target individual signatories as it doesn't require KYC.
With projects like Yearn Finance, Aave, 1Inch using Gnosis Safe, you bet there is a lot of effort being put into securing the smart contracts that make up the multi-sig wallets. In fact, Gnosis Safe has never been hacked since its inception. This says a lot about a protocol that collectively secures $107B+ in crypto assets.
Their smart contracts have been formally audited by 5 security experts and there is a bug bounty of up to $1M for every vulnerability discovered. You can tell the creators of Gnosis Safe are not joking around when it comes to the integrity of their service.
How does Gnosis Safe work?
Gnosis Safe uses smart contracts that allow you to manage your crypto assets, specifically Ethereum and ERC-20 tokens. The protocol uses a multi-layer approach to designing its services. So, without any further introductions, let's dive in!
Gnosis Core
Gnosis Core is a comprehensive software development kit (SDK) that enables developers to build Dapps on the Ethereum blockchain. Gnosis Core provides a set of smart contracts, libraries, and front-end components that simplify the process of building decentralized applications, making it easier for developers to get started and focus on the development of their applications.
One of the key features of Gnosis Core is its modular design, which allows developers to select only the components they need for their specific use case. The Gnosis Core smart contracts include basic building blocks for token management, as well as more advanced components for creating marketplaces, prediction markets, and decentralized exchanges.
In addition to its smart contract components, Gnosis Core provides a number of libraries and front-end components to help developers create user-friendly interfaces for their Dapps. For example, the Gnosis Core SDK provides a library of pre-built UI components that can be easily customized to meet the specific needs of an application. This can greatly speed up the development process and ensure that dApps have a consistent user experience.
According to the team, Gnosis Core will always be free and open to use. Creating markets using Gnosis is close to zero in terms of costs. Instead of maximizing the fees, the team decided to eliminate fees at the most basic contract level. This way, the Gnosis team pays homage to the open-source culture while promoting its Web3 infrastructure services.
Gnosis Services
Gnosis Services is like the Prime version we see in Web3 businesses. Only instead of paying a monthly subscription, they use a trading fee model. You can't get cheap when it comes to building your own Web3 business, and the Gnosis guys are very understanding of it. After all, the payment infrastructure is just one component of a well-made consumer application. So why not let the pros help you out?
These additional services will include a state channel implementation, new market mechanisms, stablecoin and payment processor integrations, open source template applications, application customization tools, and the oracle marketplace.
As a developer, creating these services from scratch takes a lot of time and effort – making them work together is twice as hard. For example, state channels help increase the transaction throughput. Financial applications need to scale fast in order to accommodate with the demand. Stablecoin payments are also a necessary feature to deal with price volatility.
Application templates, customization tools, and advanced oracle selection make the whole package in order to expand the vision for your product. With Gnosis Services you can get own Dapp up and running in no time, and all while enjoying a good laugh. And trust me, after working with Ethereum, you'll definitely need a good laugh.
Gnosis Application
The third layer of Gnosis is centered around its roots aka prediction markets. The Gnosis application layer is designed to be highly flexible and customizable, which means that developers can easily build new applications and integrate them with the Gnosis platform.
The wider vision for Gnosis is to have a wide variety of prediction market applications built atop the same platform and liquidity pool. These applications will likely charge additional fees or use alternative business models such as market making, information selling, or advertising.
Some of the most popular Gnosis applications include the Gnosis Safe multi-sig wallet, Gnosis prediction markets, and Gnosis PM, which is a DEX that allows users to trade tokens directly from their Gnosis Safe wallets.
Gnosis Multi-Sig Wallet
The most popular feature by far is the multi-sig functionality. This means that you can set up a wallet that requires multiple signatures before any assets can be transferred. Here's how it works:
1. First, you set up a Gnosis Safe wallet by specifying the number of signatures required for each transaction. This number is called the "threshold," and it can be customized to your preference. For example, you might set up your Gnosis Safe wallet to require 2 out of 3 signatures for each transaction.
2. Once your Gnosis Safe wallet is set up, you can add other users as signatories. These users can be your friends, family members, business partners, or anyone else you trust.
3. When you want to make a transaction, you initiate the request and specify the details (e.g. the amount and the recipient). This request is then sent to the other signatories for approval.
4. Each signatory must then approve the transaction before it can be executed. If the threshold is met (i.e. the required number of signatures have been obtained), the transaction will be automatically executed and the assets will be transferred.
5. If the threshold is not met, the transaction will not be executed. This helps to prevent unauthorized crypto transactions, as well as ensure that all transactions are thoroughly vetted before they are completed.
6. The multi-sig functionality of Gnosis Safe helps to ensure that your assets are secure and protected at all times. Even if one of the signatories is hacked or compromised, the assets cannot be transferred without the approval of the other signatories.
Because Gnosis Safe uses smart contracts to enforce the terms of the agreement, you can be confident that the multi-sig functionality will work exactly as intended.
Gnosis $GNO and $OWL
Where would crypto be if a project didn't have its native token? Probably in a better place, but that's none of our concern. Gnosis has decided to go with its own token for two reasons: the first one is to decentralize its platform. GNO holders can impact the course of the protocol by submitting proposals and voting on them. Governance is putting users in control of the protocol, which differentiates Gnosis from a typical corporation.
The second reason is that users need an incentive in order to participate. The simples example is LP tokens offered by DeFi protocols to lure in new users. Who doesn't like free money?
GNO also has utility as a gas token within the Gnosis Application ecosystem. But here comes the twisted part: in order to pay for the platform fees and Gnosis Services, users have to lock up their GNO to generate OWL tokens. OWL will be pegged to $1 USD worth of fees. In this way, OWL acts as a coupon for $1 of use within Gnosis.
The utility of the two tokens can be summed up as follows: GNO (governance token), OWL (fee payment).
How to make money on Gnosis Safe?
Here comes the juicy part. The reason why you are here. Gnosis Safe can make you money by leveraging its two tokens. As a builder, Gnosis can help you set up the infrastructure for your own project, which is an indirect way to offer a good service that will pay you money later. For example, you can create your own prediction market on Gnosis and lock up GNO to create OWL and subsidize fees for your users.
But the idea is to make money now, ideally without too much hassle. Which is why Gnosis has designed multiple revenue sources for its loyal users.
Gnosis Staking
As previously mentioned, users lock up their GNO tokens to generate OWL. This is done via a smart contract system that allows you to mention for how long you would like to have your tokens locked. A multiplier is added for longer lock durations. The smart contract then calculates how much OWL you will receive.
Once you execute the contract, 30% of your OWL will be distributed for immediate use, and the remaining 70% will be distributed proportionally over the locked duration. Once the lock duration expires, the locked GNO ceases to generate OWL and the GNO becomes freely transferable. There is no limit (other than duration) for how many times GNO tokens may be used to create OWL.
Price Prediction for Gnosis Safe — Can it hit $1000?
Buying and hodling GNO — the native token of Gnosis Safe — is one way of potentially making money on Gnosis.
By looking at its current price, it’s natural to think about the chance of GNO hitting $1000 per token. This can happen sooner, or way in the future, and is determined by a couple of ever changing factors.
Let’s examine the potential growth of the GNO token by analyzing its tokenomics. GNO’s current market cap sits comfortably at ${MARKET_CAP}. With {CIRCULATING_SUPPLY} GNO tokens being in circulation today, that means a price of {PRICE} per GNO.
How did we come to that calculation? It’s quite easy, the price of a GNO token is equal to its current market cap divided by the number of tokens in circulation. Dividing ${MARKET_CAP} by {CIRCULATING_SUPPLY} gives us a result of {PRICE} for each GNO coin.
By changing the order in the simple formula above we can use it to calculate other things as well. This helps us a lot because we can deduce the market cap of GNO at different token prices. Then, we can use the result to compare it to the current state of the network and see what would be required for GNO to hit that price.
At a price of $1000 per token, that means the current market cap of GNO would equal ${{CIRCULATING_SUPPLY} * 1000}. Remember that we arrived at this number by multiplying the amount of circulating tokens by $1000.
Now let’s shift our attention to the fully diluted market cap.
Some blockchains may have their tokenomics built in a way that only a small percentage of tokens are circulating at the beginning. This can be misleading because we don’t have the full picture and only take into account the current number of coins released in the market.
The fully diluted market cap represents the total value of a coin if all tokens were in circulation. GNO’s whole supply of tokens is {MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} GNO which means that no more coins above that number will ever be created.
These tokens are not created at the discretion of a specific entity. They are created automatically by the network to reward different actors that keep it secure.
How does this impact the price of GNO? Taking into account the current price of a GNO token, that would result in a fully diluted market cap of ${MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY * PRICE}. GNO coins that have been burned are not taken into consideration because they have been permanently removed from circulation.
Whether it seems gigantic or not, the number we came to above only takes into account the current price of a GNO token. Doing the same calculation but with a price of $1000 gives us a result of ${{MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} * 1000} for the GNO protocol fully diluted market cap.
These are all crucial details to know when calculating if GNO can reach the price of $1000 per token. If the diluted market capitalization is way too high, the token has little room left to grow. Blockchains in general have no cap on the value they can reach, whether that number seems possible it’s totally up to you.
The future of GNO depends solely on its growth as a network used by tens and hundreds of millions of users.
If you’re looking to add some GNO to your portfolio, the most trusted places to get some are Binance and Coinbase.