Gnosis, one of Ethereum's first ICOs, is creating a decentralized autonomous organization (DAO) that uses a new, still little-known way of governance. The new GnosisDAO will allow Gnosis users to vote on the governance and development of the platform.
A DAO to integrate with forecasting markets
Gnosis CEO Martin Köppelmann said in an interview that DAO's voting proposals “can be truly far-reaching: decisions on product roadmaps, treasury management, launching new initiatives, financing public goods.
DAOs open up a large space for collaboration and experimentation. " One of the key points of GnosisDAO's marketing is its integration with Gnosis's prediction markets.
Since any protocol change will have an associated prediction market where traders bet on its impact, Gnosis users can judge a proposition based on the market's attitude (regardless of whether traders believe it is positive or negative for the Gnosis).
Futarchy: testing governance with forecasting markets
This governance model, called Futarchy, was formulated by George Mason University economist Robin Hanson. Futarchy proposes that the effectiveness of democratically voted decisions or policies should be tested by forecasting markets; in other words, prediction markets create a barometer for policy success or failure, which voters can then consult to increase their decision making.
“People can influence a vote with their business decisions. When a new proposal is on the table, people can already signal whether they will buy or sell the token (GNO) if the proposal is implemented.
It is basically the existence of a more direct way to ask the “market” for feedback on a proposal, ”said Köppelmann. Gnosis will bootstrap these markets using Gnosis treasury funding of 150.000 ETH and 8 million Gnosis (GNO) tokens.
At launch, Gnosis Treasury will allocate 1.000 ETH and 20.000 GNO to GnosisDAO's tradable forecast markets on Bitcoin Pro. The DAO will launch with three proposals: one that creates a model for Gnosis Improvement Proposals (GIP), one that establishes a governance token for the DAO called SAFE, and one that distributes a one-time reward to early DAO participants.
Köppelmann stated that the votes are effectively weighted by "how many GNO tokens you have". But voters can also ignore prediction markets and vote however they want on a proposal.
As voters can go against the direction of the markets, GnosisDAO will launch with a softer futarchy trend that could become firmer as DAO grows. "We will not go all in on the futarchy on day one," said Köppelmann.
