Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


Can Cryptocurrency Prediction Markets Forecast the Future at Gnosis?

The team behind the Gnosis (GNO) cryptocurrency is betting everything on prediction markets.

Thus, Gnosis’s strategy runs counter to its competitor Augur (REP).  Augur is converting its ecosystem into a no-limit betting platform. I think this change could make Augur a lot of money.

For instance, Augur is enabling US Dollar betting with the Dai (DAI) or Multi-collateral (DAI) stablecoin. Using the Dai could make Augur lucrative because Dai can pay in US dollars. To explain, stablecoins such as Dai pay users in US dollars from trust bank accounts.

Augur is planning to release its Augur V2 no-limit betting platform soon. You can bet now on the Augur V1 no-limit betting platform.

Gnosis’s Prediction Markets

In contrast Gnosis’s business plan is to enable anyone to create decentralized prediction market platforms. Gnosis’s hope is that users could make money by building customized forecasting applications.

A prediction market is a collection of people who speculate on the occurrence of events. For example people bet on the outcome of elections at a political prediction market.

The Gnosis decentralized prediction markets will be the basis of conditional tokens. The conditional tokens are custom cryptocurrencies based on specific outcomes. For instance, a token based on President Trump’s reelection, or loss in the U.S. presidential election.

Conditional tokens can be specialized. For instance, Gnosis’s Sight offers live markets based on blockchain technologies such as Ethereum 2.0, or new smart contracts. Individuals will use Sight to bet on the success or failure of those applications.

Gnosis is offering two mechanisms for building prediction markets, Sight and Apollo. Gnosis makes those mechanisms available via GitHub.

Gnosis and Trading at DutchX

In another effort to harness prediction markets, Gnosis is building the DutchX; a trading platform that uses the Dutch Auction system.

In a Dutch Auction, the auctioneer starts with a high price and lowers the price until somebody buys. Most Dutch auctions feature a reserve price a low price where the auctioneer halts bidding.

Gnosis plans to test DutchX with multi-token, batch cryptocurrency auctions with uniform-clearing prices. The hope is to build a more rational trading market that is arbitrage-free. Gnosis’s long-term plans include trading of information, incentives, or ideas on DutchX platforms.

Which is More Valuable Augur or Gnosis?

Augur (REP) and Gnosis’s (GNO) Coin Prices are close. For instance, CoinMarketCap gave Gnosis a Coin Price of $16.68 on 7 February 2020. Meanwhile, CoinMarketCap gave Augur a Coin Price of $15.96 on the same day.

Gnosis was CoinMarketCap’s 176th  most-valuable cryptocurrency with a Market Capitalization of $18.423 million and a 24-Hour Market Volume of $99,038.78 on 7 February 2020. In contrast, Augur was CoinMarketCap’s 42nd most-valuable cryptocurrency with a Market Capitalization of $175.582 million and a 24-Hour Market Volume of $23.327 million on the same day.

Thus, Mr. Market thinks no-limit betting is more valuable than Prediction Markets. Hence, CoinMarketCap’s prediction market forecasts that Augur’s no-limit betting will make money but Gnosis’s prediction markets will not.

Are Gnosis and Augur good Cryptocurrencies?

Both Augur and Gnosis are Ethereum Request for Comment (ERC20) tokens. Therefore, both Augur and Gnosis operate on the most popular blockchain operating system; Ethereum.

In addition, Gnosis participates in Bancor’s Liquidity Network. Bancor gave Gnosis a Coin Price of $16.60, a 24-Hour Market Volume of $1,400 and a $35,409 Liquidity Depth on 7 February 2020.

To explain, the 24-Hour Market Volume is the value of the GNO tokens trading in Bancor’s Network. In addition, the Liquidity Depth is the cash value of all the GNO in Bancor’s Network. Bancor’s Network attempts to give cryptocurrencies cash value by making it easy to convert them.

In the final analysis, I think Gnosis and Augur are intriguing ideas for cryptocurrencies. However, I do not think either REP or GNO has any cash value. In contrast, Mr. Market believes Augur’s betting mechanism could be more valuable than prediction markets.

I advise speculators to stay away from both Gnosis and Augur until either platform makes money.