ELI5: What is Gnosis?
TL;DR: Gnosis is a decentralized exchange that pools limit orders of different tokens, pays “solvers” to suggest how those orders should be settled (every 5 minutes), and finally executes the most cost-efficient settlement suggestions on-chain.
Pooling limit orders:
A user creates limit orders for different tokens they wish to trade. For example, Alice can specify she is willing to sell X $SNX for at least Y $LINK.
Solver suggestions:
Solvers try to find the most optimal way to match limit orders within a batch. The most optimal way means delivering the best possible trading prices and settling as much trade volume as possible.
Trade execution:
The protocol executes the best solver suggestion and pays trading fees to the solver and GNO tokenholders. In Gnosis, traditional immediate trade execution is replaced by batched auctions, where trades are settled after a delay period.
What’s unique about Gnosis?
Gnosis is designed to improve the liquidity of the long-tail of tokens and is optimized for larger trade sizes (compared to AMMs like Uniswap).
Gnosis vs. Uniswap?
Gnosis uses shared liquidity instead of having liquidity pools for specific token pairs (the Uniswap model).
Each asset in a Gnosis batch has a single price, whereas assets in Uniswap liquidity pools can have different prices in the same block.
Gnosis features:
- Anyone can list tokens and build integrations.
- Open competition among solvers (no central operator).
- Ring trades → pooled and optimized settlement.
- Transaction batching → limit price guarantee and no frontrunning.
- Fees included in limit prices.
UIs built on top of Gnosis?
Mesa, the 1st trading interface built on top of Gnosis, supports trading and simple market making for stablecoins. Users can market make with minimal effort, add liquidity, and earn a competitive yield on their assets.
How does Gnosis make $$$?
The protocol has a built-in fee of 0.1% for each trade.
The fee is split evenly between the solvers and GNO tokenholders, which means that GNO tokenholders benefit from increased volume.
How is the protocol governed?
The protocol is decentralized and permissionless. It cannot be upgraded (no admin keys and governance) and will run for as long as Ethereum is around.
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