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Where does something get its value from? While some goods and services have an inherent value, others rely on the eye of experts to set a price. But what would happen if you asked a crowd to do the same thing? That's the premise behind Gnosis, and its prediction market, Olympia.
Below we explore how this project is harnessing the wisdom of the crowd.
What is Gnosis Olympia?
Gnosis Olympia is a prediction market and the flagship Dapp of Gnosis, a company building advanced Dapps on Ethereum. It is used to aggregate predictions from experts and people all over the world to help anticipate future events. It has potential applications such as:
⛓️ Supply chains
🔨 Auction pricing
How does it work?
Users who sign up are given 200 OLY tokens, which have no value. However, what you can use them for is to make predictions on just about anything. If you make a correct decision, you get paid in GNO tokens as a reward. These have value and can be traded on the open market.
The idea is to prevent the market from making wildly inaccurate predictions.
What advantages does it have?
👨👩👧👦 Crowdsourced - By bringing together a wider range of opinion, a much more targeted prediction can be achieved.
👨🚒 Expert information - When a prediction is location-specific, having users living in the location may bring a new level of accuracy.
🍭 Incentivized - The GNO reward encourages users to make predictions and try to be as accurate as possible.
What disadvantages does it have?
🏭 Open to manipulation - A rival business could deliberately shape the prediction in order to cause bad decision making.
❓ Not necessarily accurate - Crowdsourced guesses may not perform better than advice from experts. While proven in theory, a marketplace like this has yet to prove it's better than the alternative.
What other products do they have?
Olympia isn't the only product the team behind Gnosis have been developing.
Gnosis safe - A way to keep tokens and spend them in Dapps. It is an upgrade to the Gnosis MultiSig wallet.
Dutch Exchange - A decentralized exchange for ERC-20 tokens. It is based on the Dutch auction principle-a method for pricing shares whereby the price of the shares offered is lowered until there are enough bids to sell all shares. All the shares are then sold at that price.
Trading interface - This is a way for users to trade in prediction markets.
Prediction markets have been criticized for opening the door to “assassination markets” where people can predict someone’s death and profit from making it happen. However, prediction markets have multiple legitimate uses that could make businesses more efficient and change the way we forecast events. Who knows, they could end up saving lives.