Here’s What I Learned Participating in the Gnosis Token Auction

Gnosis is the second token auction I’ve participated in. This post describes what the Gnosis Token auction taught me.

The Gnosis token auction finished in about 11 minutes. As of today, the auction raised almost $12.5 million. Gnosis’ current market cap is over $300 million. Whew!

Wow…really?

I participated in a small way. I treat these auctions as hobbies and experiments. The first one I participated in was the Golem auction.

It’s fun to figure out how to participate, then watch the auctions unfold. I enjoy sharing what these experiments teach me.

A Very Brief Background

I decided to participate in the Gnosis auction a couple months ago. I put a reminder in my calendar. It reminded me to start preparing a few days in advance.

My participation in the Golem auction taught me advance preparation is necessary. (Golem raised about $9 million in 20 minutes.)

Continue reading to learn what my Gnosis experiment taught me.

The Gnosis auction was a reverse auction. In summary the -

Auction planned to raise $12.5 million

Auction would end once $12.5 millions was raised

Longer the auction lasted, the lower the final price of each token

Talk in the Gnosis Slack channel starting increasing a few days before the launch. Speculative talk starting increasing exponentially a couple days before the launch. Speculation spiked a few hours before launch.

I experienced strong opinions within the Slack Channel. It seemed like people were either strongly in favor of or against the auction. The talk started focusing on the reverse auction concept, more than the project itself.

I had MyEtherWallet at the ready. A Gnosis-recommended light wallet was my back-up.

1P ET hit, I sent my Ether via MyEtherWallet and waited. The transaction completed pretty quickly. I now owned GNO, the Gnosis token.

What the Gnosis Auction Taught Me

Each blockchain experiment I complete teaches me many things. Here’s what the Gnosis Auction taught me.

1 — There is a crazy amount of speculation in the token economy right now.

The Gnosis auction raised $12.5 million, at a $300 million market cap, in a little over 10 minutes. That says it all on this point ;)

2 — Know why you’re investing in a token auction before you dive into it.

I had a general idea why I wanted to participate. Most of it related to the fact I enjoy these experiments. I think the project’s interesting too. I didn’t do full due diligence on it, as I would if making a significant (to me) investment.

3 — Have a plan before participating.

I planned to invest 1 Ether at the auction’s start. That’s it.

It’s kind of like what I’ve heard people say about gambling, “Know how much you plan to gamble, then walk away when you’ve hit your limit.”

4 — Don’t get caught-up in the token auction Slack dialogues. Do use them to get answers to specific questions.

It’s easy to get swept away by the passionate discussions that take place. Don’t get involved in them. Instead, use the Slack channel to ask specific questions.

Try and identify the token auction team members. They’re usually active in the channel. Get answers from them or confirm answers from other sources yourself.

5— Advance preparation before a token auction’s start is necessary.

I learned this preparing for the Golem auction. It proved valuable before the Gnosis auction too. I originally planned to use MyEtherWallet, with Coinbase as a backup. MyEtherWallet crashed during the Golem sale.

I practiced using both and hit snags with each. Since I had time, I was able to learn and adjust.

Also, the steps to participate in these auctions can be complicated at first. Simply practicing the steps required to participate, even once, is very helpful.

6 — You can’t rely on the documentation.

Golem and Gnosis provided a lot of documentation about their auction. The documentation in both cases was —

Extensive, which made it

Difficult to navigate and

Incomplete and inconsistent, missing key steps and including conflicting information

Both teams were responsive in their respective Slack channels. Don’t expect to be successful walking through the docs once the auction begins. Practicing will serve you well here.

7 — Set the recommended gas limit in your transaction

This recommendation is more tactical than the others. Pay attention to the recommended gas limit for the auction. Set it in your transaction.

I failed to do this during the Golem auction. This resulted in the transaction taking a while to complete.

I set the gas limit to the recommended amount this time. The transaction completed quickly.

8 — Don’t deviate from your plan once the auction starts.

It’s easy to get swept away in the token auction’s start. Stick to your plan.

The Gnosis Token Auction Finished in About 10 Minutes

Ok, my transaction completed!

Now what?

Sit back and take three deep, conscious breaths when your plan is complete.

Log out of Slack and step away from you computer :)

That’s what I did. I resisted urges to jump back into the Slack channel and/or buy more GNO.

Then wait and see how your investment does. I’m planning to watch mine over the long haul.