The highly anticipated Gnosis ICO is upon us, and it has become an emotionally charged event. Confusion among the crypto community, and much strife towards the Gnosis team leave many potential participants to Monday’s ICO baffled whether to invest or not. The community has been highly critical of the dutch auction method which could lead to a 90%+ retention rate of GNO tokens by the development team, should the ICO sell out in the opening day(s).

I will address what appears to be the 2 main, public concerns with the ICO and GNO token structure, and present an alternative view in which a fast ICO sell out (and retention of 90%+ of the tokens to the Gnosis team) would be beneficial to both token holders and the long term growth and development of this decentralized prediction platform.

There is a lot of hype behind this ICO, and it is hard to imagine that it will not sell out quickly. This article is written under the assumption that the Gnosis team will be retaining a very large percentage of the GNO market cap.

Concern #1 — Ownership has been skewed to favor the founders at the expense of the community. The team is just cashing in on the ICO-mania by retaining such a large ownership of GNO tokens.

Look at it this way — The Gnosis team created this project and the GNO token, and they have the right to own 100% of it if they desire. What they are essentially doing is selling ~10% ownership of the GNO token function, which is a “fee credit (WIZ) generation machine,” in their own words. “ As a result, GNO tokens give access to the platform at a fixed cost, comparable to holding a license.”

What does this mean? It means you are purchasing the right to print WIZ tokens at a fixed rate. Gnosis team states “ The algorithm adjusts the WIZ emission rate constantly to create the right amount to maintain the total at 20 times the average monthly WIZ use. Consequently, when the use of the platform grows, the amount of WIZ generated per GNO grows along with it.”

With this being said, 1 WIZ will be pegged at $1 within the platform, and likely worth a bit less than $1 on the exchanges. The more GNO you hold, the more WIZ/Dollars you create as the Gnosis platform grows in usage. More clarity on this shortly.

This high retention by the gnosis team also allows them to sell more tokens at a later date, when the project has grown in awareness and user-base. If I am a GNO holder and the developers announced they are selling 250,000 tokens to MGM Resorts, or Tim Draper, or Vitalik Buterin, etc, I am happy to see these tokens in strong hands. These retained tokens allow for well planned, future avenues of growth and partnership, by the team that created this entire thing. If, on the flip side 90% of the coins go to the public, the development team has much less future ammo to work with in order to expand.

Concern #2 — How are GNO and WIZ valuable if someone can just use bitcoin or ethereum directly on the platform?

I am going to cut right to what I think is the most misunderstood and important piece of the GNO puzzle which is the Fee Reduction Mechanism. Gnosis says:

We assume that most fees will be paid in WIZ however, if fees are paid with any other token these fees will be credited directly to an external auction contract. The auction contract will sell the fees for GNO.

Simply stated, any fee collected outside of WIZ tokens will be used to purchase an equivalent amount of GNO on the market and then moved in to a permanent address. If Gnosis knocks it out of the ball park, there will be a constant and forever demand for GNO tokens by this external auction contract.

the GNO held by the smart contract does not receive WIZ.

IF Gnosis is a wild success, then the longer you hold GNO, the more GNO is purchased and locked in to a contract that does not recieve WIZ, the higher the % of WIZ you will recieve per GNO token. As far as I am concerned, it is structured to be a long-term holder’s wet dream.

Regardless of whether most fees are paid via WIZ or not, all fees paid will still benefit GNO holders, and there will always be a market for WIZ because they will always be worth $1 in fees on the platform. If a WIZ token only sells for 95 cents on the market, just think of it as a dividend for holding GNO tokens.

Closing Thoughts —The spotlight is on this Gnosis ICO and that is not just because the team has delivered a working product before asking for money, unlike many other ICO projects to date, but take a look at the list of advisors and names attached to this venture. Not a list that would be easily tarnished. Add this to a token structure that directly benefits long term holders in both GNO token value and WIZ dividend value, and you have my attention.