Gnosis Chain (GNO)

From CryptoWiki

Gnosis Chain
TypePOS Sidechain for DAI
Consensus mechanismPOSDAO
Total supplyInitial supply: 8,537,500 STAKE 29-1-2021: 8,310,858
Websitehttps://www.xdaichain.com/

Basics

"xDai is an EVM (Ethereum Virtual Machine) sidechain. It functions independently from Ethereum yet relies on Ethereum for the creation of its native token XDAI (converted DAI from Ethereum) as well as its multi-use governance token (STAKE). The network follows the same protocol updates, block size limits and EVM parameters as the Ethereum mainnet. This compatibility makes it easy for developers, projects and users to move seamlessly between chains."

History

Audits & Exploits

  • Bug bounty program for the OmniBridge can be found here (19-3-2021) with a a $2,000,000 bounty.
  • It names (21-4-2020) two audits, one of which was a security audit on their POSDAO by PepperSec (8-2019) and a TokenBridge audit by Quantstamp (8-10-2020). Both had issues but are claimed to be resolved.
  • Has a 5 audits listed within their docs (11-2020).
  • Had an audit by Chainsecurity on the OmniBridge (27-4-2021): "ChainSecurity uncovered 8 medium severity findings and 8 low severity findings."
  • Had an audit by Chainsecurity on POSDAO (6-2021).

Bugs/Exploits

"xDai patched an arbitrary method call vulnerability after it was responsibly disclosed by 0xadee028d."

Governance

"xDai governance processes are maturing to accommodate increased usage. An 11 member governing board now oversees xDai bridge operations on both Ethereum and xDai using a multisig Gnosis Safe for secure signature management. Updates to bridge operations, bridge validators, contract upgrades, or any other changes must be approved by a majority governance decision (Source). The STAKE governance token, an ERC20 with a primary deployment on Ethereum, is used by nominated validators to secure the xDai chain in a Proof of Stake context. This usage will extend to public validators and delegators, further decentralizing the network in the coming months (Source)."

  • From their docs (27-1-2021):

"There are currently 5 bridge validators, and 3/5 signatures are required for bridge transactions. The validator set can be updated by the Governance Board.

xDai Bridge: Convert Dai to xDai and xDai to Dai

OmniBridge: Convert any other ERC20 tokens on Mainnet to equivalent ERC677 tokens on the xDai chain

An NFT Bridge is currently in active development."

"With POSDAO, users who hold the STAKE governance token on the xDai chain can apply to become validators, and community members with less STAKE can also participate in the consensus process as delegators. STAKE token is used to protect the protocol and also for governance through a snapshot integration. The STAKE community can add and vote on proposals for protocol changes."

"In order to further decentralize the chain, the xDai team will transfer two of its current validator nodes to 01node and stakefish. We expect 01node to join as a new validator from epoch 56 and stakefish from epoch 57 - subject to change."

DAO

Treasury

Token

Launch

  • From their docs (7-2020):

"400,000 offered offered in the public auction round."

Token allocation

  • From their docs (7-2020):

"The STAKE token has an initial circulating supply of 8,537,500. Additional STAKE tokens are minted as staking rewards (15% of staked tokens).

46.9% Ecosystem Fund

16.5% Seed Round

9.6% Liquidity Providing

8.2% Foundation Reward

7.6% Advisors

6.6% Private Round

4.7% Public Round"

Utility

  • STAKE is used in its governance. You do not need STAKE to use the xDai chain for regular transactions. You only need STAKE if you want to be a validator or delegator on the xDai chain.

Token Details

"It functions independently from Ethereum yet relies on Ethereum for the creation of its native token XDAI (converted DAI from Ethereum) as well as its multi-use governance token (STAKE)."

Stablecoin

Coin Distribution

  • According (29-1-2021) to Cryptorank there are 11133 holders with the top 100 holders collectively owning 86.72% tokens of xDai Chain. 1 address is holding 51.53%, this is the Ecosystem address.

Tech

  • Code can be viewed here.
  • Its own chain
  • Previously built on: Ethereum, STAKE is an ERC677; "ERC677 is very similar to an ERC20, but includes additional functionality. We use the transferandCall functionality to enable easier bridge conversions, moving STAKE from the Ethereum Mainnet to the xDai chain and back."
  • Programming language used: EVM

Transaction Details

How it works

"The upgrade, which went live on Thursday, will unify Gnosis Chain’s Proof of Stake Beacon Chain with its Proof of Authority (PoA) mainnet, abandoning PoA consensus in the process. Gnosis Chain now boasts the No. 3 validator network with more than 100,000 nodes, ranking behind Ethereum and Bitcoin. Gnosis Chain was secured by just 20 validators under PoA, making it highly centralized. Only one GNO is required to run a validator on the Gnosis Chain."

"Gnosis Chain is currently secured by the POSDAO consensus, but this will be deprecated in the coming months as the Gnosis Chain incorporates a consensus-layer beacon chain."

"xDai is the first developed use-case for STAKE. However, it may be adopted by other chains in the future and used as a staking token for their consensus as well. POSDAO consensus is an algorithm we’ve developed that may be adopted by other chains, and those chains would have the opportunity to also incorporate a ready-made solution with STAKE to protect their chain."

"xDai is a chain with a stable reserve currency. Transactions and fees are conducted with XDAI, which is created when DAI on Ethereum is locked in the xDai bridge. The value of XDAI remains stable to the US Dollar, meaning transaction costs are predictable and not subject to market fluctuations. The real cost of a transaction on Ethereum can vary wildly based on congestion and the price of ETH. Looking at recent prices, a simple ETH transaction will cost ~$5.50 USD. On xDai, the same transaction costs ~1 cent (.01 USD).

xDai also uses a different consensus mechanism than Ethereum called POSDAO, and uses a Proof-of-Stake incentivization model to achieve 5 second block times with low transaction costs. Validators are incentivized with STAKE rather than the native XDAI token. This decouples incentivization from the transactional currency, so transactions can be processed with minimal costs. 

Currently, nominated validators from esteemed Ethereum organizations (Gnosis, MakerDAO, Shapeshift, etc - full list here) are signing blocks, but operations are transitioning to a more permissionless delegated model where community members can participate as validators and delegators."

"The xDai OmniBridge provides a mechanism where any user can transfer any ERC20 token between Ethereum and the xDai chain in a permissionless fashion. A token does not need to previously exist on xDai to be bridged through the UI; if it does not exist a new token is deployed as a function of the bridging process. As of October 28, 2020, 118 unique ERC20s have been bridged, including large market currencies like USDC, WETH, and LINK as well as many personal tokens, governance tokens and small project tokens. (Source)"

  • From their docs (7-2020):

"The xDai chain is currently functioning in a permissioned POSDAO-based consensus, where selected validators use xDai-based STAKE tokens to secure the chain. xDai will transition to public POSDAO in the coming months, where community members can become validator candidates as well as delegate STAKE to candidates and validators."

Fees

Upgrades

"EIP-1559 test implementation to explore its dynamics and benefits for the xDai chain and the broader Ethereum ecosystem. With successful testing, we plan to activate on xDai.

Mechanics to increase demand for STAKE token based on the adoption of the network are currently in R&D. Stay tuned for details!

In order to further decentralize the chain, the xDai team will transfer two of its current validator nodes to 01node and stakefish. We expect 01node to join as a new validator from epoch 56 and stakefish from epoch 57 - subject to change."

Staking

  • From their docs (1-2021):

"STAKE is a volatile token used as a staking token to protect the xDai chain. It enables delegated staking and community participation in xDai consensus. It is also used for STAKE weighted proposal initiation and voting. The current projected minimum amounts needed to validate or delegate on the xDai chain.

"In order to further decentralize the chain, the xDai team will transfer two of its current validator nodes to 01node and stakefish. We expect 01node to join as a new validator from epoch 56 and stakefish from epoch 57 - subject to change."

  • From Our Network (10-7-2021);

"66% of STAKE on xDai (660K+) is now allotted to staking."

Liquidity Mining

  • From their docs (7-2020):

"Exchange listings and market maker services require additional fees. The liquidity fund will support these activities to ensure token availability through exchanges. This fund will also provide staking tokens to initial validators onboarded prior to the transition (Number of validators * 20,000 STAKE per validator)."

Different Implementations

Interoperability

"The [PoS] transition will also allow Gnosis to upgrade the security of bridges . “Currently, it is… controlled by a multisig. In the future, thanks to zK-proof of consensus, we will be able to have the bridges secured by the full validator set,” Gnosis said."

"Two bridges connect the xDai Stable Chain to the Ethereum mainnet, supporting seamless two-way asset transfer between chains. Tokens are acquired on the mainnet, then bridged to the xDai Stable Chain sidechain using either the Dai-xDai bridge for transactional tokens, or the DPOS bridge for staking tokens. Once a user is finished transacting or staking, tokens can be bridged back to the mainnet with ease."

  • Over 50 different ERC20s have been bridged from Ethereum Mainnet to the xDai chain using the OmniBridge.
  • From Bankless (4-12-2020):

"And with the TokenBridge architecture, tokens and messages are also transferable between Ethereum and xDai, as well as other blockchains. Through interoperability, xDai extends the available Ethereum operating space, providing a network with less congestion along with familiar tools and applications for developers."

Other Details 

Oracle Method

Privacy Method

"In process, defining requirements and exploring approaches. Implementation of additional zero-knowledge protocols and private transactions into xDai. We also plan to implement privacy preserving transactions on xDai directly. Additionally, we plan to enable privacy for STAKE transactions, allowing for anonymous staking on xDai and Ethereum.

We have invested in several different approaches to implement different ZK protocols into xDai based applications and wallets."

Compliance

  • From their docs (11-2020):

"Based on our research and legal opinions they are not considered securities. However, the regulatory landscape may differ between countries. Please be informed of your local laws when using."

Their Other Projects

Roadmap

"The xDai Chain is transitioning to POSDAO, a Proof of Stake consensus protocol. POSDAO will introduce a staking token called STAKE. Individuals who own STAKE may become validators or may delegate their stake to validator candidates to secure the xDai chain. Validators and delegators (stakers) will receive rewards in exchange for providing STAKE.

The transition to POSDAO will proceed in phases. Phase 1 of this transition is scheduled for completion on April 1, 2020."

Further on it says "Phase 1 was successfully activated April 1, 2020."

Usage

"Total value locked (TVL) in the xDai chain increased almost 100-fold over the past 3 months from $57,643 USD on August 1, 2020 to $5,642,000 USD on October 22, 2020 (Source)."

  • Reached almost 20M tx (15-4-2021).

Projects that use or built on it

  • A list can be found in their docs (27-1-2021).

Pros and Cons

Pros

  • Quick and cheap to vote on.
  • Is gaining traction with projects (1-2021).
  • It’s Ethereum-compatible and users can use Metamask to interact with it.
  • It’s user-friendly as in having a short dispute period and fast block times.

Cons

  • Not well-suited (30-9-2020) for large securing large amounts.
  • Its bridge to Ethereum is run by a group of chosen parties, so not completely decentralized. This is especially an issue since its xDai token, which is used for paying tx on xDai Chain, is an IOU of Dai, which needs the bridge.

Competition

Team, Funding, Partners

Team

Funding

Partners 

"As part of the partnership, we’ve invested in the xDai Ecosystem Fund to become significant holders of the STAKE Governance token, with a lock-in period of one year. This investment, committed in part with the Gnosis GNO token, further aligns the objectives of xDai and Gnosis communities. In addition, we’ll bring our product suite to xDai, including deployments of:

  1. Gnosis Protocol, a top-ten Ethereum DEX by volume
  2. Gnosis Safe Multisig, a wallet holding more than $1 Billion in assets
  3. Conditional tokens framework, built on by prediction markets Omen and Polymarket

We’ll also assist in deploying Omen prediction markets on xDai, support xDai in future releases of the OpenEthereum client, and back further development of the Burner Wallet, as well as other critical tooling that makes decentralized applications like prediction markets more accessible to users."

  • Gnosis has proposed to make the partnership go further, by merging the two, creating Gnosis Chain (11-2021).

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