With the opening of $SAFE on-chain transfers, an invisible giant in the cryptocurrency industry, @GnosisDAO, has surfaced. To make an inappropriate analogy, it is a bit like the Berkshire Hathaway of this industry, holding a large number of project tokens, and is the No. 4 project in Treasury size after excluding the native currency, second only to @ethereum, @0xMantle and @golemproject. Unlike Berkshire Hathaway, which does not have any business itself, @GnosisDAO not only has its own core business @gnosischain, but also incubates and lists multiple projects internally, including @safe, @CoWSwap, and even invests in a large number of early projects, including Succinct, RiscZero, Flashbots and other hot projects. It is definitely a capital operation mothership with cash flow business.

1) Gnosis History

Gnosis is definitely a super OG in the industry. At the end of 2014, @koeppelmann and @StefanDGeorge joined @Consensys at the invitation of @ethereumJoseph, and Safe (the later multi-signature wallet business) came into being. In 2017, Gnosis became independent from ConsenSys and used the narrative of the prediction market to conduct an ICO, setting the fastest ICO record at the time - raising $12 million (250,000 Ethereum) in 10 minutes.

However, the prediction market that Gnsosis had high hopes for did not develop as expected. On the contrary, with the growing demand for on-chain asset management, its multi-signature wallet products have been advancing by leaps and bounds. In addition, the decentralized trading protocol Gnosis Protocol (whose V2 is the later famous @CoWSwap) developed by Gnosis has also been gaining momentum with the rise of the DeFi market. However, these two businesses are not reflected in the market value of $GNO. In 2020, the market value of $GNO has been significantly lower than its financial book value for a long time.

This also indirectly contributed to Gnosis's subsequent major transformation - transforming into a capital operation platform, operating in the form of a DAO (decentralized autonomous organization), all assets are owned and disposed of by the holders of $GNO tokens, and the Safe and CowSwap businesses are separated, allowing them to operate and list independently, while the DAO retains the token rights of the Safe and CowSwap businesses. https://medium.com/@gnosisPM/announcing-gnosisdao-595f75776eab

2) Businesses controlled by Gnosis

Although Safe and CowSwap were divested, Gnosis has supplemented the core assets of DAO by completing the acquisition of xDAI Chain. After the acquisition, Xdai Chain was renamed Gnosis Chain. @gnosischain is essentially an Ethereum sidechain that uses POA consensus (a type of POS consensus), and its security is maintained by $GNO token staking nodes.

A major feature of Gnosis Chain is the use of $xDAI as the gas on the chain, and $xDAI is $DAI bridged to Gnosis Chain. Part of the gas generated on Gnosis Chain will be allocated to $GNO staking nodes, and the other part will be used to repurchase and destroy $GNO.

In addition, $xDAI holders on the Gnosis Chain can also receive benefits: $DAI that crosses to the Gnosis Chain will be 100% deposited into the DSR and distributed to users who deposit $xDAI into the @Agave_lending sDAI Vault. Since not all $xDAI will be deposited, and the underlying income is generated by all $xDAI on the chain, users who participate in the DSR on the Gnosis Chain can receive higher interest. Currently, the annualized income of deposits on the Gnosis Chain is 16%, while the annualized income of the DSR on the Ethereum mainnet is 13%, a difference of 3%.

With the cooperation between @MakerDAO and @ethena_labs, the yield of DSR has been improved, which has indirectly promoted the growth of Gnosis Chain's total locked value (TVL). Currently, Gnosis Chain ranks 15th among L1 and L2 platforms with $312 million in assets deposited, and about 7,500 daily active users, ranking about 15th among all L1s, which is at a medium level.

Although Gnosis Chain’s main focus on cost-effectiveness may not be particularly prominent in the competitive environment of many L2 and other L1, the AI ​​on the chain has momentum, and the amount of agent-to-agent payments continues to grow: https://dune.com/gnosischain_team/gnosis-payments. It is worth noting that nearly 60% of Safe transactions on Gnosis Chain come from AI agents: https://twitter.com/koeppelmann/status/1724702884304998626

3) Gnosis divested businesses

In early 2022, Gnosis separated the @safe and @CoWSwap businesses, but still exerted significant influence.

Safe, the largest multi-signature wallet technology stack and smart wallet developer on the market, has served more than 8 million accounts and provided security for more than $100 billion in assets before independence. After the spin-off, Gnosis still holds a 15% interest in $SAFE tokens and also manages an additional 5% interest with SafeDAO.

https://forum.gnosis.io/t/gip-29-spin-off-safedao-and-launch-safe-token/3476

Cowswap is a leading decentralized exchange (DEX) aggregator and MEV-resistant (miner extractable value) trading protocol. In 2022, CowSwap also became independent and launched its own token $COW. CowSwap's innovation lies in the "Coincidence of Wants" (CoW) transaction matching method, which directly matches the needs of buyers and sellers without the need for traditional market makers. In this divestiture, Gnosis retained a 10% interest in the $COW token.

https://forum.gnosis.io/t/gip-13-phase-2-cowdao-and-cow-token/2735

4) Businesses that Gnosis is incubating

After @safe and @CoWSwap, Gnosis did not stop its internal incubation and product development. For example, @karpatkey, developed by the Gnosis team, focuses on managing treasury assets for DAOs. Karpatkey not only serves @GnosisDAO, but also provides financial management or other related services for @Balancer, @ensdomains, @CoWSwap, @LidoFinance, @aave, and @arbitrum, with a staggering $1.6 billion in funds under management. Karpatkey's profit model is based on profit sharing.

In addition to Karpathey, the Gnsosi team has also incubated:

- Gnosis Pay: physical card, payment services
- Gnosis Hashi: Cross-chain security
- Gnosis VPN: Decentralized VPN
- Gnosis uRamp: Fiat deposits and withdrawals

5) Businesses in which Gnosis participates in investment

Gnosis has a long history of early-stage project investment. Gnosis's industry status and influence enable it to obtain very high-quality project sources. Currently, its main investment portfolio includes @gelatonetwork, @graphprotocol, @zksync, @SuccinctLabs, @alt_layer, @RiscZero, @immunefi, @WalletConnect, @anoma, @autonolas, @hoprnet, etc., and the investment income will be used to enrich the Gnosis Treasury and repurchase $GNO. In February 2024, Karpathey announced that the $5 million $OLAS held by the Gnosis Treasury will be repurchased in $GNO within 6 months.

6) GnosisDAO Treasury

GnosisDAO controls a massive treasury, second only to @ethereum, @0xMantle and @golemproject in the industry, totaling $350 million. This portion of the treasury is owned and controlled entirely by $GNO token holders. Note: The treasury does not include their 15% interest in Safe and 10% interest in CowSwap, as well as tokens that have not yet been unlocked in investment projects.

Gnosis Treasury is managed by the on-chain asset management institution @karpatkey. Its main assets include more than 200 million US dollars of Ethereum and more than 40 million US dollars of stablecoins. The rest are DeFi project tokens and some unlocked tokens of Gnosis' early investment projects, such as $OLAS. For details, please see the report released by Karpatkey:

https://reports.karpatkey.com/?dao=1&month=2&year=2024#token-detail

The overall management strategy of Gnosis Treasury is relatively conservative, with less than half of the funds participating in on-chain revenue mining. The main strategies involve staking on Lido, lending on Aave/Spark, and LP on Balancer. The comprehensive APR is around 3.2%. Based on the total size of the Treasury including $GNO, which is $730 million, it can generate approximately $23 million in revenue each year.

It is worth noting that Karpatkey has been continuously repurchasing $GNO tokens since the end of November 2023. In order to improve the utilization rate and overall rate of return of the Treasury, GnosisDAO uses the $GNO tokens held by the Treasury to match LPs with tokens of projects within the ecosystem and key investment projects, becoming part of the protocol owned liquidity, which improves liquidity and the TVL of Gnosis Chain on the one hand, and increases Treasury income on the other.

7) $GNO Value Capture

@GnosisDAO has in fact become a replica of @Consensys on the chain. As its business scope continues to expand, the value intention of its token $GNO has gradually become clear:

- Staking tokens of the Gnosis chain;
- Gnosis Treasury governance tokens;
- Return on capital for Gnosis incubated/invested projects

The value of $GNO will be captured from the following aspects: L1 business valuation + treasury value + incubation/investment project capitalization, and will be released and strengthened by repurchasing $GNO through L1 cash flow, treasury income, and incubation/investment project exit income.

Specifically, if we only consider the value of the Gnosis Treasury ($350 million after excluding $GNO) and its interests in Safe (Gnosis holds 15% of the $2 billion FDV, which is $300 million) and CowSwap (Gnosis holds 10% of the $240 million FDV, which is $24 million), the corresponding book capitalization value of $GNO is approximately $674 million.

Currently, the FDV of $GNO is about 1.1 billion US dollars. Since Gnosis Treasury holds about 380 million US dollars of $GNO, which also belongs to the $GNO holders, this part should be deducted from the FDV. After offset, the FDV of $GNO is 720 million US dollars.

This means that $GNO's price-to-book ratio is about 1.068x, reflecting that the current market price does not reflect the future listing returns of Gnosis L1 business and incubation/investment projects, and even does not fully account for the potential appreciation of tokens held by Gnosis Treasury. From this perspective, $GNO is undervalued. However, this is the crypto market, and it may be normal for long-term value not to return.

But in any case, the future trend of $GNO is likely to be highly correlated with $ETH and $SAFE. The former is the largest treasury asset, and the latter is a business with a large amount of capitalized interests, which makes $GNO an index fund to some extent. And because of the continuous profit repurchase, the staking income of the Gnosis chain (currently about 13%), and the continuous incubation/investment project listing, the index fund also has the characteristics of deflation, dividends and excess returns, and is a combination of beta + alpha.

Although $GNO may not be able to perform as well as mainstream narrative coins in the future, assets that possess the above characteristics are extremely rare. The existence of such assets may be unimaginable to people in the traditional financial field, but this may be the charm of the crypto market.