One of the core features of Gnosis Protocol is that any token can be directly traded against any other token. An often-used pattern in token economics is, that a system collects fees in a wide range of tokens but uses those tokens to buy-back and burn the protocol token.
This can come with a lot of challenges. Traditional exchanges might not offer that specific trading pair. On GP this can be implemented quite elegant:
One contract account would be needed and the only thing this contract can do is to create market orders of any token into a specific protocol token. Those orders would have an unlimited sell amount and would be valid forever.
Now any token that is earned as fees can simply be deposited into the account. The GP will take care of the liquidations.
Advantages of protocols that use this system:
- no frontrunning issue
- does not need to be actively traded
- no gas fees
If no withdrawal option is provided the tokens are effectively burned. Alternatively, there can be a mechanism to withdrawal the tokens into another contract.