Augur (REP) has been around for some time now and has been competing in the crypto market to be able to rank #40 by market cap at the time of this writing. Augur is known as a decentralized oracle and prediction market platform that uses the Ethereum blockchain to bet on the outcome of future events.
Beginning a Prophecy
Augur was aptly named because the platform is essentially an Oracle. It uses "The Wisdom of the Crowd" principle and creates real-time predictive data from a collective group or individuals that claim to be more accurate than leading experts.
With development started in 2014, eventually led to an Initial Coin Offering (ICO) and then the launch of their mainnet on July 9, 2018.
When it comes to Augur, it follows 4 stages:
It costs some Ethereum to create an Augur market and can be anything from "Will the Coronavirus lockdown end by May 2020?" to "Will Bitcoin hit $20,000 by the end of 2020?". When a market is created, the creator will set a "creator fee" that will take a percentage of the rewards from winning traders. The creator fee can be set between 0 and 50 percent. Participants that place bets on events can use ETH or DAI stable coin.
When you are trading event shares, you can buy and trade shares that represent the odds of the event in the market will happen.
Market participants forecast the outcomes of events by trading shares of those market outcomes. A complete set of shares is a collection of shares that consists of one share of each possible valid outcome of the event. Complete sets are created by Augur’s on-contract matching engine as needed to complete trades.
For example, consider a market that has two possible outcomes, A and B. Alice is willing to pay 0.7 DAI for a share of A and Bob is willing to pay 0.3 DAI for a share of B. First, Augur matches these orders and collects a total of 1 DAI from Alice and Bob.7 Then Augur creates a complete set of shares, giving Alice the share of A and Bob the share of B. This is how shares of outcomes come into existence. Once the shares are created, they can be traded freely.
The Augur trading contracts maintain an order book for every market created on the platform. Anybody can create a new order or fill an existing order at any time. Orders are filled by an automated matching engine that exists within Augur’s smart contracts. Requests to buy or sell shares are fulfilled immediately if there is a matching order already on the order book. It may be filled by buying shares from or selling shares to other participants, which, may involve issuing new complete sets or closing out existing complete sets. Augur’s matching engine always sequesters the minimum amount of shares and/or cash needed to cover the value at risk. If there is no matching order, or the request can be only partially filled, the remainder is placed on the order book as a new order.
Orders are never executed at a worse price than the limit price set by the trader, but may be executed at a better price. Unfilled and partially-filled orders can be removed from the order book by the order’s creator at any time. Fees are paid by traders only when complete sets of shares are sold; settlement fees are discussed in more detail in Section I D.
While most trading of shares is expected to happen before market settlement, shares can be traded any time after market creation. All Augur assets – including shares in market outcomes, participation tokens, shares in dispute bonds, and even ownership of the markets themselves – are transferable at all times. In practice, all of these assets take the form of ERC777 tokens.
Augur uses its community score token called Reputation or REP. The amount of REP tokens a person owns represents the person's reputation on the Augur network. REP can't be mined and is rewarded to people through a bounty program or being a market creator. It can also be earned that provides truthful reports on the outcomes of the events on the markets. Once an event has occurred, the "oracles" or reporters who stake REP will learn the outcome. Once the outcome is clear from truthful reporting, a settlement takes place automatically and participants can immediately receive their winnings.
While reporting truthful outcomes on events on the market will earn you REP, untruthful reported outcomes will cost REP. Another thing to note is that if you are holding REP and not participating on the Augur network by reporting on markets, you could be fined up to 20% of your tokens.
Read the Whitepaper for full details
Growth of the Oracle
Over the years since Augur's inception, it has seen the ups and downs like many other coins on the market. A little more than a week after the July 9, 2018 launch of their mainnet, the first bets were paid out that equated to $20,000.
Mentioned earlier, the Augur platform supports the DAI stable coin but that was more recently added last year in April of 2019.
Interestingly, you are able to build a prediction market with the HYDRO token.
On a side note:
HYDRO is one of the tokens used for tipping on publish0x but it seems recently support for the token has been dropped for the time being.
Like most coins on the market, Augur did not go without controversies and problems as it came clear that some traders on Augur were being scammed by an exploit in the design where invalid markets were purposefully being created. This sparked a debate on the direction to take as worries began to swirl around a fix that could turn Augur into a centralized system.
A predictions platform that was built using Augur know as Veil decided to close its doors on Augur in July 2019. That eventually led Veil to fork Augur and create a prediction market for the 2020 U.S. Election. The fork is known as AugurLite.
Eventually, it became clear that changes need to be made for Augur to continue to thrive in the crypto market and announced the Augur V2 update that has been in development since April 2019. V2 is apparently in the final stages and testing and will be released very soon.
Augur will migrate all REP over to their new smart contract system but holders will be required to participate in the final round of dispute if a market forks to keep their REP.
Please note that all REP holders will be required to participate in the final dispute round if a market forks in Augur v2 in order to maintain their REP (the original intended functionally of REP from the crowdsale). See more in Use It or Lose It Forking.
A long list of features and fixes will be coming in the V2 update:
- Dai Denomination Token
- Uniswap v2 price feed
- Designated reporting time reduced to one day
- Use it or lose it forking
- Invalid as a tradeable outcome
- Immediate dispute rounds up to a threshold
- First dispute window reduced to one day
- Pre-emptive contributions to tentative winning outcomes
- Maximum market duration of x months
- Floating formulas altered
- Removal of controller contract & escape hatch
- Dispute ROI reduced to 40%
- Removed ETH fees from disputing
- Affiliate marketing support
- 0x trading
- Ability to ignore shares when trading
- Various bug fixes
Augur V2 will introduce a revamped trading UI and an entirely new betting UI.
With the upcoming upgrade, Augur is looking to give a boost to its platform but the timing may be questionable as the current global shutdown of the economy has hit the sports betting industry to a halt. While there are many events to create for betting, sports did make up a large percentage of most betting platforms. There could perhaps be a shift in the overall way the betting industry survives the Coronavirus and new events other than sports become the new norm for gamblers and the prediction market. Only time will tell.
This is not investment advice and always do your own research.