Harnessing the Wisdom of the Crowd
An Ethereum-powered oracle and prediction market, Augur lets crypto users bet on sports, economics, world events and more. Indeed, anyone can create a market based on any real-world event, with token-holders staking their crypto on the outcome and, in return, pocketing settlement fees from the markets. Trustless and decentralized, Augur uses open source software.
Five Years in the Making
The idea for a blockchain-based prediction market took root in 2015, the brainchild of Joey Krug and Jack Peterson. The concept gained plenty of interest, not least from Ethereum founder Vitalik Buterin who signed on as an advisor, but the project faced multiple hurdles, with Krug acknowledging in 2017 that Augur needed to be “10x better than any existing system” to succeed. Fast-forward to 2020 and there is finally some meat on the bones: Augur V2 launched in July and the platform recently broke $1m in open interest and trading volume. V3 will include Dai stablecoin support, 0x support to enable free order replacements, and faster market resolution.
Mission & Vision
Prediction markets have historically been centralized. Augur aims to change that, and in doing so open the betting market up to global participants. Unlike regular betting vendors, Augur takes a hands-off approach to wagers themselves: the only role of its developers is to publish smart contracts to the Ethereum network. While bet outcomes are determined by Augur’s oracle, “reporters” decide if the outcome on which stakes are placed matches the real-world outcome of the market’s underlying event.
In an interview published in 2020, Augur co-founder Joey Krug hinted at the future direction of the project: “The whole idea behind Augur and crypto is fair markets. Markets that don’t cut you off or start charging super high fees if you start winning, and where everyone plays by the same rules. In the beginning, that’ll just mean a lot of benefits for people who like betting, but in the long run you could imagine markets on a lot of things. Imagine, in the very long term, asking Siri what the likelihood is that whatever the news is talking about actually happens – that’d be pretty cool, even if you don’t use stuff like Augur.”
Augur relies on the Reputation (REP) token, an ERC777 token on the Ethereum network, however bets themselves are made in DAI. The platform’s incentive structure is designed to ensure that honest, accurate reporting of outcomes is always the most profitable option for REP token holders, who can post progressively-larger Reputation bonds to dispute proposed market outcomes. REP has a total supply of 11,000,000. 80% of which was distributed to ICO participants, 16% to Augur founders and 4% to the Forecast Foundation.
Augur provides users with the ability to wager at very low cost, with no risk of asset seizure or censorship. Markets follow a four-stage progression, comprising creation, trading, reporting, and settlement, with users free to trade on any market. After the event upon which wagers are placed ends, its result is determined by Augur’s oracle whereafter traders close out their positions and collect their winnings. Ostensibly, gamblers predict outcomes by trading shares of those outcomes, i.e. yTrump/nTrump in the case of the 2020 U.S. Presidential election.
The Augur community is dispersed across Twitter, GitHub, Reddit, Facebook and Discord, and the project’s official account boasts over 136K Twitter followers.
YouTubers, bloggers, and media publishers can earn affiliate revenue by creating or curating content that links to Augur. This may include tutorials and guides on how to use Augur, blogs on sporting or political predictions, news stories referencing what Augur markets are forecasting on current events, aggregators that display and compare odds from different betting exchanges for given events, or any engaging or useful content on Augur. More info here.
Market and Competition
Augur is not the only blockchain-based project seeking to create a different kind of betting market. Omen shares many similar characteristics. Launched by DXdao and built on Gnosis’ open framework, the decentralized platform lets users create prediction markets on questions of their choice. The difference is that Omen is oracle-agnostic, so users can themselves specify the custom data source they would like to use as an oracle.
There are centralized prediction platforms too, PredIQt (PQT) being perhaps the best-known. Built on EOS, PredIQt’s open interest exceeds $3.3m with over 402 markets currently attracting bets. Unlike Augur, PreDIQt only allows users to purchase up to $850 worth of shares on each contract, and the fees are also rather high. As it stands, though, Augur still holds first-mover advantage.
News and Views
According to Krug, “Augur V3 is all about solving the challenges with scalability, as well as making Augur even easier to use. V2 is a 10x better experience than V1, V3 will be a 10x better experience than V2.”
You can stay tuned on all things Augur by keeping an eye on the project’s blog or Twitter feed. Predictions.global also provides an at-a-glance snapshot of what Augur’s betting landscape currently looks like.