Augur is a

decentralized Decentralization or decentralisation is the process by which the activities of an organization, particularly those related to planning and decision-making, are distributed or delegated away from a central, authoritative location or group and gi ...

prediction market Prediction markets, also known as betting markets, information markets, decision markets, idea futures or event derivatives, are open markets that enable the prediction of specific outcomes using financial incentives. They are exchange-traded mar ...

platform built on the

Ethereum Ethereum is a decentralized blockchain with smart contract functionality. Ether (abbreviation: ETH) is the native cryptocurrency of the platform. Among cryptocurrencies, ether is second only to bitcoin in market capitalization. It is open-s ...

blockchain The blockchain is a distributed ledger with growing lists of Record (computer science), records (''blocks'') that are securely linked together via Cryptographic hash function, cryptographic hashes. Each block contains a cryptographic hash of th ...

. Augur is developed by Forecast Foundation, which was founded in 2014 by Jack Peterson, Joey Krug, and Jeremy Gardner. Forecast Foundation is advised by Ron Bernstein, founder of now-defunct company Intrade, and

founder

Vitalik Buterin Vitaly Dmitrievich Buterin (; born 31 January 1994), better known as Vitalik Buterin (), is a Canadian computer programmer and co-founder of Ethereum. Buterin became involved with cryptocurrency early in its inception, co-founding ''Bitcoin Ma ...

Operation

Augur allows any user to create a prediction market on any topic. There are two kinds of markets: *Categorical markets have up to seven options; for example, "Will Alice win X election?" with "yes" and "no" as options, or "Who will win X election?" with five candidates as options. These markets are winners take all, making them similar to binary options. *Scalar markets offer a spectrum of numerical outcomes; for example, "What will the closing price of

Apple An apple is a round, edible fruit produced by an apple tree (''Malus'' spp.). Fruit trees of the orchard or domestic apple (''Malus domestica''), the most widely grown in the genus, are agriculture, cultivated worldwide. The tree originated ...

's stock be on January 1 2021?" Traders can "long" or "short" any value, i.e. bet that the result will be higher or lower than a certain value. If a trader longs at X value, the more above X the result is, the more money they make (and similarly for shorts). "Invalid" is one of the outcomes in all markets, which is intended to help prevent scam markets and ensure that market questions and resolutions are unambiguous. To resolve markets, "reporting" fees are used to incentivize the reporting of market outcomes. Augur uses an ERC-20 token called REPv2 to incentivize reporters on its network to back their reports with tokens. The REPv2 token holders are entitled to the trading fees generated on the platform. Augur's security model has been rigorously quantified and shown to be secure. Augur runs on Ethereum.

History

After a

crowdfunding Crowdfunding is the practice of funding a project or venture by raising money from a large number of people, typically via the internet. Crowdfunding is a form of crowdsourcing and Alternative Finance, alternative finance, to fund projects "withou ...

in August 2015, the project launched in July 2018. Soon after the platform launched, users had created death pools — or assassination markets — on famous people. Augur's user numbers dropped off sharply after launch in 2018: from 265 daily users in early July, to 37 on 8 August. In July 2018, the

Commodity Futures Trading Commission The Commodity Futures Trading Commission (CFTC) is an Independent agencies of the United States government, independent agency of the US government created in 1974 that regulates the U.S. derivatives markets, which includes futures contract, fut ...

noted resemblance of the Augur contracts to

binary option A binary option is a financial exotic option in which the payoff is either some fixed monetary amount or nothing at all.Breeden, D. T., & Litzenberger, R. H. (1978). "Prices of state-contingent claims implicit in option prices". ''Journal of Busin ...

s, which would fall under its jurisdiction. Augur's decentralised design may allow it to sidestep regulatory difficulties, because Augur is just a protocol that allows users to set up their own prediction market, which developer Joseph Krug says "shift(s) legal responsibility to bettors". In July 2020, Augur v2 was released. It included dramatic changes including the usage of DAI (a stablecoin pegged to the US dollar) for trading, faster resolution of market outcomes (24 hours vs. v1's 7 days), a more user-friendly interface, making "Invalid" a tradeable outcome, allowing market creators to add affiliate fees to encourage others to share the market, and allowing the creation of orders without any fees. ''

Forbes ''Forbes'' () is an American business magazine founded by B. C. Forbes in 1917. It has been owned by the Hong Kong–based investment group Integrated Whale Media Investments since 2014. Its chairman and editor-in-chief is Steve Forbes. The co ...

'' described Augur v2 as "a significant leap forward in the world of

decentralized application A decentralised application (DApp, dApp, Dapp, or dapp) is an Application software, application that can operate autonomously, typically through the use of smart contracts, that run on a decentralized computing, blockchain or other distributed le ...

s that function similar to the internet but without the need for trusted third parties. If successful, the profound upgrades could be used to more than just place horse-bets without a bookie; they could mark a turning point in the next generation of the internet."

Operation

History

See also

References

Further reading