Augur is a

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

prediction market Prediction markets (also known as betting markets, information markets, decision markets, idea futures or event derivatives) are open markets where specific outcomes can be predicted using financial incentives. Essentially, they are exchange-trad ...

platform built on the

Ethereum Ethereum is a decentralized, open-source blockchain with smart contract functionality. Ether ( Abbreviation: ETH; sign: Ξ) is the native cryptocurrency of the platform. Among cryptocurrencies, ether is second only to bitcoin in market cap ...

blockchain A blockchain is a type of distributed ledger technology (DLT) that consists of growing lists of records, called ''blocks'', that are securely linked together using cryptography. Each block contains a cryptographic hash of the previous block, ...

. Augur is developed by Forecast Foundation, which was founded in 2014 by Jack Peterson,

Joey Krug Pantera Capital is an American hedge fund that specializes in cryptocurrencies. It is the largest crypto hedge fund in the world by AUM. The firm was founded in 2003 by Dan Morehead (ex Tiger Management) and is co-managed by Co-CIO Joey Krug, ...

, and Jeremy Gardner. Forecast Foundation is advised by Ron Bernstein, founder of now-defunct company

Intrade Intrade.com was a web-based trading exchange whose members "traded" contracts between each other on the probabilities of various events occurring. After having been forced to exclude US traders in 2012, on 10 March 2013 Intrade suspended all tra ...

, and

founder

Vitalik Buterin Vitaly "Vitalik" Buterin (born 1994) is a Russian-Canadian computer programmer and founder of Ethereum. Buterin became involved with cryptocurrency early in its inception, co-founding '' Bitcoin Magazine'' in 2011. In 2014, Buterin deployed Et ...

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 an edible fruit produced by an apple tree (''Malus domestica''). Apple trees are cultivated worldwide and are the most widely grown species in the genus '' Malus''. The tree originated in Central Asia, where its wild ances ...

'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. In 2015, over was rais ...

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 agency of the US government created in 1974 that regulates the U.S. derivatives markets, which includes futures, swaps, and certain kinds of options. The Commodity Exchange Act ...

noted resemblance of the Augur contracts to binary options, 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 Stablecoins are cryptocurrencies where the price is supposed to be pegged to a reference asset, which is either fiat money, exchange-traded commodities (such as precious metals or industrial metals), or another cryptocurrency. In theory, the p ...

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 owned by Integrated Whale Media Investments and the Forbes family. Published eight times a year, it features articles on finance, industry, investing, and marketing topics. ''Forbes'' also r ...

'' 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 that can operate autonomously, typically through the use of smart contracts, that run on a decentralized computing, blockchain or other distributed ledger system. Like t ...

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

References

Further reading