What is Augur?
Augur is a decentralized, trustless oracle and prediction market platform built on top of the Ethereum blockchain. It is also the first major decentralized application (dApp) developed using Ethereum, making it a major proof of concept for this technology.
Augur was created to enable crypto users to leverage the “wisdom of the crowd” and predict the outcome of any future event, such as an election, a successful SpaceX launch, or the World Cup winner.
Augur’s concept is based on monetizing correct answers — users speculate on the outcomes of future events; those who get the outcome right, win money, while the rest lose. The smaller the likelihood of an event occurring, the bigger the reward offered for predicting its success. Thanks to its advanced prediction model that generates almost real-time predictive data, Augur’s forecasts are often more accurate than those of the leading experts.
As a decentralized application, Augur does not belong to anyone and can not be shut down by a single person, company, or government.
How does Augur work?
Creating markets on Augur is something anyone can do – all that’s needed is a small amount of Ethereum and a hot betting topic. Markets can tackle anything from “Will Elon Musk sell Tesla to Apple in 2019?” to “Will the Cubs win the World Series in 2020?” People creating markets are allowed to set a creator fee in Ethereum, a percentage fee between 0 percent and 50 percent, which is collected after the settlement. It serves as an incentive for users to create new markets.
Once a market is created, the trading stage begins. This is when people can buy shares in the outcomes of any real-world events and receive rewards for contributing their knowledge and insights to the Augur oracle. The price of the shares is calculated based on how likely the event is to occur. The more people that buy into a particular outcome, the higher the price. Users can also trade the shares they buy with others or invest in less likely outcomes for better financial gains. A share of any event costs $1 and if the odds are even the price goes down to $0.50.
The reporting stage starts after a market closes. Profit-motivated reporters feed information about the actual, real-world outcome to Augur’s oracle, which determines the final outcome of the market and begins settlement. Reporters who consistently provide accurate reports and information are eventually financially rewarded while people with reports are inconsistent with the consensus are penalized. Anyone holding reputation (REP), which is Augur’s native token, can become a reporter and participate in this stage. Note that Augur users do not need reputation to make bets on the platform, only reporters are required to hold REP tokens.
The settlement stage relies on smart contracts that execute on the final outcomes automatically. User predictions that turn out to be right get rewarded. Reporters whose reports were determined to be correct and accurate are rewarded in reputation tokens, while reporters who did not respond, or provided inaccurate information, are penalized — their share of REP goes to honest reports.
Who’s behind Augur?
Augur launched in 2014. The project’s crowdsale raised more than 2,000 BTC and 100,000 Ether on its first day (eventually it raised $5.5 million) and, as mentioned, Augure was one of the first major platforms built on Ethereum.
Jack Peterson and Joey Krug are the cofounders of Augur — they both have a solid track record in the blockchain world, having previously led the creation of Sidecoin, a famous Bitcoin fork. In addition to that, Vitalik Buterin, one of the founders of Ethereum, is an advisor to the Augur team, which gives the platform a strong presence in the cryptocurrency market.
What does the future hold for Augur?
As one of the oldest Ethereum projects, Augur has a solid reputation. The team’s whitepaper goes into very fine details explaining the concept behind the platform and inspiring trust. And it’s obviously a concept that works.
Crowdsourcing intelligence is a great way to go about predicting markets, too. The use of smart contracts that self-execute and automatically fulfill the predetermined conditions eliminates human error and drastically reduces the possibility of outcome manipulation.