Augur: Your Global, No-Limit Betting Platform

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Augur

Contents

Introduction

Have you ever thought about the possibility of having a platform on the blockchain that predicts the future? Well, whether you have thought about it or not, the Augur platform is here to give you a chance at predicting the future and rewards you if your prediction is correct. This article has been written to introduce you to Augur v2 and its operations. However, it will start with the general features between the two versions. 

A Brief History of Augur

Augur protocol was launched in 2014 by Forecast Foundation owned by Jack Peterson, Jeremy Gardner, and Joey Krug as one of the first generation protocols built on the Ethereum platform. Augur raised more than 2,000 BTC and 100,000 ETH on its first day of the crowd sale. 

The platform has a native token known as reputation (REP). With a market capitalization of approximately $308 million, reputation ranks at number 154 and has a total supply of 11 million tokens. After years of operation, it launched a version 2 where it re-enforces the development since its launch. 

What is Augur?

Augur v1 was developed when Ehereum was barely two years old; since then, Ethereum, its parent blockchain, has evolved. Augur is a decentralized peer-to-peer software that uses the Ethereum blockchain to enable its users to predict the market. Augur verifies that an event happens and rewards those that made the correct prediction because it acts as a decentralized oracle. With Augur, anyone can predict the outcome of a future event such as the UEFA champions league winner, an election winner, the day of the next iPhone launch, etc.

The Augur concept is based on incentivizing correct predictions – users that correctly predict the future outcome of an event get Ether (ETH) as a reward while those with false predictions, experience losses. The higher the chance an event will happen, the lower the reward you get for predicting right. The lower the probability of an event, the higher the incentive you get for predicting correctly. 

How Augur Works

Augur is a market prediction protocol. This means that it is pretty different from the way exchanges work. While exchanges allow users to trade assets, the market prediction platform users depend on the events’ outcomes. 

Augur has four stages for its market prediction protocol. The stages are:

  • Market creation
  • Market trading
  • Reporting
  • Settlement

Market Creation

It is easy for anyone to create a prediction market on the Augur platform. Augur provides a template for anyone who wants to use their platform to access, and for situations where templates are not available, there is a custom setting.

A user has to get funds for a validity bond to create a market. A validity bond is an Ethereum fund paid for making a call. The fund is returned once it is established that your market is not invalid. The user also needs a no-show bond (this fund is returned if your designated reporter shows up to give their report within 24 hours after the market ends, and it is deposited in REP). If the user reports in 24 hours but the reported outcomes are not in final agreement upon the outcome, it is still forfeited. The fund is returned only when the outcome is correct and within 24 hours.

Also, the market creator sets a creator fee (a fee paid by traders to reward the market creator after the market contract has been settled(usually in Ethereum). The creator fee is set to encourage users to create a market.

Market Trading

This is the stage where people participate by buying shares in the outcome of the betting topic (events) and get rewards for their contribution on the Augur platform.

The more shares people buy, the higher the prices of the shares. Hence, the people who invested in the shares earlier get it at a lower price than those who got in late.

Reporting

This stage allows people (reporters) to report on the market to Augur oracle, which determines the event’s outcome. If the report is consistently correct, it becomes part of the consensus outcome, and reporters get their reward. But if the report is not among the consensus, the report is false, and the reporters lose their reward. 

Although all reporters require reputation (the native token of Augur) to participate in reporting on the Augur protocol nevertheless, reputation is not needed to place a bet on the platform.

Settlement

In this stage, the traders close out their trades and receive their payment. 

Major Augur v2 Improvement

Augur v2 is an entirely new deployment of the previous Augur Version because the v1 has no upgradeability, escape hatch or, method of halting trading activity on the protocol or the REP token.

Augur v2 incorporates or integrates the following;

0x Mesh Off-Chain Ordering

Using 0x Mesh for off-chain order books is one of the most significant changes to Augur in version 2. It allows for no-fee ‘maker’ orders and enables the capacity to transfer the onus of Ethereum transaction fees on to order ‘takers’. The 0x utilization serves as a boon for liquidity formation and allows Augur service providers and market makers to operate with more attractive margins.  

Dai Stable Betting Unit

Unlike Augur v1 that allows users to bet with ETH, the new version introduced a stablecoin DAI for betting. Introducing a stablecoin diminishes the volatility of the original betting asset, ETH, which further improves the experience for users. 

Uniswap Price Feed Oracle

Before Uniswap v2, Augur relied on a semi-centralized price feed oracle to inform the REP’s market capitalization system. Upon its launch, the Augur v2 integrates Uniswap’s newly incorporated pricing signal to dynamically adjust reporting fees based on the target REP valuation peg of 5x open interest. 

More Seamless User Experience Using Portis, Formatic, and Torus Wallets 

Unlike its version 1, Augur v2 interoperates and is compatible with web3 concepts. It is designed to natively support signing up for a wallet from either Portis, Formatic, or Torus and abstract away key management and provide authentication flow easily. For instance, users can sign up with familiar login details with Portis and support login with either a phone number or email address and Google account using  Fortmatic and Torus, respectively. 

Conclusion

Augur is a platform that utilizes the Ethereum smart contracts to execute its operations and ensures that users who made the right predictions are rewarded. The recently launched v2 incorporates several user experiences, interoperable, new settlement using DAI instead of Ethereum, market-making tools, and the ability for a market to be settled as invalid.

Also read Digital Identification on the Blockchain with Microsoft’s ION

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