What is Augur?
Once upon a time, in a land of blockchain and smart contracts, a group of crypto enthusiasts came together to create the ultimate prediction platform, Augur. They envisioned a world where anyone could predict the outcome of any event and be rewarded for their accuracy.
But as they were building their platform, they realized that they had a major problem. No one could agree on what the outcome of any given event actually was. So, they came up with a brilliant solution: they would let the market decide. And thus, Augur was born, a platform where the truth is determined by the highest bidder. It was a wild success, and soon, everyone was predicting everything from sports games to the weather to the outcome of their next date. It was a hilarious, but strange world, where the truth was only a few ether away.
Augur's main source of value is the ability for users to share information and make predictions, which can be used for a variety of purposes such as hedging, speculation and risk management. However, the platform became known as the place where people bet on the most absurd things, such as "Will the office coffee run out before lunchtime?" or "How many times will the boss say 'um' during the morning meeting?". The team behind Augur couldn't help but laugh at the irony, they had created a platform for predicting the future and ended up creating a platform for predicting the most mundane events of the present.
To explain Augur, it's important to mention where the idea started from. As early as 2015, Augur attempted to solve one of the biggest problems in crypto – bridging real-world data to the blockchain aka the "oracle problem." Blockchains cannot pull data from the outside world, thus they are limited in achieving their use case. Augur relies on the wisdom of crowds to determine whether a real-world outcome has happened. In true spirit of decentralization, the platform isn't bound by KYC requirements. In this strange world of predictions, accurate reporting is all that matters.
Augur uses a system of reputation tokens to incentivize truthful reporting of event outcomes and is designed to be decentralized and self-regulating. These reputation tokens, or REP, are used to vote on the outcome of events, and users are rewarded for providing accurate reports. This system ensures that the outcome of events is determined by the collective actions of its users, rather than by a single entity. This means that the platform is self-regulating, which makes it less susceptible to manipulation or fraud.
The Augur protocol operates on the Ethereum blockchain, which enables it to be decentralized and trustless. This means that no single entity controls the platform, and all transactions are recorded on a public ledger that is visible to all users. This eliminates the need for a central authority to govern the platform, making it a true decentralized application.
Furthermore, the platform is open-source, which means that anyone can contribute to its development and improvement. This allows for a community of developers to constantly review and improve the platform, making it more secure and reliable over time. Overall, the use of blockchain technology and the various mechanisms in place make the Augur platform a safe and secure place for users to participate in prediction markets.
As a testament to the robustness of Augur, the platform has never been hacked. But that doesn't mean the protocol remains hack-proof in perpetuity.
One way is through a vulnerability in the smart contract code. If a hacker is able to find and exploit a vulnerability in the code, they could potentially gain unauthorized access to the platform and manipulate the outcome of events, or steal funds from the platform.
Another way is through a Sybil attack, where an attacker creates multiple fake identities to gain control of a significant portion of the reputation tokens, allowing them to manipulate the outcome of events, or steal funds from the platform. This attack vector is possible because Augur doesn't enforce KYC.
It is worth noting that the Augur team and the community is actively working on identifying and addressing these potential vulnerabilities through continuous auditing and security testing. Additionally, it is always recommended to keep an eye on the protocol updates and manage your risk.
How does Augur work?
Augur allows users to create markets predicting the outcome of events and to buy and sell shares in those markets. The price of shares in a market reflects the perceived likelihood of a particular outcome. This allows for a decentralized and efficient method of information sharing and prediction. For example, if a market is created predicting the outcome of a political election, users can buy shares in the market corresponding to the candidate they believe will win. The market's price will then reflect the perceived likelihood of that candidate winning, as determined by the actions of the users trading in the market.
The platform operates using a system of reputation tokens, called REP, which are used to incentivize users to report on the outcome of events in a truthful manner. These reputation tokens are used to vote on the outcome of events, and users are rewarded for providing accurate reports. This system ensures that the outcome of events is determined by the collective actions of its users, rather than by a single entity.
The Augur protocol also includes a dispute resolution mechanism, which is used to resolve any disputes that may arise over the outcome of an event. This mechanism allows users to challenge the outcome of an event if they believe it was reported inaccurately. If a dispute arises, a group of users, known as reporters, are chosen to vote on the outcome. The outcome is determined by a majority vote of the reporters, and those who voted incorrectly are penalized by losing a portion of their REP.
The Augur platform also includes a built-in mechanism for liquidity provision, which allows users to provide liquidity to markets and earn trading fees in return. This allows users to earn a return on their investments, even if they are not actively trading. Additionally, the platform allows for the creation of "categorical markets", which allow for the prediction of multiple outcomes for a single event.
Augur Sportsbook
Augur Sportsbook is a specialized prediction market. Users can create markets predicting the outcome of any sports event, such as the winner of a football game or the total number of points scored in a basketball game. Sports betting is one of the most popular activities in the realm of predictions. More than $35 billion was wagered during the 2022 FIFA World Cup.
Augur has started to gain attention of bookmakers because of its innate advantages. Unlike centralized betting platforms, there is no limit to the number of bets one can place. As a result, there is also no limits for payouts. Bettors get automatically paid in ETH and DAI if they bet on the correct outcome. On Augur there is no house that freezes accounts out of suspicion or for predatory reasons. The only condition is that users follow the rules of the platform.
Another important talking point are fees. Augur charges only 1.5% fees compared to 5-10% fees on other betting platforms. Fees are paid in the form of REP tokens and they are distributed to users who predict the correct outcome.
Augur Turbo
Augur went through multiple iterations since it launched in mid-2018. During its early days, users have complained about the clunky user interface, which added to the intricacies of using crypto. The Augur team has learned from users' feedback and decided to create Augur Turbo, a simplified version with features that are not present in the standard Augur platform.
One of the key features of Augur Turbo is its simplified user interface, which makes it easier for users to navigate and interact with the platform. It provides a more user-friendly experience and reduces the complexity of creating and trading on prediction markets.
Another feature of Augur Turbo is the ability for users to create "Turbo Markets" which are prediction markets with a shorter time frame, allowing for faster resolution and quicker payouts. This allows for more frequent trades and can make the platform more attractive to users who are looking for more short-term opportunities.
Another feature is the ability for users to create "Turbo Match", which is a type of prediction market that allows users to bet on the outcome of a single match or game. This feature is particularly useful for sports betting and other similar events that have a clear and immediate outcome.
How to make money on Augur?
In a prediction market, individuals can speculate on the outcomes of future events. Those who forecast the outcome correctly win money, and those who forecast incorrectly lose money. Participants can participate or create prediction markets ranging from football games, presidential elections, all the way to crypto market events and Twitter celeb fights.
Unlike DeFi platforms, where the financial risk is more calculated, in prediction markets there is an acute sense of uncertainty. Think of natural events, or sports. Even if you did the statistics on the outcome, there is always a one in a million chance that the least possible outcome happens.
If the idea of betting on outcomes has tingled your lizard brain, fear not, his is a normal tendency. After all, we all like to have a sense of control in the uncertain world we live in. If you borrow money from friends and trade with 10x leverage like it's nothing, we call that a gambling addiction (get some help!)
Augur represents a wonderful tool for trustless result reporting. If you are looking to toss a coin and have an adrenaline rush, here is how to make money with Augur.
Augur Trading
Trading on Augur means buying or selling shares. The price of a share, between 1 and 99 cents, corresponds to the market’s estimate of the probability of that event taking place. For example: the Donald Trump outcome in a presidential winner market trading at $0.51 indicates the market believes he has a roughly 51% probability of winning, at the given moment.
If you perceive the price is too low, or when you think traders underestimate the likelihood, this is a good chance to buy shares. The value of your shares will change over time. You may decide to sell your shares later on, either to take some profit or stop a loss. Or, you can hold onto your shares until the market closes. At that point, if the event in the market has taken place, shares will return $1.
To place a trade on Augur, follow these steps:
1. Open the Augur app
2. Click on the "Trade" tab
3. Select a market you would like to participate in
4. Select the outcome you want to buy or sell
5. Enter how much you want to buy or sell of your chosen outcome
6. Hit the Buy Or Sell button
7. Approve the transaction
8. Profit
Now that you've placed your order you can see the status of your shares on the "Portfolio" page under the positions tab. Buy them, sell them, or wait for the market is finalized to claim your winnings. The ultimate factor between a win or a loss is the outcome. So, remember to hedge your bets accordingly.
Augur Liquidity Provision
With the rise of DeFi, Augur sought to integrate a liquidity provision mechanism, which allows users to provide liquidity to markets and earn trading fees in return. This represents a way to make passive gains without having to actually trade.
Liquidity provision works by allowing users to deposit funds into a market as a liquidity provider. These funds are then used to fill orders from other users who are trading on the market. The liquidity provider earns a small percentage of each trade as a reward for providing liquidity to the market.
The percentage earned by the liquidity provider is called the "liquidity provider fee" and it's set by the market creator. The liquidity provider fee is usually a small fraction of the total trade value (e.g. 0.01%), but it can vary depending on the market.
It's also worth noting that liquidity providers can also earn additional rewards for providing liquidity to markets with high trading volume or for markets that have been open for a long time.
To earn fees as a liquidity provider, follow these steps:
1. Open the Augur app
2. Find a market you would like to provide liquidity
3. Enter the market and click the "add liquidity button" under the order ticket or under the liquidity tab
4. Enter the amount of liquidity you wish to provide
5. Hit the "Add" button
6. Approve the transaction
7. Profit
Liquidity Providers adding to an existing pool will receive a mix of outcome shares and LP Tokens. The LP tokens are what you will receive after depositing your funds into the pool. You can use these tokens to reclaim your share plus a portion of the trading fees.
The Trading Fee is charged to traders each time they make a trade on the market. This is split between all liquidity providers and your current allocation is shown next to Your Share of The Pool.
How to make money on Augur Protocol?
Buying and hodling REP — the native token of the Augur protocol — is one way of potentially making money on Augur.
The main utility of REP is governance and utility within the protocol. Specifically, REP is needed by market creators and by reporters when they report on the outcome of markets created on the Augur platform. The value of REP is therefore tied to the number of predictions ocurring on the platform.
By looking at its current price, it’s natural to think about the chance of REP hitting $1000 per token. This can happen sooner, or way in the future, and is determined by a couple of ever changing factors.
Let’s examine the potential growth of the REP token by analyzing its tokenomics. REP’s current market cap sits comfortably at ${MARKET_CAP}. With {CIRCULATING_SUPPLY} REP tokens being in circulation today, that means a price of {PRICE} per REP.
How did we come to that calculation? It’s quite easy, the price of a REP token is equal to its current market cap divided by the number of tokens in circulation. Dividing ${MARKET_CAP} by {CIRCULATING_SUPPLY} gives us a result of {PRICE} for each REP coin.
By changing the order in the simple formula above we can use it to calculate other things as well. This helps us a lot because we can deduce the market cap of REP at different token prices. Then, we can use the result to compare it to the current state of the network and see what would be required for REP to hit that price.
At a price of $1000 per token, that means the current market cap of REP would equal ${{CIRCULATING_SUPPLY} * 1000}. Remember that we arrived at this number by multiplying the amount of circulating tokens by $1000.
Now let’s shift our attention to the fully diluted market cap.
Some blockchains may have their tokenomics built in a way that only a small percentage of tokens are circulating at the beginning. This can be misleading because we don’t have the full picture and only take into account the current number of coins released in the market.
The fully diluted market cap represents the total value of a coin if all tokens were in circulation. REP’s whole supply of tokens is {MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} REP which means that no more coins above that number will ever be created.
These tokens are not created at the discretion of a specific entity. They are created automatically by the network to reward different actors that keep it secure.
How does this impact the price of REP? Taking into account the current price of an REP token, that would result in a fully diluted market cap of ${MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY * PRICE}. REP coins that have been burned are not taken into consideration because they have been permanently removed from circulation.
Whether it seems gigantic or not, the number we came to above only takes into account the current price of an REP token. Doing the same calculation but with a price of $1000 gives us a result of ${{MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} * 1000} for the REP protocol fully diluted market cap.
These are all crucial details to know when calculating if REP can reach the price of $1000 per token. If the diluted market capitalization is way too high, the token has little room left to grow. Blockchains in general have no cap on the value they can reach, whether that number seems possible it’s totally up to you.
The future of REP depends solely on its growth as a network used by tens and hundreds of millions of users. Since REP has unlimited supply, it is difficult to predict whether the price of REP will reach $1000 by 2030.
If you’re looking to add some REP to your portfolio, the most trusted places to get some are Binance and Coinbase.