Augur is maybe one of the most promising prediction based blockchains on the market. It is also one of the most established ETH based projects. It was launched in 2016 and Augur has already launched a number of updates. The user adoption of the token has also been on the increase as numerous markets have opened up in the past few years. The use cases of this project have spiked competition from a number of other decentralized prediction markets.
What is Augur?
Augur is a decentralized market platform that makes predictions. As an ERC20 token it uses the Ethereum network to gather the ‘’Wisdom of the Crowd’’ and to make predictions on real world events. This predictive ability has actually produced many results that are more accurate than those of the top experts in this field. The predictions are nothing new and in fact, many times it would be called gambling while others can call it ‘’analysis.’’
Augur actually goes further by utilizing blockchain technology. The platform aims to enable predictive communities that have a greater accessibility and lower fees and even greater accuracy that anything before.
What is a Prediction Market?
Before getting into the platform, you need to first understand what a prediction market is. As you might have realized, it is pretty much just what it sounds like- an exchange traded-market that is used to predict future events. With Augur, the market participants can buy and sell shares on the outcome of future events. The research shows that the prediction markets can be more reliable than institutions that employ pools of experts. The predictive markets are not something that we don’t know about since the first records date back to 1503.
At that time, they used something called the ‘’Wisdom of the Crowd’’ to generate the accurate estimates of the possible outcome of the events. This premise explains that with a large enough sample size; the answers tend to be accurate rather than the answers you can get from an individual or even a smaller group of experts. This is the principle that is being used by the Augur Team to create accurate forecasts and predictions of the future outcome of the events.
The Market for Prediction Markets
While it may sound like the prediction markets are another form of gambling, the fact is that they are considered to be quite valuable when they are implemented properly. Their mechanism can lead to incredibly accurate predictions and eventually will make the markets easier to operate and much more efficient. Both Google and Ford Motor Company have been using predicative markets internally for more than a decade.
While these internal markets were used mostly to gauge the effectiveness of in-house processes, the predictive markets can be used in the area of financial markets as well. There is some consensus that the predictive market modeling can be used to hedge investments based on certain corporate behaviors and changes in dividends or stock buyback programs.
The Augur Team and History
Augur was one of the first platforms that were built on the Ethereum network and it was launched in 2014 by a 1-person team led by Jack Peterson and Joey Krug. Prior their work on Augur, both of them gained experience with blockchain technology when they created SideCoin which was a fork of Bitcoin. In addition to their experience in Augur, Vitalik Buterin is also an advisor to the project.
The first public alpha version of Augur was released in June 2015 and this was the same year that Coinbase selected it as one of the most exciting blockchain projects in 2015. This was the root of many rumors that coinbase wanted to add the Augur token REP as one of their few coins. The beta version was then released in 2016.
The biggest Augur competitor is Gnosis which is also built on the Ethereum network and is a very similar project with a very talented and devoted team. The primary difference between the two projects comes down to the economic models being used and while Augur has a fee based model based on trading volume. Gnosis has fees based on the outstanding shares.
How Augur Works
Augur is meant to be a prediction market platform that will pay the users for making correct predictions when it comes to events around the world. In addition, the creators of the markets and their holders of REP tokens will also be rewards. The predictions in the market are made by trading shares in the outcome of a real-life event. If you were to bet that your favorite team will win the game, you can purchase shares in the correct outcome you profit. The benefits you can make are determined by the likelihood of an event happening as it is determined by the crowd. Each share has a value of 1 ETH.
If there are even small odds of an event happening you will have to pay 0.50 ETH for a share and if the event does happen you will get paid 1 ETH. If the event does not happen, you will lose your 0.50 ETH or however you are willing to spend to purchase your shares. The Share prices will change over time and the price will rise as more people buy the shares. This makes possible to buy shares at a low price and then sell them at a higher price.
The Platform was fully developed in 2018 and has been growing ever since. The second version of the platform is due to launch in January 2020 and will significantly be faster than the first one. It will also allow instant settlements.
Augur was one of the first blockchcain projects that had a serious goal and intention and one of the first to use the ERC20 token and ETH network. The fact that it took more than three years of development for the project to come out to the light, hurt the reputation of the platform but after a year of the launch of the mainnet, there is a steady growth and users and investors are coming back to the project.
What is even more encouraging, if the second version is better than the first one, the improvements related to speed and reporting will bring further adoption to the project? The latest launch expected in 2020 can be the real start of growth for Augur. If all things go well, the team said that they expect their platform to eventually replace the need for centralized options and futures trading.