Augur is a decentralized prediction market that utilizes blockchain technology to explore the concept of collective intelligence and attempt to get accurate predictions on the outcome of future events. Users make predictions by trading shares in the outcome of events happening in the real world.
Augur’s protocol is a collection of smart contracts built on Ethereum. Users can create markets that are binary (yes/no), scalar (a range of values, i.e. how many Galaxy phones will Samsung sell in Q4, etc.), or categorical (will the Yankees win the World Series, or will Donald Trump be elected for a second term, etc.), and then bet on the potential outcomes. If a user bets on the right outcome, they win a monetary profit.
Prediction markets have been shown to be more accurate at predicting future events than surveys, opinion polls, and individual experts. By providing real-time predictive data that can be traded using real money, Augur incentivizes market participants to reveal what they think will happen, not what they hope will happen.
Augur Value, Market Cap and Volume
There is a fixed supply of 11 million REP, of which 80% (8.8 million) was sold in a public token sale in 2015 for $5,300,000. The remaining tokens were distributed to the Augur team and the Forecast Foundation, a non-profit that handles the maintenance, enhancement, and marketing of the platform. The proceeds of the crowd sale will be used to fund Augur’s development beyond its initial release.
The price of REP during its release was $0.5795. In 2017, the price reached $21.73. The highest price of one token during that year was $38.69. As of November 2017, the 11 million REP in circulation had a market cap of $276,630,200 with a daily volume of $4,788,060.
Acquiring and Storing Augur REP
If you didn’t get a chance to acquire REP during the token sale, you can still get it in exchange for BTC or ETH from several crypto exchanges, including Kraken, Gatecoin, Bittrex, Poloniex, and Shapeshift. The Augur team recommends buying REP from reputable exchanges and asks users to be wary of off-exchange trades in Bitcoin forums, Telegram groups, etc. If you must do an OTC trade, do it with someone you trust.
REP can be stored on any wallet that supports ERC20 tokens like MyEtherWallet (MEW), Mist, and Parity, or a hardware wallet like Ledger. Augur supports Ledger integration, which means you can participate on the platform without taking your REP out of your wallet.
Augur’s Relationship With Ethereum
Augur’s development team chose Ethereum as the back-end because they believe it offers the best development platform for rapid deployment. Being part of the Ethereum blockchain means Augur is decentralized, and there are no central servers that can be shut down. The platform is open to anyone, anywhere in the world and anyone can create a prediction market asking a question about anything.
Augur’s fees are set by users, and are vastly lower than conventional trading platforms. The platform uses smart contracts to eliminate security risks and allow fast, automated payments to winning traders. All deposits and withdrawals are completely automated using smart contracts, eliminating any chance of human error.
Augur Reputation Tokens
Augur has an internal digital token called Reputation (abbreviated REP) that gives users the right to report or weigh in on the outcome of events. The more REP a user has, the more value or trust is assigned to that person’s input. REP is kind of like the “score” of an individual user.
Users earn REP by providing truthful reports. REP holders who submit correct predictions are awarded a portion of the winnings while those who report against the market consensus will lose their tokens and earn nothing. Simply put, REP is gained or lost depending on the reliability of users votes with the consensus.
Holding REP comes with a scope of work requirements. REP holders are obligated to accurately report on the outcome of randomly assigned events within Augur during a 30-day reporting period. Users who fail to accurately report on an outcome or try to be dishonest lose their tokens. Augur redistributes the tokens of bad reporters to users who provided accurate reports in the same reporting cycle. Reporters can lose up to 20% of their REP if their reports conflict with the final consensus.
Users who own REP and participate in reporting receive a portion of Augur’s market fees. Each token entitles the holder to 1/22,000,000 of the platform’s total market fees. The more REP a user owns and reports accurately with, the more in fees they will collect. A member of the Augur community built a handy Reputation Calculator that gives REP holders an estimate of expected earnings.
After the reporting period ends, a 29-day reveal period begins. The REP holders obligation during that period is to simply log in once within 29 days. There are no other work obligations. If a reporter chooses to take a vacation, their REP can be moved into a dormant state. Reporters in a dormant state can’t report on markets or earn trading fees, and they won’t be subjected to REP re-distributions.
Please note that you don’t need REP to create markets on Augur. REP is only required for reporting on the outcomes of events. Regular participants can make bets using Ether.
Liquidity of Augur Reputation
Any good news in the crypto space is good news for Augur, and the past year has been very good for crypto assets. The total crypto market cap went from $18 billion at the beginning of 2017 to over $300 billion towards the end of that year. This is money that can be used to predict, hedge, or gamble on markets created on Augur.
As it stands, Augur REP is highly liquid. You’ll have no trouble trading them for BTC or ETC at most major cryptocurrency exchanges. The value of REP is expected to skyrocket once Augur completes its beta phase.