Augur Project Status Update

Augur project aims to be an open source decentralized prediction market running on the ethereum network. Its a really cool idea, but it seems like a long time until its ready for live real money trading, or maybe I’m just impatient?

Augur was founded in 2014 with the first release coming in June 2015. Development was funded token crowdsale in October 2015. In 2016, Augur beta was released for testing on the Ethereum testnet. The project has gone through a few iterations since then, and while the community is waiting for real money release, the value of Augur tokens has been on a wild ride. At the time it was issued, the Augur tokens were one of the biggest Ethereum ICOs ever. The current market cap of Augur tokens is 11 million “REP” worth almost 500 million US dollars at the time of writing.

Back in December 2016, the value of REP tokens had been falling since the ICO, trading under $3 per REP, but by the summer of 2017, the price had climbed near $35 per REP. After trading in a range to just below $17, the REP tokens are now trading at all time highs above $40.

I’m not sure we can use the price of Augur REP tokens as a sign of the project’s progress/success. The value of REP tokens are secured by the ethereum blockchain, so digital security of REP tokens is as strong as the ethereum blockchain itself, but at the price of alt coins has been rising across generally, the REP price has gained as well. Its unclear how much of the gains in REP price are due to the specific viability of the Augur project, and how much is due to the general rise in the market value of alt coins. One way to find out would be to construct an index of alt coins, and compare REP returns to that index, try and strip out the market risk.

I’d really like to see Augur and other open source prediction markets such as Gnosis be successful, and I think they will be eventually, but I wish progress towards real money trading would happen sooner. To follow the progress of Augur, check out their regular blog posts.

Let’s talk about how Augur will work. Augur isn’t a for profit business, it will be an open source decentralized prediction market. This distinction is very important because its open source decentralized nature will be one of the features that protects it from being shut down by governments. Since Augur will run on blockchain tokens, it will become very difficult (if not practically impossible) for governments to stop Augur. There will be an Augur app that provides a basic user interface, but the real volume of Augur will likely come by interacting with the network by way of their API, check out their API documentation. If Augur can exist for real money trading, then hosted service providers will emerge to provide users with services that will help users interact on the Augur network. This will come in the form of business that exist to house user accounts, historical data for users, to guard user’s data and money, to provide payment services, etc. There will be data service providers that provide useful information to users.

I can think of lot’s of viable business models that will come to exist once Augur exists for real money. There will also be all sorts of ethical issues that emerge such as what to do about death markets, etc.

The odds that Augur will exist for real money use are getting higher, and I think the odds are becoming likely.

Augur Market & REP Price Impressions

Augur proposes to be an open-source decentralized prediction market built on Ethereum. Augur would be revolutionary if it comes to be, but until now development is still in beta stage. Augur an ambitious undertaking, and has been taking longer than expected to go live with real money trading. The platform will work by allowing users to post and adjudicate outcomes on a nearly autonomous crowd sourced basis. Users will be able to post markets and then determine the results. The settlement of outcomes will be determined by users by voting on the outcome of posted events using their Augur “reputation” tokens. If they vote with the crowd they will receive positive credit, and if they vote with the minority, they will be charged credit. Whether this system works or not will be discovered once the platform goes live for real money trading, for now its still just a theory.

Other event exchanges such as InTrade have come and gone. Usually their fate is determined by governments, who make it difficult for the exchange to comply with AML and securities laws. It becomes too costly for the exchange to comply in all jurisdictions. But if Augur goes live with real money trading, it will be more difficult for governments to stop it. The exchange will use its own currency, Augur “rep”, and so won’t have to comply with AML requirements. It will also be an autonomous organization funded by its own tokens and so it will be difficult to hold Augur accountable to a fiat state based legal system. Especially since the idea and implementation of Augur will be open source, even if governments were to shut Augur down, it could be replicated using code repositories.

What’s also interesting for Augur market watchers is trading will be done using a native crypto currency called “reputation”. These REP digital tokens will be used as currency to trade contracts on the Augur exchange, but also as voting tokens used to determine the outcome of posted events. The tokens were distributed during October 2016, and began trading on various exchanges at that time. This trading has provided market watchers with a guage of expectations. The price of REP has been trailing down since inception which signals declining confidence/expectations.

According to coinmarketcap.com, REP have the 9th largest market cap of all crypto currencies on Dec 12th, 2016 with a market cap of $34 million worth of REP outstanding. After settling into a post-distribution price of $7.07 REP/USD in October 2016, the price has steadily traded lower to a current price of $3.15.  This price action seems to imply that the market is less confident about the eventual launch of the Augur platform. The longer it takes for development, the less confidence the market will have, and the price will drift lower.  Its difficult to determine when the platform will go live for real money. There is not much guidance from the developers and social media posts are also very speculative.

Personally, I am looking forward to Augur live real money trading. Augur could be a valuable tool in many ways.