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.