| Revision as of 07:30, 17 November 2019 edit2001:14bb:53:92e9:e4f1:1d9e:5b3e:589b (talk) Jack and Joey did not found Ethereum blockchain. Made initial sentence clearer.Tags: Mobile edit Mobile web edit← Previous edit | Revision as of 09:46, 17 November 2019 edit undoDavid Gerard (talk | contribs)Edit filter managers, Administrators213,090 edits Reverted to revision 926509418 by David Gerard (talk): Rm extensive unsourced rambling (TW)Tag: UndoNext edit → | ||
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| | logo = File:Augur white background.png | | logo = File:Augur white background.png | ||
| | screenshot = | | screenshot = | ||
| | developer = Forecast Foundation | | developer = Forecast Foundation OU, Jack Peterson, Joey Krug | ||
| | latest release version = | | latest release version = | ||
| | latest release date = | | latest release date = | ||
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| | website = {{url|https://www.augur.net}} | | website = {{url|https://www.augur.net}} | ||
| }} | }} | ||
| '''Augur''' is a ] ] platform built on the ] ] |
'''Augur''' is a ] ] platform built on the ] ] that was founded in 2014 by ]{{dn|date=November 2019}} and Joey Krug with support from the Forecast Foundation, advisors to which included ] founder Ron Bernstein and ] founder ].<ref name=Bloomberg/> After a crowdfunding in August 2015,<ref>{{Cite news|url=https://www.foxnews.com/tech/new-tech-promises-government-proof-prediction-markets|title=New tech promises government-proof prediction markets|last=Lott|first=Maxim|date=2015-08-20|work=Fox News|access-date=2018-12-02|language=en-US}}</ref> the project launched in July 2018. | ||
| ==Augur Market Concepts== | |||
| ===Summary=== | |||
| Prediction markets are based on the concept that a rational user will price an asset in line with their belief of the expected return of the asset<ref name="ArrowForsythe2008">{{cite journal|last1=Arrow|first1=K. J.|last2=Forsythe|first2=R.|last3=Gorham|first3=M.|last4=Hahn|first4=R.|last5=Hanson|first5=R.|last6=Ledyard|first6=J. O.|last7=Levmore|first7=S.|last8=Litan|first8=R.|last9=Milgrom|first9=P.|last10=Nelson|first10=F. D.|last11=Neumann|first11=G. R.|last12=Ottaviani|first12=M.|last13=Schelling|first13=T. C.|last14=Shiller|first14=R. J.|last15=Smith|first15=V. L.|last16=Snowberg|first16=E.|last17=Sunstein|first17=C. R.|last18=Tetlock|first18=P. C.|last19=Tetlock|first19=P. E.|last20=Varian|first20=H. R.|last21=Wolfers|first21=J.|last22=Zitzewitz|first22=E.|title=ECONOMICS: The Promise of Prediction Markets|journal=Science|volume=320|issue=5878|year=2008|pages=877–878|issn=0036-8075|doi=10.1126/science.1157679}}</ref>. If the user's expected price is lower, they should sell (short) the asset, and if the user's expected price is higher, they should buy (long) the asset. A real world price will emerge through the aggregate actions and behaviors of all market participants. Augur formalizes this concept into the notion of a Market and Outcome Tokens. Each Market has outcome tokens that users can buy or sell. The trading of the tokens generates a price between 0 and 1 of the denomination currency, which signals the market's aggregate expected return. When the outcome for the event becomes known, a dispute process is started which can culminate in a fork of the protocol if there is sufficient disagreement among REP holders. Upon finalization of the dispute process (potentially including a fork), the Outcome tokens become redeemable for 0 or 1 of the denomination currency. Since the Outcome token pas out either 0 or 1, the price of each token then signals the probability of the outcome itself in the market. This gives viewers of the prediction market prior to the outcome being known a probability generated by the wisdom of the crowd. | |||
| ===Basic Example of a Prediction Market (as related to Augur)=== | |||
| Assume Alice, Bob, and Carol are playing a game in which Bob will draw a card from a standard playing card deck. The playing card deck has 52 cards, but each card is either a Heart, Spade, Diamond, or Club. Bob now creates a prediction market for the result of the deck of cards. He will sell 4 tokens, labeled "Heart", "Spade", "Diamond" and "Club". After Bob reveals the card, he will payout $1 for people who give him the token that matches his drawn card. Bob must always have enough money to payout when the game is over, so he initializes a rule: Player who buy from him must buy a complete set of four tokens for the price of $1. This way, since after his draw only 1 token will be worth $1 and the rest will be $0, he will never be insolvent. | |||
| Alice, interested in the game, would like to bet on "Heart". Alice is rational. Because there is no other information, each token has a 1/4 probability of winning. The expected returns are then: | |||
| Expected Return = (Win Return) * (Win probability) + (Loss Return) * (Loss Probability) | |||
| = ($1) * (1/4) + ($0) (3/4) | |||
| = $0.25 | |||
| Because she is rational, she prices each token at $0.25. Because of Bob's Rule, she then buys all four tokens in a complete set for $1. She approaches Carol and offers another game: "I will bet you at 1/4 odds that Bob pulls a Heart." Carol accepts, so she sells Carol the "Spade", "Diamond", and "Club" tokens for $0.75, giving Carol a 3/4 odds chance at winning. | |||
| Bob has $1 to payout when given the token matching the draw. | |||
| Alice is holding the "Heart" token. She paid $1 for each token, and sold all tokens that weren't a "Heart" for $0.75, giving her net spending at $0.25. | |||
| Carol is holding the "Spade", "Diamond" and "Club" tokens, which he spent $0.75 on. | |||
| In each of these cases, each player has spent exactly their rational pricing on the outcome they wish. Because of this, the prices reflect exactly the probabilities that This is a basic example, but one that highlights exactly how Augur markets work. After realization, payouts proceed, and either Alice or Carol wins $1, and Bob loses no money. | |||
| ===Profit Opportunity for Information Asymmetry=== | |||
| Prediction markets serve as a public utility because they incentivize users to reveal information in order to profit from it. Augur is designed to reveal all trades to all users, thus revealing potential information asymmetries through price updates. To extend the above example, assume another player, Desirae, works at the playing card deck manufacturer. She has learned that Bob's deck is defective and only has Hearts and Spades. | |||
| * Desirae will buy any and all available "Heart" and "Spade" tokens trading less than it's real Expected Value of $0.5. This will drive up the price of Heart and Spade, thus revealing her additional information to anyone who is looking to the current market price as a source of outcome probability. | |||
| * Desirae will sell any and all available "Diamond" and "Club" tokens, since their effective value is $0 due to there being no Diamonds or Clubs in the deck. She may buy a complete set from Bob for $1, and then sell the "Diamond" and "Club" tokens for $0.25 to people who are unaware that the deck is faulty. This will drive down the price of Diamond and Club toward $0, once again revealing additional information to any observers. | |||
| ==Operation== | ==Operation== | ||
Revision as of 09:46, 17 November 2019
 | |
| Developer(s) | Forecast Foundation OU, Jack Peterson, Joey Krug |
|---|---|
| Written in | Solidity and JavaScript |
| Platform | Ethereum |
| Type | Prediction Market Platform |
| License | Free software (GPL) |
| Website | www |
Augur is a decentralized prediction market platform built on the Ethereum blockchain that was founded in 2014 by Jack Peterson and Joey Krug with support from the Forecast Foundation, advisors to which included Intrade founder Ron Bernstein and Ethereum founder Vitalik Buterin. After a crowdfunding in August 2015, the project launched in July 2018.
Operation
Because it is decentralized, Augur allows any user to create a prediction market, unlike betting exchanges like Betfair which only allow betting on questions that are chosen by the site.
As of July 2018, the Commodity Futures Trading Commission was investigating whether Augur was selling binary options without registering them, which would violate US law.
Immediately after the site launched, users had created death pools — or assassination markets — on famous people.
Augur's user numbers dropped off sharply after launch in 2018: from 265 daily users in early July, to 37 on 8 August.
References
- ^ Leising, Matthew (July 26, 2018). "As Crypto Meets Prediction Markets, Regulators Take Notice". Bloomberg.
- Lott, Maxim (2015-08-20). "New tech promises government-proof prediction markets". Fox News. Retrieved 2018-12-02.
- Shen, Lucinda (2018-07-09). "Ethereum-Based Blockchain Betting Platform Augur Just Launched. Here's Why It's Not Married to Ether". Fortune. Retrieved 2018-07-25.
- Orcutt, Mike (August 2, 2018). "This new blockchain-based betting platform could cause Napster-size legal headaches". MIT Technology Review.
- "Blockchains could breathe new life into prediction markets". The Economist. 9 August 2018. Retrieved 2018-12-02.
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