Fueled by software development efforts that began in autumn 2014, the decentralized prediction-market network Augur was born. It is a open-source forecasting tool, that makes use of the Ethereum network and smart contract protocol. Early project supporters include Intrade co-founder Ron Bernstein, The Thiel Foundation, and Ethereum founder Vitalik Buterin.
Augur works by having participants set up prediction events where shares can be purchased for outcome predictions. Individuals can then forecast real-world events such as election outcomes, receiving rewards for correct predictions. At the conclusion of the event, funds connected to shares of the correct outcome are distributed to shareholders (those who guessed correctly), the Augur Foundation, and the “Augur oracles” involved in verifying the event outcome.
By way of example, if a person predicts that the Alabama Crimson Tide will win the national championship, or that the movie “Inferno” will win an Academy Award, then shares could be purchased relative to those outcomes. People who disagree can buy shares in the negative outcome. Whoever is correct after the event date passes will reap a reward.
Undergirding Augur’s operational model are tenets articulated in James Surowiecki’s bestselling book The Wisdom of Crowds. In this book, Surowiecki explains how and why predictions made collectively are typically more accurate than those done individually, through surveys or via traditional opinion polling. Importantly, crowds don’t always predict better than experts, but under certain circumstances, they do. Augur set out to build a platform that enabled/encouraged those circumstances.
Launched on October 4th, the digital token known as REP (short for Reputation), is what fuels the network; the more REP a user possesses, the greater weight assigned to that person’s input when reporting on the outcomes of events (this is how the system knows what happened in real life). When the event concludes, the “oracle” consensus of these REP holders defines the outcome. Truthful reporting leads to the distribution of REP tokens and award winnings. Those who report against the consensus lose REP tokens and earn nothing.
REP saw fervent interest when first released, and were quickly listed on markets like Kraken, Poloniex, and ShapeShift. However, the market value took a hit after trading publicly, declining 52% from an October 4th opening price of $13 to $6 two days later. This was, however, still far higher than the ICO price when the REP tokens were initially purchased in mid-2015.
The price at the time of this writing is $4.91 with a market cap of $54m, REP currently ranks eight on CoinCap’s list of most valuable assets.
Despite a promising start, the future of REP could largely be predicated on user adoption and regulatory issues. With respect to the latter, the failed prediction market Intrade offers a cautionary tale on how government pressures can adversely impact business advancement. The thinking in some circles is that Augur could attract unwelcome attention and a fate similar to Intrade if it even remotely resembles gambling and betting. On the other hand, Augur is set up as a decentralized platform precisely so that it is not beholden to any jurisdiction, or even development team.
Nevertheless, in light of the U.S. presidential election’s failed popular predictions — from Nate Silver’s FiveThirtyEight to the news outlets Fox, Bloomberg, and Rasmussen — Augur’s innovative approach may offer a superior prediction model. Says Anthony Di Iorio, CEO of Jaxx : “Augur is a genius concept. We are extremely excited to be integrating REP because it’s been surging in growth since it entered beta and is now becoming a hot commodity … We have developed a great friendship with the team at Augur and are looking forward to providing our customer base with a way to manage their REP on computer, device or phone.”
Augur (REP) Snapshot
Available on Shapshift: Yes
Launch Date: October 4, 2016
Available Supply: 11,000,000
Consensus Algorithm: Serpent, an Ethereum scripting language
Augur on CoinCap: http://coincap.io/REP
Augur Website: https://www.augur.net/
Augur on Twitter: https://twitter.com/AugurProject