Cryptocurrencies and their underlying technology, Blockchain, are slowly gaining application in virtually all sectors of the global economy. The gaming and gambling industry hasn’t been left out. Cryptocurrencies and platforms have been developed that will make it easier for gamblers and gamers to better participate in a fair and decentralized system.
One of the platforms in this industry is Augur and it has gained widespread acceptance since its establishment.
What is Augur?
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This is a decentralized prediction market platform that makes use of the Ethereum network. The prediction market allows you to bet on the outcome of future sporting or entertainment events. If successful, you get monetary prizes for the correct predictions. In the prediction market, the less likely the chance of an event occurring, the higher the reward earned for predicting its success.
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Augur utilizes “The Wisdom of the Crowd” from members of the platform to establish real-time predictive data which most of the time is more accurate than the predictions of leading experts in the field.
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By making use of the blockchain technology in the prediction market, Augur provides its users with an option that will see them pay fewer fees, have greater accessibility, and gain better accuracy than most markets.
How does Augur work?
Creating markets
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In order to create a market on Augur, you will need to spend a small amount of Ethereum. The market can be anything as long as it is speculative. E.g. “will the price of Bitcoin bounce back to $19,000 before the end of the year?”
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After creating a market, you can determine the taker and maker fees. Taker fees usually range between 0% and 12.5% while the maker fees can’t be more than 50% of the taker fees. As the creator of the market, these are the fees you will receive by the time the market closes.
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In order to draw in more participants, it is advised that you keep your settlement fees low. However, the fees need to be high so as to cover the initial Ethereum payment you made while creating the market.
Trading event shares
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Apart from creating prediction market, you can also carry out several activities on Augur. One of them is to buy and trade shares which represent the odds that the even in a market will occur. For instance, if there is a market that reads, “will Bitcoin plunge below the $5,000 mark this year?’ and the subject interests you, consider the fact that Bitcoin and other cryptos are facing major regulations in most country.
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If you are confident that the event will happen, you can put in a bid to buy say 100 shares of the market at 1 ETH per share. Keep in mind that shares are worth between 0 and 1 ETH. The higher you pay for an event, the more likely you believe that the event will occur.
Augur Platform
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Using the Augur platform, you can earn money by predicting an event correctly and holding shares by the time the market closes. The amount you pay is calculated using this formula;
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Payout = Number of shares X Price / Number of ticks
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The number of ticks, in this case, is the number of possible points that exist between the minimum and maximum prices in the market.
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From your winnings, you pay a settlement fee. The creator fees and the reporting fees that is utilized in the Decentralized Oracle System are part of the settlement fees. The larger your earnings though, the larger the settlement fees you pay. Read more about it here: Augur Coin Guide 2018 | Read This and Become an Augur Guru.
REP (Reputation) tokens
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This is the coins that powers Augur Decentralized Oracle System. You will have to stake the REP before you can predict the outcome of an event in a market.
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After a market closes, you report the outcome of a certain event and put up some amount of REP. The REP here will back your claim. If the event hasn’t happened yet, then you will mark the event as Invalid since you won’t be able to report on its outcome.
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The market gives you a total of 27 days after the closure of an event to submit your report about it. If your event report matches that of the larger percentage of the market, then you will be given back your REP in addition to a portion of the reporting fees. To know the reporting fees, use this formula,
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Reporting Fee = Current Reporting Fee X (Augur Open Interest X 5 / REP Market Cap)
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Every 30 days, the platform calculates the new reporting fee. Know that the higher the REP you stake when submitting your report, the higher the reporting fee you stand to earn if you report correctly.
Augur Detailed Reporting Diagram
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Augur has also made it possible for a designated reporter to report the market events. The creator of the market can assign a reporter to report the proposed outcome of the market. This is usually done three days after the market has closed.
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As a reporter, you are given extra three days to challenge the proposed outcome reported by the designated reporter. If the proposed outcome of the designated reporter goes unchallenged, then the market will enter the next reporting round, thus bypassing the normal 27-day reporting period.
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To challenge a proposed outcome, you will need to stake some REP. The REP used in this case is dubbed dispute bond. If you successfully challenged the proposal and the proposed outcome is reserved, the REP you assigned as dispute bond will be given back to you.
Where to buy REP
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There are several exchanges that sell REP tokens. Bittrex, however, is the recommended exchange at the moment.
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To buy REP, you will have to fund your account with BTC or ETH. You can trade Bitcoin or Ethereum for the REP coins. You can also purchase REP tokens directly on Kraken.
Where to store REP
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There is no specific Augur wallet at the moment. However, you can store it in online wallets such as Jaxx and Exodus. It is recommended, however, to save your REP tokens in a hardware wallet. Hardware wallets Ledger Nano S and Trezor support the REP coins.
Conclusion
Augur is one of the oldest decentralized projects out there and is amongst the first to be built on top of the Ethereum network. It is a decentralized prediction marketplace and event likelihood trading platform.
It became popular due to “The Wisdom of the Crowd” approach it uses and is a highly reputable predictive platform.
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