November 09, 2018 1166By Mark Nezvisky
“Augur is a decentralized oracle and peer to peer protocol for prediction markets. Augur is free, public, open source software, portions of which are licensed under the General Public License (GPL) and portions of which are licensed under the Massachusetts Institute of Technology (MIT) license. Augur is a set of smart contracts written in Solidity that can be deployed to the Ethereum blockchain.”Furthermore:
“Augur is a protocol, freely available for anyone to use however they please. Augur is accessible through a desktop client app, similar to interacting with an Ethereum or Bitcoin node. Users of the Augur protocol must themselves ensure that the actions they are performing are compliant with the laws in all applicable jurisdictions and must acknowledge that others’ use of the Augur protocol may not be compliant. Users of the Augur protocol do so at their own risk.”According to the Augur website, here are a few use cases for the Augur network: Political Forecasting
“Turn political knowledge into predictive power by trading on the outcome of upcoming elections, potential policy decisions, and other political events.”Event Hedging
“Hedge against catastrophic events like natural disasters, market crashes, and geopolitical upheaval by betting that the event will occur.”Weather Prediction
“Harness the power of crowds to create a more accurate weather prediction tool for events like hurricane landfalls, heat waves, and daily temperature averages.”Company Forecasting
“Companies can use Augur to guide decision making by forecasting vital information such as total product sales and project completion times.”How does it work? Using Augur is a simple process, firstly, users must select and event that they want to hedge against. In this example, we are looking at the US midterm elections, so let’s stick with that. Within the event, users can then bet on a specific market, or can create their own, so, in this instance, a market may include something like ‘democrats or republicans to take the house in US midterms’. Now, other investors can trade on the outcome of the market, they can back whichever outcome they want to bet for, so again in this example, an investor may bet a bunch of Ethereum or REP tokens on the democrats taking the house in the US midterms. As Augur is decentralised, the final outcome must be reported before winning bets are returned, this gives all users a chance to dispute the outcome if they think it is false or unfair. Finally, those who own shares of the winning market (through the bets they have placed) will receive their payout and the contract is closed. Augur simply takes a traditional betting format, and brings it to the blockchain. Augur has been impressive throughout the elections As we have stated, Augur is in the news this week for holding it’s cool during a huge increase in activity as a result of the US midterm elections. Since Augur is built on the Ethereum network, it’s often assumed that Ethereum products are unable to handle high volumes of traffic and large scale transactions. Even so though, during the recent US election period, it’s alleged that Augur has seen an incredible $1.65 million in bets, with as much as $900,000 all coming through on the same day. According to Ethereum World News:
“The decentralized prediction platform of Augur (REP) that is built on the Ethereum network, has achieved an impressive feat of handling approximately $1.65 Million in bets during the US Midterm elections that were held on the 6th of November this year. During the day of the midterm elections, the value of bets had initially reached $900,000 only to surpass the $1 Million Mark as the day came to a close. Further researching the bets made using Augur on the tracking website of Predictions.Global, we find one particular bet that asks which party will control the house after the 2018 US Midterm elections. The volume of this bet currently stands at $1.625 Million.”In terms of value, it’s not a huge amount given the sheer scale of transactions that move across various blockchains, however, it’s a huge amount for a project like Augur to have to handle. What this tells us, is two things. Scalability on the Ethereum network might not be as drastic as we think. Secondly, this proves that there’s a growing interest in cryptocurrency and within the blockchain, so much so, that people are now using it to bet on the outcome of major political elections.