The power of community and the power of Reddit has once again been exercised this week after reports surfaced revealing that Redditors have located a new scam within the blockchain prediction platform, Augur.
Augur is a popular Ethereum based predictions platform that essentially allows users to gamble on a range of different markets. If you can predict it and put money on it, then you can run it as a market in Augur. It’s an innovative way to gamble and is actually one of the most popular uses of the Ethereum blockchain at present.
The scam located by the Redditors involves an entity within Augur creating a prediction market that includes inconsistencies within the wording to allow the market to be rendered intentionally invalid, when this happens in Augur, all funds placed into market are distributed evenly between the betters - so everyone receives a share of the return when the market is invalid.
This means that the creator of the market (knowing that it will be rendered invalid) can then start to gamble on very unlikely outcomes (which they wouldn’t normally win) in the knowledge that when the market becomes invalid, they will get a share of the funds that have been gambled, it’s likely that the share is more than they actually put in, meaning they walk away with a guaranteed profit - something that is impossible to achieve in any form of gambling.
According to Cointelegraph:
“In the discussion thread, a redditor has posted an example of one such ill-intended market — entitled Ethereum price at the end of March 2019? Whereas the title and the additional details state that the prediction market expires at end of day March 31, 2019 UTC, there is a discrepancy with the actual listed expiration date, which is 1:59 p.m. UTC on March 31 — several hours earlier. This slight discrepancy virtually ensures the market will be flagged as invalid, while the subtle contradiction is unlikely to be picked up by most betters.”
The Reddit community has been all over this ever since, and it seems that actually this could be quite a deep problem within Augur.
How can we stop this?
Well, thankfully the Augur team are already onto a fix, in fact it seems they have been looking to repair this for sometime. Joey Frug, one of the developers at Augur has suggested that the scale of this isn’t huge and that it’s not a scam that can affect many people, with that in mind, the latest version of Augur is set to ensure this sort of scam can no longer take place:
“Krug has suggested that in forthcoming version 2 of Augur, the issue with validity bonds will be fixed, and that new means to detect such practices will be enforced, so that invalid will be separately tradable and will be used as an auto-triggering filter to identify bad actors.”