December 2, 2018
Name of Token: Augur (REP)
Leadership: Jack Peterson (Founder & Lead Developer), Joey Krug (Senior Back-End Developer).
Token Ecosystem: ERC20 Token on the Ethereum Blockchain
Main Use Case: Prediction Market Protocol
Market Cap: $93,468,056 (November 29th, 2018)
Volume: $1,301,187 (November 29th, 2018)
Price: $8.50 (November 29th, 2018)
Circulation Supply: 11,000,000 REP
Introduction: the Augur platform and the REP Token
Augur is a decentralized, open-source, peer-to-peer prediction market platform that rewards users for accurately predicting future events. Users choose any event to predict and create a market to gamble on the likelihood of the event unfolding. It is now possible for bettors anywhere to place wagers on anything.
The platform allows for the prediction of political outcomes, the occurrence of geopolitical upheaval, the success of a certain company’s product, real estate market price movements, and even the weather. Users then create a market for each event, a market in which shares are traded. Once the outcome is reported via crowdsourcing, users who hold shares of the winning outcomes are paid out from the market contract once it is resolved. The outcome is also reported by users who earn tokens for honest reporting, acting as a sort of oracle. The app creates a decentralized consensus. In short, Augur is an event-based gambling platform with no middle-men and an endless possibility of events to bet on.
The Augur platform is built on the Ethereum Blockchain and uses its Reputation token (REP), a work token, to give the right to users to report and/or weigh in on the outcome of events. It is earned by the users who provide truthful reports and correct predictions. The token is issued on the application layer through a smart contract on the Ethereum Blockchain, creating decentralized software protocols.
History of the Augur (REP) Token:
Augur raised around $5.3m in a sale of its REP tokens in 2015 and launched its public beta in March 2016. However, the market value of the REP token fell sharply post-launch as market observers voiced concerns over the tokens’ long-term viability and the viability of “appcoins” in general.
The nature of the token also raises questions of regulation. For example, the SEC concluded in 2017 that now-defunct DAO tokens (https://blogs.wsj.com/cio/2016/06/20/downfall-of-dao-digital-currency-fund-shows-blockchain-reputational-risk/) were in fact securities and that other tokens could be too, subjecting them to federal securities laws. Hence, some ERC20 tokens like Augur could be rated as securities but the SEC has not issued a statement about the REP token so far.
Initially, Augur’s smart contracts were written in the Serpent programming language. After a security audit by OpenZeppelin that found concerning critical issues in 2017, the new REP contracts were re-written in Solidity. The migration was successful and no funds were lost, while also solving the underlying critical issues.
After careful and strategic planning during beta, Augur made its full launch on Monday July 9th 2018 and enjoyed a prosperous week as thousands of users flocked in to place over $1.5m in wagers on the platform and the REP token value grew to the mid $30 range. However, the hype was short-lived as daily users dropped significantly the following week as complaints about the clunky UI marred their community hotspots. Furthermore, the creation of vapid and ethically questionable markets became increasingly popular (for example, markets betting on the existence of God and on the assassination of celebrities and political figures).
Nonetheless, the Augur platform has enjoyed an average of 47 users per day this past month, as well as surpassing $2m in placed bets (November 2018, via dappradar).
Industry Case Studies:
The platform has seen an increase in placed wagers due to the U.S. Midterm Elections in a market aptly called “Which party will control the House after 2018 U.S. Midterm Election?”. The market has $1,120,720 staked on it at the time of writing (updates linked here). Augur’s open interest in Ether terms is increasing consistently, which is not reflected in dollar-terms due to Ether’s declining exchange rate. We can expect similar influxes of markets and wagers for the upcoming political elections in the United States in 2019, and also very keen interest in the presidential election of 2020.
Major Partnerships, News, and Notable Achievements:
The Augur project has an impressive list of developers, partners, and advisors. It lists Vitalik Buterin as an advisor, and was granted the “Peter Thiel Fellowship” that provided the platform with $200,000 in seed funding in 2014.
Augur is also collaborating with giants Microsoft, which has added it as a service to Azure, their BaaS (blockchain-as-a-service) solution.
Future Goals of Augur:
The potential and use of Augur makes it a pretty cool platform. If development continues above board and they manage to lower trading fees while improving UX, we should see the use of the platform for major events to start with. While Augur could be prone to manipulation, which has been conceded by the development team, it is still in its infancy stages.
These changes are taken into account in the Augur Master Plan. The team recognizes the apps’ shortcomings and vows to work on a better Augur 2.0. It is encouraging that Joey Krug (senior back-end developer) has acknowledged the apps limitations and aims to improve on UX through constant listening of the community’s inputs, for example via the Augur subReddit. For example, one planned upgrade will integrate Augur with the DAI, a stablecoin that will stop traders’ funds from dropping in value.
This is a young technology. If blockchain apps become more usable, more people will use them – and not only in North America. Give it some time. Clearly, people are still keeping Augur and the REP token in mind by placing bets when they feel like its worth it.
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