All About Augur dApps || @gbanga lesson 4 Assignment

Augur; the decentralized prediction market

Have you thought of the ability to predict future events but this time not in a betting site or a casino but rather on the blockchain? Augur is the first decentralized prediction market using Oracle and a mechanism known as "wisdom of the crowd" on the Ethereum blockchain to predict future events. With Augur, predictions such as the winner for the next presidential election, Winner of the next football world cup, and so on. Launched in 2014 by Jack Peterson and Joey Krug, with more than 2,000 BTC and 100,000 Ether on its first day and it raised $5.5 million.

Instead of basing predictions on the wisdom and expertise of a very few people regarded as experts or analysts, it makes a more accurate prediction by using a large group of people. With Augur, correct answers are monetized. When users speculate the outcome of a future event, the winners make money while the losers lose money in the same light. Using Oracle, it is able to generate almost real-time predictive data. With Augur being decentralized, it has a shield against government interference.

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How Augur Works

Since it is a decentralized gambling market platform, it has to have a marketplace and a trading platform to make it possible.

Creating Market

In other to use the Augur prediction market, the first thing is to create a market. A market is a prediction pool and to create the market, one needs a small amount of Ethereum. While creating the market, a market creator's fee is set for the market creator. This fee can be between 0% to 50% and just like the house usually keep a part of a bet or casino prediction, so does the market creator get to keep the creator fee after the prediction ends and there is a winner. Also, the market creator would set the taker and maker fee for the trading shares.

Trading Shares

This is the point when users start to buy shares with respect to the odds of winning the prediction. The price of the shares to be bought is based on how likely the event is to occur. If more people buy into a particular outcome in a prediction, the price/shares increases. Shares can be between 0 - 1 ETH and the higher the amount of the shares, the more likely the event will take place. When the market is opened traders can flip prices of prediction shares buying low and selling high with the more likeliness of the event taking place.

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Reporting

When the market is closed, Augur reporters send reports in actual real-time to the Augur oracle which determines the final outcome of the market and the prediction. Augur rewards reporters who report information at the right time and penalizes inconsistent users. To be a reporter, it is necessary to hold Reputation (REP) which is Augur's native token. Augur users who predict do not need Reputation (REP) to make bets on the platform but reporters are meant to hold REP so as to qualify for reporting.

Settlement

This is the point where smart contracts execute the final outcome and users who predict rightly get rewarded with Reputation (REP), as well as reporters, also get settled in REP. Winners will be required to pay the Settlement fee which includes the creator fee for the creator and the reporting fee for the system.

Reputation(REP) tokens

REP is the native token for the Augur platform. Users stake the REP to report data to the oracle. There is 11,000,000 REP in circulation currently, and a market capitalization of $314,716,796. REP is currently traded on Binance, OKEx, CoinTiger, Upbit, and RightBTC.

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Conclusion

When it comes to dApps, Augur is one of the oldest dApps on the Ethereum Blockchain and has been holding strong since 2014. Being a decentralized prediction market has changed the prediction market space.