Is Augur a good project and should you buy Augur REP?

Augur is a prediction market platform based on blockchain technology (the crypto token is called Augur REP). It’s got a lot of positive coverage, it has a superstar adviser in Vitaly Buktarin and it’s now available to store in the Exodus wallet (along with its rival Gnosis).

Before we look at whether this is good project and a good speculative play, here is an excerpt from their homepage:

Here is their video introducing REP tokens:

Okay got all that? Let’s look at the project itself.

The main current world competitor to Augur and blockchain-based prediction markets are betting exchanges.

In the UK, the best known of these is Betfair.

Betfair is different to traditional non-exchange gambling platforms.

In traditional gambling platforms, a bookmaker (or the market creator) sets the odds on an event happening. Eg if the bookmaker says that that snow on Christmas Day is even money, that means he thinks it’s 50:50, or at least that the price he’s willing to offer you. If you bet that it will snow, and you are correct, then you win your stake back plus your profits. In this case, the bookmaker will pay you profits equal to the size of your stake.

The problem with this model is that the bookmaker’s odds make not be reflective of the true odds of the event happening. Maybe the real odds are 60:40, but you’re only being offered 50:50. This isn’t ideal.

Betting exchanges like Betfair are different in that there is no bookmaker. The market is made up of people like me who think that it will snow on Christmas and people on the other side of the trade/market who don’t think it will snow and are willing to offer me odds on the event.

This means that the price offered (odds of event happening) can move according to how sentiment changes. So if the weeks into Christmas are unusually warm, then the odds will move accordingly.

This brings us to problem number 1.

Problems with Augur

1. Prediction markets already exist outside of blockchain, and they’re good

For instance, Betfair has markets on politics. Look at the below screenshot:

That’s some serious money placed (GBP 1,011,592) on this market.

The odds at the moment suggest/predict (roughly):

• that there’s a one in 17 chance of Trump exiting the Presidency in 2017 (5.88%)
• a one in 4 chance in 2018 (25%)
• a one in 6 chance in 2019 (16.6%)
• a one in 0.88 chance in 2020 (63%)

That’s pretty good as a prediction market isn’t it? That’s real world market participants who’ve arrived at these odds at that’s what they predict.

Does Augur improve on that from a prediction market standpoint?

This is from their beta app:

I know this is in beta, but these aren’t as granular in terms of range of outcomes that Betfair offered. Furthermore, the prediction isn’t anywhere as specific as Betfair’s range above. Augur’s says 50% chance of Bitcoin hitting USD 5,000 by New Year’s 2018. Not very specific.

2. You have to wait a month before getting your winnings

Remember from the video above. For the market in Augur to settle, you have to wait a month for the holders of REP (Augur token) to vote on what the correct outcome of the event was. So you have to wait for REP holders to vote into the blockchain that it snowed on Christmas Day. On Betfair, that would pay out the next day. A month!!

3. Holders of REP have to report on events within the timeframe or lose ‘reputation’.

What a burden this is on the holders of REP. Will anyone want these?

Advantages to Augur

Create your own markets

This something that I can’t get on Betfair at the moment. I can’t invent a new market like ‘will Theresa May wear red shoes tomorrow?’. I could do this on Augur, but it’s another question as to whether this would be an attractive market for other people to bet on.

Should you buy the Augur REP tokens?

1. There are a limited supply of Augur REP tokens which is good. A finite supply means that the price should rise in the future if demand rises.
2. There is good positive sentiment about it.
3. It is on Exodus as a supported altcoin.
4. It has Vitaly on the board of advisors.

So it’s a tentative yes from me. Even though I’m not sure about the project, I think it’s still worth a gamble on the tokens. But this means that I will buy a smaller amount of Augur REP tokens, say 5% of my total portfolio.

I did this yesterday using Shapeshift in my Exodus wallet. I now have some Augur REP.

What do you think? Do you hold any? Let me know in the comments below!