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Augur (software)

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Augur
Type of site
Non-profit foundation
FoundedSan Francisco, California (November 2014)
HeadquartersSan Francisco, California
IndustryPrediction markets
URLhttp://www.augur.net

Augur is an open-source, decentralized prediction market built using blockchain technology. A demo of an alpha version of the platform was released June 15, 2015.[1] The project was funded by a crowdfunding campaign, raising more than US $5 million in 45 days (Over 18,000 BTC and 1.1 Million Ether).[2] As of December 2015, the campaign is ranked among the top 25 crowdfunding projects of all time with up to 4,800 crowdsale participants in total from every continent expressing interest in financially supporting the project and becoming system referees. The software was projected for beta release on Christmas 2015[needs update] and live release by Spring 2016.[3]

The project seeks to leverage the "Wisdom of Crowds" (also known as "collective intelligence"), game theory, financial incentives and the open, global, peer-to-peer, distributed ledger functionality that blockchain technology provides to generate better forecasts about any future event involving any major topic of widespread interest. The group's mission is to create a decentralized "Early Warning System for Everything" that has no potential central points of control, failure or censorship and no middlemen.[4]

Augur is one of the first applications being built on Ethereum, a decentralized computing platform featuring digital contracts and a turing-complete programming language. The underlying network unit utilized by Augur is known as Reputation, which will be the unit used by the platform's referees to report event outcomes (whether predictions happened or not), whilst Bitcoin and Ether will be used for speculating on predictions. Augur can be used as a distributed oracle system, allowing other smart contracts to propose questions to it and allowing them to discover information about the real world without trusting a third party. In May 2015, Augur released a two-minute animated video titled "How Augur Works" narrated by country music star Shooter Jennings, the video provides a detailed explanation of Augur utilizing simplified language to increase understanding of the technology.[5] Following this, Augur made it to the finals in CNBC and Singularity University's Exponential Finance XCS Challenge in the Breakthrough Technology category, making it the only Blockchain technology to make it as a finalist.[6][7]

The platform has amassed growing media attention, including from The Wall Street Journal,[8] International Business Times,[9] Politico,[10] Tech Crunch [11] and CoinDesk.[12]

"The consensus of large groups presents a near infallible way of predicting unknown events, and with this in mind Augur uses a decentralised network combined with an immutable blockchain to record predictions and outcomes," wrote Ian Allison of International Business Times. "In a strange and compelling sense the technology and its scale creates a tool for accurately predicting the future... It's a vibrant example of the sort of wiggy decentralised applications (DAPPs) that can be expected (predicted) to follow in lockstep with the type of technology underlying the bitcoin network." [9]

Background

Markets Dashboard of Augur's decentralized prediction market platform

Augur is a project that began with the purpose of building a scalable open source tool utilizes the wisdom of crowds to improve decision making capabilities in a wide variety of fields. The project's uniqueness centers in its utilization of Ethereum, a decentralized platform similar to Bitcoin that will provide numerous improvements over other centralized prediction markets available in the past.

Augur's conceptual roots can be traced back to Frederich von Hayek's The Use of Knowledge in Society, Robin Hanson's concept of "Idea Futures", Paul Sztorc's "Truthcoin" whitepaper,[13] Vitalik Buterin's "Schellingcoin" concept,[14] and the work of Stanford University computer scientist Joseph Bonneau.

In a 2012 FiveThirtyEight blog by Nate Silver, he discusses the efficiency of prediction markets and points out that the consensus of forecasts is often better than even the best-performing members of the group involved. Silver, known to be one of the few statisticians to outperform prediction markets, confirms that a consensus of data gathered by about a dozen models similar to his own FiveThirtyEight.com blog would be useful as the consensus of forecasts often performs better than even the best singular performer in the group used.[15] Silver has also stated that a prediction market given sufficient volume could be more accurate than Bayesian statistics.[16]

Augur was the only blockchain technology that made it to the finals of the Exponential Finance XCS Challenge. Judges from Forbes, Barclays, Deloitte, Wells Fargo and Credit Suisse voted Augur to the finals.[17] Coinbase selected Augur as one of its five most exciting bitcoin projects in their "Bitcoin Trends In The First Half Of 2015" report, sharing the title included 21, Blockstream, Abra and Streamium.[18]

Funding

Augur started their crowdsale of the system's 11 million Reputation Tokens on August 17, 2015.[19][20] The crowdsale was deemed necessary as to support future development, appoint market referees and determine the distribution of voting power.[21] The crowdsale had a very successful beginning, raising $1.3 million in cryptocurrency in its first 26 hours ($500,000 of which was raised in the first six hours) from more than 2,000 accounts.[22][23][24] Augur raised over $5.2 million with its crowdsale concluding on October 1, 2015, making it one of the top 25 highest funded crowdfunding projects of all time.[25]

Development

The development of Augur began in October 2014 with the Alpha Prototype being available after some time in the development phase.[26] In April 2015, Augur's first contract was uploaded to the Ethereum network.[27]

In June 2015, the Augur Alpha was released to the general public.[28] Shortly afterward, Augur announced that 8.8 million Reputation Tokens would be distributed via a 45-day crowdsale beginning on August 17, 2015, which was two weeks after the launch of Ethereum Frontier.[22][29]

Academic and business affiliations

The project includes Intrade founder Ron Bernstein and author of OvercomingBias.com and George Mason University Economics Professor Robin Hanson among its advisers.[30]

Coinbase CEO Brian Armstrong said Augur "could produce some incredibly useful data" and that it was "super exciting. We talk about it a lot internally."[31] Ethereum founder Vitalik Buterin and bitcoin entrepreneurs Erik Voorhees and Bo Shen have also expressed support for the platform.[32]

Erik Voorhees, Ethereum's Vitalik Buterin and Bo Shen were listed as notable supporters that pre-purchased Reputation Tokens in August 2015.[33]

Ethereum Criticism

The only[citation needed] direct criticism that has been made of the project is based on their use of Ethereum. Augur has explained that Ethereum currently offers a better development platform for immediate deployment, that making use of bitcoin as the foundation for its codebase would not have offered clear security benefits and that, in any case, it intends to integrate into the bitcoin network through sidechains as soon as that technology becomes available.[34] Notably, since Ethereum went live in late July, it has amassed more than 200 GH/s[clarification needed] in processing power (gaining more processing power in its first two weeks than bitcoin's in its first two years),[35][36] become the fourth most valuable cryptocurrency network after Bitcoin, Ripple and Litecoin, and over the weekend of August 14–15 registered the highest 24-hour trading volume of any cryptocurrency after Bitcoin.[37][full citation needed]

One critic also expressed the opinion that the Ethereum platform is impractical for use in the calculation of outcomes because it allows for "parasite contracts" which steal the work done by contributors without compensating them properly.[38] The Augur team pointed out that this vulnerability is not unique to Ethereum: any blockchain-based system can execute such a "parasite" attack on another blockchain simply by incorporating Merkle proofs of the host blockchain into its own chain. Ethereum-based oracles are expected to be unusually resilient to parasite attacks, as they cannot be attacked by Ethereum-based parasite contracts; Ethereum contracts do not have access to raw blockchain data.[39]

References

  1. ^ "The Augur Alpha is Now Available To Download!". Augur.net. June 16, 2015.
  2. ^ https://sale.augur.net/
  3. ^ Peterson, Jack; Krug, Joseph (November 17, 2014). "Augur: a Decentralized, Open-Source Platform for Prediction Markets" (PDF). Augur Whitepaper.
  4. ^ Despeignes, Peronet (July 13, 2015). "The Pressing Need for Augur".
  5. ^ Sakich, Tony (May 20, 2015). "How Augur Works Video". Augur.net.
  6. ^ "Decentralized Prediction Market Augur Reaches XCS Finals in 'Breakthrough' Category". Retrieved 2015-06-17.
  7. ^ "Blockchain Prediction Market Augur Elected as a 'Breakthrough' Finalist at Exponential Finance 2015 - Bitcoin Magazine". Retrieved 2015-06-17.
  8. ^ "BitBeat: Ethereum Opens Its 'Frontier' for Business". Retrieved 2015-07-31.
  9. ^ a b "Augur to issue 11 million REP tokens starting 17 August". Retrieved 2015-08-03.
  10. ^ "Mega-banks back Burr — Next-gen prediction market to test limits in D.C. — Get ready for more Greek drama — CFPB, New York DFS sue pension-advance lender (Archive: 8/21/15)". Retrieved 2015-08-21.
  11. ^ "Vapor No More: Ethereum Has Launched". Retrieved 2015-08-01.
  12. ^ "Augur Bets on Bright Future for Blockchain Prediction Markets". Retrieved 2015-03-01..
  13. ^ Sztorc, Paul (August 24, 2014). "Truthcoin: Trustless, Decentralized, Censorship-Proof, Incentive-Compatible, Scalable Cryptocurrency Prediction Marketplace" (PDF). {{cite journal}}: Cite journal requires |journal= (help)
  14. ^ Buterin, Vitalik (March 28, 2014). "SchellingCoin: A Minimal-Trust Universal Data Feed". {{cite journal}}: Cite journal requires |journal= (help)
  15. ^ Silver, Nate (October 23, 2012). "The Virtues and Vices of Election Prediction Markets". FiveThirtyEight.com.
  16. ^ The Signal and the Noise
  17. ^ "Breakthrough Category". Exponential Finance | June 2–3 NYC. Retrieved 2015-06-17.
  18. ^ "Bitcoin Trends In The First Half Of 2015". The Coinbase Blog. Retrieved 2015-07-22.
  19. ^ "The Augur Crowdsale". The Augur Crowdsale. Retrieved 2015-08-28.
  20. ^ "Augur to issue 11 million REP tokens starting 17 August". Retrieved 2015-08-28.
  21. ^ "Why A Crowdsale Is Necessary For Augur To Work & Some Updates". Why A Crowdsale Is Necessary For Augur To Work & Some Updates. Retrieved 2015-08-28.
  22. ^ a b "Augur to issue 11 million REP tokens starting 17 August". Retrieved 2015-08-13.
  23. ^ "Ethereum blockchain explorer".
  24. ^ "Blockchain info (bitcoin blockchain explorer)".
  25. ^ "Augur - Fund the Future". sale.augur.net. Retrieved 2015-08-28.
  26. ^ "AugurProject Contributors". https://github.com/AugurProject/augur/graphs/contributors. Retrieved March 17, 2015. {{cite web}}: External link in |website= (help)
  27. ^ Hertig, Alyssa (2015-04-21). "Augur Creates First Contract with Ethereum". CoinTelegraph.com.
  28. ^ Krug, Joey (June 16, 2015). "The Augur Alpha is Now Available To Download!". Augur.net.
  29. ^ "The Augur Crowdsale". The Augur Crowdsale. Retrieved 2015-08-13.
  30. ^ Rizzo, Pete (March 1, 2015). "Augur Bets on Bright Future for Blockchain Prediction Markets". Coindesk.com.
  31. ^ "@brian_armstrong augur". twitter.com. Retrieved 10 August 2015.
  32. ^ "Tony Swish". Twitter. Retrieved 10 August 2015.
  33. ^ "Why A Crowdsale Is Necessary For Augur To Work & Some Updates". Why A Crowdsale Is Necessary For Augur To Work & Some Updates. Retrieved 2015-08-13.
  34. ^ Krug, Joey (February 13, 2015). "Why Ethereum". Augur.net.
  35. ^ "Ethereum Network Status".
  36. ^ "(Bitcoin) Hash Rate".
  37. ^ "Crypto-Currency Market Capitalizations".
  38. ^ Sztorc, Paul (2015), Oracles are the Real Smart Contracts, Truthcoin.info, retrieved 2015-10-12
  39. ^ "What about parasitic contracts - will other Ethereum applications be able to use Augur's reporter/referee system?".
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