Augur, a prominent Ethereum-based prediction market platform, has announced that it is about to undergo a major update. According to the project, Augur 2.0’s code is now ready to be audited, and new features are being integrated with the platform. Augur has also explained which features users can expect to see in the near future.
Augur’s core purpose will remain the same. As a decentralized app, Augur can work around the laws that arguably prohibit prediction markets. This means that Augur is one of the few organized places where users can bet on real-world events. Unfortunately, Augur has experienced continuous issues since it was launched last year. This update could fix some recent problems.
Invalid Market Improvements
Augur has faced one particularly notable issue this year. Bad actors can create invalid prediction markets—such as markets that end before an outcome is known—then exploit those markets for profit. To remedy this, Augur 2.0 will allow users to bet on the likelihood that a market will become invalid. This will also clarify that invalid markets are risky investments. Augur explains:
“‘Invalid’ will be a tradeable outcome like any other … For example, if a market’s order book consistently has BUY orders for “Invalid” above 0.2, that suggests there is a greater than 20% chance the market is Invalid. For conservative users, this should be a warning to not trade the market.”
The “invalid market” loophole was revealed in late March when bad actors began profiting from it. At the time, Augur decided to begin warning users about invalid markets through its UI. However, that approach is not a foolproof solution. Augur 2.0 partially solves the problem by adding value to these markets and by making it clear to users what their odds are.
Changes to Tokens
The update also introduces some changes to Augur’s token options. Previously, Augur only allowed users to place bets with Ethereum’s ETH token. In Augur 2.0, users will be allowed to place bets with MakerDAO’s DAI, a stablecoin that is always worth $1.00. This will allow users to escape some of the market volatility that occurs over the course of a long-term bet.
Augur’s REP token will also be priced differently. Originally, REP prices were meant to be set by a centralized price feed, but this ran into problems. Now, auctions will be used to determine REP prices. Appropriate REP pricing is important because the token gives users power: if you hold REP, you can create markets and participate in dispute resolution.
The Current State of Augur
These and other changes could solve many of Augur’s biggest problems. Incidentally, Augur announced the update shortly after Binance published a detailed survey of the platform’s issues. That report criticized Augur’s low participation rates, subpar usability, and complex market mechanisms. Binance also discussed the aforementioned scams that were underway at the time.
Although Augur 2.0 may fix some major problems, the update probably won’t help with Augur’s low usership rates. Although Augur is a major prediction market, that category is itself a very small niche. Blockchain-based prediction markets pale in comparison to regular gambling apps—which overwhelmingly dominate the dApp landscape in almost every way.
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