General Overview of Augur (REP)

What is Augur?

Augur is a protocol, freely available for anyone to use however they please. Augur is accessible through a desktop client app, similar to interacting with an Ethereum or Bitcoin node. Users of the Augur protocol must themselves ensure that the actions they are performing are compliant with the laws in all applicable jurisdictions and must acknowledge that others’ use of the Augur protocol may not be compliant. Users of the Augur protocol do so at their own risk.

Augur is also the first major decentralized application (Dapp) developed using Ethereum , and represents a major proof of concept for this underlying technology. Decentralization ensures that Augur cannot be censored by governments that deem prediction markets as gambling, whilst ensuring the sustainability of the application. This decentralized nature ensures honesty in reporting the outcome of events, using crowd wisdom to cancel out individual frauds.

Augur History

How Does Augur Work?

Reputation

By owning REP, and participating in the accurate reporting on the outcomes of events, token holders are entitled to a portion of the fees on the platform. Each staked REP token entitles its holder to an equal portion of Augur’s market fees. The more REP a reporter owns, and reports correctly with, the more fees they will earn for their work in keeping the platform secure.

In other words, Reputation tokens are gained and lost depending on the reliability of users votes with the consensus. The Augur Team released an infographic to explain how the Reputation tokens work.

Although REP plays a central role in Augur’s operations, it is not used to trade in Augur’s markets. Traders will never need to own or use REP, as they are not required to participate in the reporting process.

Augur — How A Decentralized Prediction Market Works (Narrated by Shooter Jennings)
Reputation 101: How Augur’s Reputation Tokens Work

What are the benefits of Augur?

REP Technology

  1. Augur uses Ethereum’s smart contracts to provide live, peer-to-peer, decentralised, secure, and robust betting platforms for users.
  2. Any user can create a new prediction event, based on whatever they want, with start and end times, a designated reporter, a source for resolution of the prediction, and a settlement fee.
  3. After the market has been created, traders can immediately purchase negative or positive shares regarding the outcome of the prediction using reputation or REP coins, called staking in Augur’s terminology.
  4. Augur markets follow the “Wisdom of the Crowd” principle. It is the theory that if incentivized, crowdsourced predictions will have a greater chance of being accurate.
  5. If the event becomes true, or takes place, buyers of the positive shares will receive $1 USD for each share bought, while shareholders of the negative shares will lose their staked REP coins.
  6. A user can also sell their shares before the completion of an event is they wish to do so.

Key Features

  1. Based on an established network — Since REP is an ERC20 compliant token, the Augur network is fully backed by the Ethereum network, which means that it has robust and secure support for features such as smart contracts, which are used to provide the functionalities Augur offers
  2. Proof of Stake Implementation — Being an Ethereum token, Augur uses the PoS approach which results in a leaner and faster blockchain, which is significantly less resource hungry and environmentally detrimental than a similarly sized PoW network.

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