We have prepared for you the Augur network market analysis, where you can see what drives this cryptocurrency forward, what its core concept is, what makes the investors interested and how it is different from other well-established cryptocurrencies such as Ethereum or Bitcoin.
Currency name(s): Reputation (REP)
Genesis Block: August 2015
Total Supply: 11 million REP, all are currently in circulation
Algorithm: the specific algorithm is not available, but the network is based on Ethereum architecture
Features: decentralized, peer-to-peer, search engine
The Augur network is a prediction system that operates on blockchain technology. The main idea behind this cryptocurrency network is to use the ‘wisdom of the crowd’ to forecast an outcome of an event. The outcome of each event is limited to either ‘positive’ or ‘negative’ and the network users can vote for either option through the network. If the predicted outcome turns out to be ‘positive’, those who voted ‘positive’ are rewarded from the pool, and those who voted ‘negative’ are penalized. According to the development team, this method of operation encourages correct and factual reporting, and the predictions rely on a large group of people instead of a couple of experts.
Augur is created with a purpose to overcome the limitations regular prediction markets have, and these are the inability to participate globally (as almost all regular prediction markets are location limited), centralization (usually one entity controls a prediction market), and finally the human factor (fraudulent behavior is reduced to a minimum).
This network has its own cryptocurrency which is called Reputation (shorthand is REP) and is used to wage predictions within the network. Anybody can access the network and see what predictions have been discussed, waged and confirmed, but just Reputation holders can actually vote for the outcome of a prediction. The outcome is voted for in the following way. A user creates a market, chooses a designated reporter and sets the no-show bond the market creator has to fund and is lost in case the designated reporter does not report on the outcome of the event. Once the market is created, users interested in the event can report on the outcome and participate in the resolution of the event. Those reporters who were correct will be rewarded Reputation tokens from the pool, and those who were not correct will lose their invested Reputation tokens. Of course, the system itself is a bit more complex than this, and we will go more in-depth about how it works in the next part of the analysis.
The Augur network is based on Ethereum code and is built upon that particular architecture. For this cryptocurrency network, it is important to confirm proof-of-work instead of proof-of-stake (as it is the case with other cryptocurrencies that we covered in the past, which are Theta and Tron, for example). As we mentioned previously, the Augur network’s native token is REP, which is used by market creators and reporters. All users who own REP, and participate in the accurate reporting of an event are entitled to a percentage of the fee the network charges for participating in the reporting. Ultimately, the more REP one reporter owns and is correct in their predictions, the more fees they will earn for using the platform for what it’s intended to be used. Here is the whole simplified process of how the Augur network operates:
Market creation > Trading > Market event occurs > Reporting > Settlement
As we mentioned above, any user can create a market for any upcoming event. They then set when the event ends, and choose a designated reporter to announce the outcome of the event, as well as resolution source which the reporter will use to resolve the outcome. After this phase, the trading on the outcome of the event starts, and all market participants can forecast the outcome of the event by trading shares of the outcome. There is no limit to how many tokens a user can trade in any event. Once the event occurs, the outcome is determined and a consensus is reached. Those users who were correct in their predictions will receive tokens from the pool, and the reporters who truthfully reported are rewarded by being given a portion of the fee. Finally, market settlement ensues, and those users who traded in the winning outcome can close their positions either by selling their shares to another trader in exchange for currency or by settling with the market.
The network system is created in such a way that any prediction can be resolved through smart contracts, and if it isn’t resolved in the usual way, there are protocols that push through the resolution. Also, a consensus must be reached and the settlement must be completed. All parts of the process are bootstrapped within the system so that the market creation has a closure.
Our Augur network market analysis shows that Augur’s token, Reputation, currently sits at $18.5 per token. Since its launch in August 2015, this token has come a long way and has experienced very strong price surges and decreases in priced value. Its all-time low was only $0.7 per token, while its all-time high was recorded at an amazing $123 per token. At the moment, the Augur network’s market cap is ~$204 million, but it is expected to increase, as the circulating supply of all tokens is capped at 11 million, so once the demand grows, its price should follow. At the moment, Augur token trading is possible on various cryptocurrency markets such as Binance, HitBTC, Bittrex, Poloinex, and Kraken. Investors can buy and sell Reputation for Bitcoin, Ether, as well as fiat currencies such as euro or dollar, depending on the market.
Even though the Augur network’s native token is seen as a type of altcoin by the community, it is essentially very different from Bitcoin and Ethereum which are trying to disrupt and decentralize financial services. The Augur network, on the other hand, is trying to revolutionize prediction markets and insert a new variable into the whole analysis of the events that occur. Certainly, it can be said to resemble the mechanisms that are used in the betting industry, but in its essence, it is trying to capture the ‘wisdom of the crowd’ and tap into the collective knowledge we as species may have.
However, from the investing point of view, this token is very interesting. Firstly, its availability is very limited and all tokens are currently in circulation. Secondly, early investors have seen a return on investment of over 10x and, as the prices are expected to rise in the very near future, the best position for holding this token is medium to long.
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