DApps or decentralized applications are quite the buzzword of the modern blockchain scene. And of all these decentralized applications, one of the best-known ones is Augur. So, is Augur really decentralized? Let’s find out.
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What is Augur?
Augur is nothing but a prediction market built using blockchain technology. Like a lot of other dApps, Augur is built on the Ethereum blockchain market. It is designed to be a decentralized, open source, peer-to-peer or P2P platform.
Prediction markets are nothing but exchange-traded platforms where you can bet on certain outcomes and earn if you bet correctly.
On the Augur platform, you can earn the Augur cryptocurrency in the event of you betting on the accurate outcome.
Use cases of Augur include political forecasting, weather forecasting, company forecasting and event hedging among others.
According to its official website, it is:
“A prediction market protocol owned and operated by the people that use it.”
Using it, you can:
“Predict the next election, short a cryptocurrency, or hedge against disaster.”
According to the Augur whitepaper:
“Augur is a trustless, decentralized oracle and prediction market platform. In a prediction market, individuals can speculate on the outcomes of future events; those who forecast the outcome correctly win money, and those who forecast incorrectly lose money. The price of a prediction market can serve as a precise and well-calibrated indicator of how likely an event is to occur. Using Augur, people will have the ability to trade in prediction markets at very low cost. The only significant expenses participants assume is compensation to market creators and to users that report on the outcomes of markets once the event has taken place. The result is a prediction market where trust requirements, friction, and fees will be as low as competitive market forces can drive them. Historically, prediction markets have been centralized.”
Is Augur Decentralized?
Yes, Augur is a decentralized platform. It is built in a way that makes sure no central authority controls the betting and hedging process.
As the Augur whitepaper explains, the largely centralized nature of existing prediction markets often makes way for corruption. Moreover, in those cases, users have little control over the kind of events that can be included within the prediction marketplace.
This opens up the prediction market place to a worldwide participation. The whitepaper says:
“Historically, prediction markets have been centralized. The simplest way to aggregate trades in a prediction market is for a trustworthy entity to maintain a ledger; similarly, the simplest way to determine the outcome of an event and distribute payouts to traders is for an impartial, trusted judge to determine the outcomes of the markets. However, centralized prediction markets have many risks and limitations: they do not allow global participation, they limit what types of markets can be created or traded, and they require traders to trust the market operator to not steal funds and to resolve markets correctly. Augur aims to resolve markets in a fully decentralized way. Decentralized, trustless networks, such as Bitcoin and Ethereum, eliminate the risk that self-interest will turn into corruption or theft. The only role of the Augur developers is to publish smart contracts to the Ethereum network. The Augur contracts are totally automated: the developers do not have the ability to spend funds that are held in escrow on-contract, do not control how markets resolve, do not approve or reject trades or other transactions on the network, cannot undo trades, cannot modify or cancel orders, etc. The Augur oracle allows information to be migrated from the real world to a blockchain without relying on a trusted intermediary. Augur will be the world’s first decentralized oracle.”
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