So Augur apparently still offers a 3% return if I want to predict that the Democrats will win the house (0.97 ask price). Other than the risk of using the system, is there any reason taking that bet isn't a guaranteed 3% return?
It will take over a month to get your money back. So you'd be basically getting 3% interest.
If you have a lot of money, you could allow others to cash out early at 99% of the price by creating a huge buy order at a price of 0.99, earning yourself 1% in the process.
Exactly + avoiding counterparty risk (Augur going bankupt or suffering a software glitch in the meantime) + the risks in the resolution process that could drag out for months. + the quantity on that 0.97 offer right now is about 0.4 eth (it can have been more earlier) - if you want to invest more, you will be matched with worse bids.
With the elections, it'll be really interesting to see how accurate the predictions are. I wonder what the critical mass of participation or money bet it'll take before it becomes a nearly perfect prediction market.
Yes, it's pretty easy to use. There are tutorials on youtube: [https://youtu.be/Gd5s56\_NLhg](https://youtu.be/Gd5s56_NLhg)
You need to download an application to your computer and let it sync for a few hours if you want it go be completely trustless. Otherwise, you can use [http://augur.casino](http://augur.casino)
Augur is super cool because it allows anyone in the world to bet on any event. Augur cannot be shut down by the government (unlike Intrade, which was shut down a few years ago [https://en.wikipedia.org/wiki/Intrade](https://en.wikipedia.org/wiki/Intrade)). It allows anyone to create a prediction market on any event. It is a perfect use case for Ethereum.
Unfortuantely this is one of the issues in Crypto. A normal personal can download a betting app and without any real intelligence find markets for sports, elections, entertainment , etc and make a wager in less than 3-4clicks.
Augur I lose the idea and want it to become a fair decentralized betting market but one shouldn't need a tutorial for this. It should be more intuative
That is a very good question. The Augur team has spent the last 3+ years figuring out how to implement this. The mechanism is quite complicated, but essentially people who hold Augur tokens (REP) will have to report the result. (This is why the existence of REP tokens actually makes sense, unlike many other tokens that were created in order to raise money).
This already happened several times. The best example is this market: https://predictions.global/augur-markets/will-the-weather-be-good-for-the-bastille-day-military-parade-in-paris-tomorrow-0x67ef420c045f3561d11ef94b24da7e2010650cc3
It ended in July, but still hasn't resolved yet. It's in dispute. People need to stake more and more REP on the outcome they believe is correct every round. The current battle is between the "invalid" outcome and "yes" outcome. It's very interesting. It will resolve in less than a month most likely.
You can see all of this (and profit by reporting correctly) in the Augur UI. It's very exciting!
In case of ambiguity, the market should resolve as invalid. What are you asking about specifically? What if there was election fraud, how should the market resolve? The simple answer is that REP holders will need to come to a consensus of what the outcome should be. They are the "judge". They are incentivized to be as fair as possible in order to maximize the value of their investment in REP tokens.
Imagine a centralized betting platform, how does it decide what to do in case of ambiguity? Exactly the same thing - they would try to be as fair as possible to the bettors in order to not ruin the reputation of the platform.
Reports can vote that a market is Invalid, in which case all share values are split evenly (ie 0.5 ETH each if 2 options, 0.333 if 3 options, etc).
The market creator also loses their bond if a market is found invalid -- this incentivizes creators to word their markets as objectively as possible and provide backup resolution details.
Augur allows anyone in the world to bet on different events. Augur cannot be shut down by the government (Unlike Intrade, which was shut down a few years ago https://en.wikipedia.org/wiki/Intrade). It allows anyone to create a prediction market on any event. It is a perfect use case for a decentralized blockchain.