"I can calculate the motions of heavenly bodies but not the madness of people." -Isaac Newton Grab your coffee or boba. It’s time to talk Augur. Each Tuesday on The Augur Edge, I share one Tweet, one trade, and a two-minute musing on something I’ve been thinking about Augur. Let’s dive in. First off, I published a quick piece on How to Keep up to Speed on Augur. It’s geared toward folks who are already familiar with Augur and want to know the best ways to keep a pulse on what’s happening in the space.



Weekly Tweet



Vitalik throws out an intriguing idea on how to use prediction markets like Augur to, of all things, motivate good behavior on TikTok — see the Twitter thread for context. This is a reminder of the boundless possibilities of open prediction markets. Even the term “prediction market” is a trap, since predictions, along with trading and betting, is just one potential use case, even if it is the most salient and the best starting point. Augur *could* also be used for insurance markets, bounty markets, fact-checking, accountability, and Futarchy. Some of these are pipe dreams or things nobody actually wants…but some, I think, will happen.

Is DAI Essential for Augur v2? Micah Zoltu, an independent dev and likely the person who will give you the fastest and most useful answer in the world to any question you have on Augur, publicized a vulnerability in MakerDao, the (de)central “bank” that issues the DAI stablecoin, a cryptocurrency whose value is pegged to the US Dollar. He describes a possible attack whereby a deep-pocketed individual or group of colluders could steal all of MakerDao’s collateral, summing to hundreds of millions of dollars worth of Ether. This connects to Augur, since Augur v2 is slated to use DAI. This gets at a broader point that even if Augur‘s own contracts are radically ownerless, Augur uses building blocks like DAI, 0x, and Uniswap that vary in their degree of centralization and censorship resistance. Micah makes the case that MakerDao is not only prone to centralized control, but that any actor, at least in theory, can steal this control with sufficient funds. This begs the question: how critical is Dai for Augur?



I think using a stablecoin is a big step forward for Augur, *but* I don’t see it as a make-or-break factor for v2. With faster settlement, improved UIs with simplified onboarding, 0x mesh, and a *dream market fit for the product*, the 2020 election cycle, Augur v2 could still be a breakthrough without DAI. Especially, if the use of crypto was abstracted away in the UI at the onboarding and trading level and if users had some other simple means to hedge volatility risk. There’s even a world in which v2 gets *more* trading volume with Eth than with DAI, where the crypto market is booming and folks want to maximize Eth exposure while they’re betting on Augur. Actually, Augur’s highest-stakes trader to date, the anonymous bettor who wagered hundreds of thousands of dollars worth of Eth on the Midterms market last year, told me that he would *not* use Augur if it used Dai. All said, I still think the pros of DAI outweigh the cons and it should only be dropped as a last resort.



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Weekly Trade You can see my Augur trade history here. I’m holding my longs on Bernie and Mayor Pete in several PredictIt DemNom markets, for now, along with some hedges. Conventional thinking is that Bernie is a factional candidate with a low-ish ceiling of support and not what the Dems are looking for in a cycle where “electability” and beating Trump is top of mind. But a crowded field where everyone is competing to be seen as the most “electable”, the most reasonable, may also make it easier for an extreme candidate like Bernie to set himself apart from the crowd and squeeze through, even with a low ceiling of support. The whims of the Primary schedule are favorable to Sanders. The first two states, Iowa and New Hampshire, are not representative of the nation’s population, but carry disproportional weight in driving momentum. If the first two states were different, Bernie shares would likely be way overpriced, but he’s polling well in both Iowa and New Hampshire and decently in Nevada. In a cycle where electability is king, whoever wins the first couple states could get a big boost. I’m always a bit nervous going long candidates like Bernie that the young, white, male leaning Internet crowd that current prediction markets skew toward tend to favor. One reason that I’m also long Pete Buttigieg, the one candidate trading higher right now on Betfair than PredictIt — Betfair likely being less prone to these demographic biases. Note: This isn’t trading advice, just a look at what I’m up to.



Say Hi I love hearing from readers, so shoot me an email if you have any thoughts or questions or just want to say hi. Happy predicting and best from Tulum Mexico,

Ben