Decentralized predictions market Augur has taken some big steps to stomp-out nefarious actors on its platform, the firm told The Block.

Augur allows users to create a market based on the outcome of an event, with actors buying shares of the outcome whether that be “yes” shares or “no” shares or something more complicated. When the outcome occurs, those who bet the winning outcome see an ether payout – 0.5 per share for a winning bet in a yes/no scenario and none for a losing bet. However, in an invalid outcome, which occurs when an outcome is unverifiable, yes and no shares each receive a 0.5 payout.

Here is where cheaters take advantage, according to Augur.

Attackers create an invalid market, perhaps by setting the end of the event to a time when it will certainly yield an ambiguous outcome, like before the event takes place. They then buy up shares of the least probable outcome at a price lower than the payout of the “invalid” outcome. Market creators do have to pay a validity bond when creating a market, which they only get back when the market is deemed valid, but this isn’t enough to deter bad actors since the fee is often less than the money made off the invalid market.

The Fix

To combat this, Augur has released a new Augur App that sorts markets to show those most likely to be of value to traders, deterring users from creating invalid markets for gain since they’ll be less likely to see a payout.

“The ultimate goal is to create a game where everyone wins: where the individual incentives of market actors align with the utility and security of the protocol as a whole,” said Ben Davidow of Augur's growth strategy department, in a Medium post.

Basically, the new set up filters out markets that have wide spreads and a lack of deep liquidity. As traders could manipulate markets previously with dust orders to give the appearance of a tight market. In addition to rewarding markets with tight, deep spreads by making them more visible, the filter also excludes markets that have no bids or asks that would incur a loss for the order creators in the case of Invalid resolution.

Augur also plans to allow users to trade an invalid outcome, making it impossible to profit on an “invalid” in a yes/no outcome as scammers previously benefited from. However, the filters aren’t perfect and some invalid market scammers may still slip through. They can post a small order as a loss leader to pass the filter, but the payout will likely be severely limited by the spread filter, incentivising users to not waste their time building scams since it’ll be less lucrative.

Augur isn’t the only decentralized platform that has had to take care of scammers. Bancor, a decentralized exchange, had front-running problems. Bancor subsequently hired a front-runner to find solutions.