"We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten" -Bill Gates Grab your coffee and Clorox. It's time to talk Augur and prediction markets. 🔥



Amora's Law, Augur Edition “My goal is to have a daily Augur prediction page in the Wall St. Journal by the end of 2017, in addition to having Augur integrated with Google searches.” I stumbled across this gem from a post on Augur’s old blog, dated February 19, 2015. Suffice it to say, this hasn't panned out…yet. It’s easy to laugh at our past predictions and much harder to appraise our current ones. We don’t know the future, so we can’t be certain whether we’re right or wrong, *but* we can still be on the look out for common cognitive biases that may cloud our judgement. This 2015 statement as well as many predictions in Augurland *today* may be explained by what is known as Amara’s Law: “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.” Amara’s Law, coined by computer scientist and futurist Roy Amara, shows up in everything from AI to crypto to self-driving cars, but I think it applies especially well to…you guessed it…Augur. People overestimate what Augur will accomplish in the next 2 years and underestimate what it could accomplish in the next 20. I’ve certainly done this myself. Expecting v2 to be *the* breakthrough release for Augur and solve all its major problems is Amara’s Law. But so is predicting that in 2034, Augur will just be a much larger PredictIt, with say a couple billion dollars of open interest (assuming it succeeds). v2 will be a big step forward, but it’s still early days. I‘m not expecting too many fireworks…yet. Augur is the most complex thing built on Ethereum, which itself is a young technology and primitive infrastructure. Augur also recruits a range of DeFi "legos" as building blocks, including Dai, 0x, and Uniswap, all somewhere on the spectrum of pretty early to super early. The complexity and early-ness of the tech means: The pace of development is limited by primitive tooling. As Joey Krug, put it “building something in the [crypto] space is more akin to building a rocket or, to biotech, than it is to building something like Snapchat. The developer environments, languages, and tooling are just so new in crypto…It’s like the early days of the internet when creating a simple website was difficult.” Devs cannot change smart contracts once they are launched, so it’s essential to get them right (or close enough) out of the gate. Not only that, but they are open source, so anyone can scour the code for potential exploits. So creating secure smart contracts is a profound challenge. Post-launch, there are bound to be fires to put out and unknown bugs and vulnerabilities that range anywhere from minor to critical. We have already seen a number of DeFi projects encounter serious issues in the wild, and it’s unlikely that Augur will be the exception, given its complexity. Putting aside the unknowns, there are known limitations still present in v2. These include costly and slow order taking and broader scalability limits, fiat onramp frictions (fees, limits, and delays around obtaining DAI), Invalid market risk, unadjustable market end times and outcomes, limited number of outcomes per market, forced downtime between contract upgrades, lack of long-term markets (beyond ~12 months), and slow settlement risk. We face not just limitations at the protocol level but also at the ecosystem level. There are few things built around Augur yet, including different UIs to access it, and infrastructure and tools for devs, market makers, affiliates and other players in the Augur ecosystem. But I think the essence of why Amara’s law applies especially well to Augur is that the very innovations needed to make Augur someday limitless, at first, pose some of its greatest limitations. By limitless, I mean anyone, anywhere can trade and create markets on anything…and trade as much as they want. To make a prediction market limitless you have no choice but to make it decentralized. And to make it actually decentralized, not decentraLITE like many DeFi projects, you must not only innovate at the technical level on top of early, slow infrastructure, but you also must innovate at the incentive level. To make market creation, trading, and resolution all decentralized, you have to solve hard problems that are more game theoretic, than technical, in nature. Many of these problems have already been solved, which explains why Amora’s law applied even better to Augur in 2015 than in 2020…but there’s still more work to be done. There are no shortcuts to building a decentralized prediction market. If a centralized prediction market is like a paper airplane, a decentralized one is like a rocket ship. The former is easier to build and will get off the ground much faster…but it won’t get you very far. And this takes us to the second part of Amora’s Law: people underestimate the effect/success that a technology will have in the long run. I’ll save this part for an upcoming edition of The Augur Edge, as this one is getting long. The key thing I want to convey for now is that it’s still early days, and there will be growing pains. v2 is a leap forward, but still trivial compared to what Augur has the potential to look like in another 10 or 20 years. If v1 is an embryo, v2 is like a baby or child LeBron James (yes, weird analogy). He has all the potential in the world and will start to show glimmers of his talent, but he won’t win a lot of basketball games…yet.



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Atomic Writing Habits Outside of Augur stuff, I wrote a piece about...writing. I share a simple approach to creating a consistent, sustainable writing routine. If you're looking to write more, check it out! Alright ladies, gents, cats, and bots...signing off for now. As always, feel free to say hi with any thoughts or questions. Hope you have a good rest of the week and stay safe out there! Happy predicting & social d i s t a n c I n g,

Ben



p.s. make sure to listen to the doctor...



