Why the developers Augur not sure of the long term operation of its platform in the Ethereum ecosystem?

The launch of blockchain-platform predictions Augur that acne Buterin once called “Uber in the sphere of knowledge”, took place on Monday.

One of the first applications built on the Ethereum blockchain, open source software Augur allows users to create and bet on the outcome of any action – from the presidential campaign of Donald trump 2020, 2019, on the coast of the USA happens first hurricane. Entering the market dominated by companies like PaddyPower and DraftKings, the Augur team hopes to gain a competitive advantage through low commissions and the ability for any user to create criteria for betting.

“I was excited about the possibilities of prediction markets based on Ethereum,” says Buterin, consultant Forecast Foundation of a team that was behind the creation of Augur.

The technology of the blockchain, registry, repeated in multiple copies, distributed across many network members, is being touted as a way to speed up transactions and reduce their cost. And since none of the members of the network does not control the system – unlike PaddyPower – it depends on the consensus reached between users regarding the accuracy of the result of each bet.

“To create a new market with our platform, anyone can, says Tom Kaisar, head of the operations Department Forecast Foundation. – Augur is a truly global financial market. If you look at financial markets today, it is trading Apple shares in Russia or in China is quite difficult. Controls on capital movement make it very difficult such transaction.”

Having the ability to create bets in virtually any event, even non-obvious players on our platform will potentially be able to hedge any risks. For example, a farmer who grows soybeans and concerned about the consequences of a trade war between the US and China for sales of its crop, you could bet that the negotiations between the leaders of the countries will not lead to resolution of the conflict, and thus recoup some of the losses from unsold soybeans in the case that unfavorable scenario is realized.

In 2015, the Augur drew on ICO 5.5 million dollars, but today the market capitalization of REP tokens in the secondary market is already 377,3 million dollars. The authors of the platform are planning to make payments at the rates in the ethers, whereas the REP tokens a private network will be used to create incentives for users to provide accurate reports on the results of betting or to challenge incorrect reports from other users.

The launch of the platform also takes place on the background favorable to sport betting industry precedent decisions. In may, the U.S. Supreme court invalidated provisions of the law forbidding the governments of the individual States to issue permits for activities in this area, and thus enhanced their ability to self-regulate the industry, betting on the outcome of sporting events. But even if the States leave the bans in force, they will not be able to close the Augur due to its open and decentralized nature, says the managing partner of Capital Multicoin Kyle Samani. This is one of the reasons he invested in the platform.

“Augur is the first project of this kind that the government can’t stop even if they wanted to,” he says.

The main long-term problem, which Augur will have to pay special attention to is the issue of scale. Augur relies on the “wisdom of crowds”, or the belief that many minds are better than one expert. Thus, the more reports the results of the event, the less opportunity to cheat the system.

At the moment the user base is limited Augur holders of Ethereum tokens. The platform may also face other problems, even if it manages to gain popularity among this user base. To begin with, successful applications based on Ethereum, in the past created too a large number of transactions that the Ethereum network could not handle. After starting CryptoKitties, game breeding cartoon cats and trade, Ethereum users complained that they have to wait for a confirmation of the transaction for several hours. The developers CryptoKitties in turn was forced to increase transaction fees.

As a result, developers Augur not have confidence in the long-term operation of its platform in the Ethereum ecosystem, especially when you consider that the Commission Ethereum constitute the largest item of expenditure of the project. To date, however, no other project with their platform not being used.

“We thought about it, says Joey Krug, co-founder of Forecast Foundation, when asked about whether they considered the ability to build your project based on another blockchain. – Today we don’t see alive and viable alternatives to Ethereum. But there are a few projects, the development of which we closely observed”.

While the inconvenience of using Ethereum, Augur believe forced a growing problem for the system.

“It’s pretty clear that Ethereum today, not scales, says Krug. We are ready to accept it. Is their a lot of pros to rise gradually and to carefully track and test all potential system vulnerabilities. This stage can last for several years – until then, until the issue of scalability of Ethereum will not be solved.”

Source: Fortune