Introduction to Augur, an open-source, decentralized betting marketplace • Hacker News Board

Re: Introduction to Augur, an open-source, decentralized betting marketplace

#111

Post by berberous » Mon, Aug 20, 2018, 6:33 PM UTC

drcode wrote: post #56

camjohnson26 wrote: post #18

The main problem on Augur right now is volume. Only a few markets have orders to trade against, and it seems like the cryptocurrency markets are the most actively used. I tried to use the platform to make a small bet against Tesla, but obviously you need someone to take the other side of the bet. Still a very cool platform. A lot of people use predictions.global to get a birds eye view of the markets. https://predict…

I think the "volume" problem breaks further into two critical sub-questions: 1. A big selling point of these markets is that there are theoretical commercial value to predictions- i.e. a company could get information of the likely success of their new product line ahead of time, to help them make strategic adjustments. However, Robin Hansen (one of the top economists working on betting markets) says, counterintuitive…

Why is 2 a problem? I'd love to use Augur, but the liquidity is low. If the Augur team wants to seed it with liquidity and good bets, I'm game to take the other side. This is also how many startups start out -- for example, the Reddit cofounders faked a lot of usage and self-submitted posts in order to get early traction.

Re: Introduction to Augur, an open-source, decentralized betting marketplace

#112

Post by anoncoward111 » Mon, Aug 20, 2018, 6:35 PM UTC

hedgew wrote: post #7

Augur will probably be used for betting but really it's a prediction market. https://en.wikipedia.org/wiki/Prediction_market Prediction markets are an interesting tool for determining the most likely answer or result for almost any question. Some economists hope that we could use prediction markets to make difficult political decisions. Many companies already use them internally. Sadly there's only one prediction mar…

There is a much larger global prediction market that comes with its own set of nuances and quirks, and that of course is the stock market. You can even get involved with no fee at all through Robinhood, but you will have to fill out some annoying and potentially costly IRS forms.

If I could paraphrase Charlie Munger, in the stock market, the only people who are successful long term are those who bet massive sums, very rarely, when they are sure that the price of a security is severely and unproperly valued.

If Tesla is currently trading at $355, and you have evidence for yourself that it should be worth something like $0 or $3,000, then this would be an example of the current market prediction being extremely wrong.

A stock's price is really just a prediction of the company's future cash flow in the event of profits, losses, sale of assets, so on.

Re: Introduction to Augur, an open-source, decentralized betting marketplace

#113

Post by gwern » Mon, Aug 20, 2018, 6:35 PM UTC

drcode wrote: post #56

camjohnson26 wrote: post #18

The main problem on Augur right now is volume. Only a few markets have orders to trade against, and it seems like the cryptocurrency markets are the most actively used. I tried to use the platform to make a small bet against Tesla, but obviously you need someone to take the other side of the bet. Still a very cool platform. A lot of people use predictions.global to get a birds eye view of the markets. https://predict…

I think the "volume" problem breaks further into two critical sub-questions: 1. A big selling point of these markets is that there are theoretical commercial value to predictions- i.e. a company could get information of the likely success of their new product line ahead of time, to help them make strategic adjustments. However, Robin Hansen (one of the top economists working on betting markets) says, counterintuitive…

The Augur Foundation will never do that because it would put them in immense legal jeopardy from the SEC/CFTC, and at no point in Augur's growth would that make sense: when Augur is small, the gain from wash trading is much smaller than the potential fines (Intrade was fined $3m this year alone, and it doesn't even operate any more), and when it's large, it's unnecessary.

Re: Introduction to Augur, an open-source, decentralized betting marketplace

#114

Post by barking » Mon, Aug 20, 2018, 6:39 PM UTC

phillc73 wrote: post #10

busterarm wrote: post #2

Hard pass. Blockchain and Gambling still don't really go together yet. Moreover, I wouldn't touch anything intersecting this space that doesn't have Rick Dudley directly involved. Not only does he have a 15 year headstart working on some of these problems, but he also owns patents on provably fair online gaming systems. The site acts like the main challenges are legal when really they're technical.

> The site acts like the main challenges are legal when really they're technical. The main challenge, in my opinion, is volume. The future of online betting is exchange marketplaces, where users/members can both back and lay event outcomes. This removes the reliance of a central player (bookmaker/sportsbook) to support the lay side of the market. Overlays are generally much smaller on exchanges. However, to achieve t…

Betfair was bought by the bookmaker Paddy Power. Betfair has both an exchange and sportsbook components. The former is where you bet against other punters and the latter is where you bet against the company. The site seems to steer you by default towards the latter. If you show even minimal profitability on a sportsbook and you'll typically be restricted. Does the sportsbook get first pick on odds on the exchange to lay off liabilities? Do they monitor canny punters on the exchange and take positions accordingly? Are there even chinese walls between the two parts of Betfair and between that and Paddy Power bookmakers. Is this well regulated? Paddy Power are a pretty slick operation but I wouldn't trust them as far as I could throw them.

Re: Introduction to Augur, an open-source, decentralized betting marketplace

#115

Post by nostrademons » Mon, Aug 20, 2018, 6:40 PM UTC

packet_nerd wrote: post #107

nostrademons wrote: post #90

Earlier quoted context omitted.

The idea is that they create an incentive to discover all possible information that may effect the price of the stock in the future, and so the eventual market price ends up reflecting all that information. That in turn lets people use that price as a signal for how to allocate capital and make decisions in the future. It's not that they're totally accurate, it's that they're as accurate as it is possible to be . Why…

> discover all possible information Plenty of market participants are not actually doing this. Day traders, high speed traders, even index funds come to mind. And even "real" investors are influenced by psychology that has little to do with an impartial analysis of all possible information. (It's not what you know, but what "everybody knows that everybody knows" [1]) [1] http://www.epsilontheory.com/the-fundamentals-…

Sure, but markets ensure that traders who don't effectively do this lose money and get flushed out. That's the case with most day-traders, who are losing money they would otherwise put into consumption and using it to get an emotional high off price movements. Gambling, basically.

Quant high-speed traders (and arbitragers) are using information in a different way. Typically, the way these strategies work is that they discover correlations between prices. For example, when China enacts tariffs on soybeans in response to Trump's tariffs on steel & aluminum, that's going to depress demand (and hence prices) on soybeans. However, it will also have a lot of knock-on effects on other industries: shipping companies transporting soybeans will lose money, railroads connecting soybean farms to the Great Lakes will lose money, railroads connecting soybean farms to domestic demand will gain money, ranchers and chicken farms and other domestic food producers who use soybeans as feed will gain money, commodity traders could go either way, house prices in wealthy Chicago neighborhoods might increase if commodity traders are making a killing, etc. Say that the inside information entering the market is "China is enacting tariffs on soybeans". A bunch of people with that information will short soybean futures, and then it's the job of an HFT to spread that information through all the other markets that it may affect, updating the relevant prices on their securities before the profits actually trickle down through the economy.

Index funds are the freeriders of the markets. The philosophy there is that all of the work that people do is going to produce some value, and the shareholders will capture some of that value as returns to equity. And if the rest of the financial system is functioning effectively, all of this will be reflected in prices. So rather than worry about what the price will be, just buy & hold securities in proportion to their value, let the price mechanism do its job, and profit in proportion to the initial amount of capital you put in.

Re: Introduction to Augur, an open-source, decentralized betting marketplace

#116

Post by deevolution » Mon, Aug 20, 2018, 6:43 PM UTC

Augur may not have many users at the moment... but i can imagine a near future where workers displaced by automation could make money on this platform. Who else is going to have time to place a bet and contantly monitor these markets? Or, more realistically the markets will be taken over entirely by bots and AI who also operate using smart contracts. The bots would be able to analyze billions of datapoints scraped from the web and pay for api access via crypto. How could a human ever compete? Welcome to the future.

Re: Introduction to Augur, an open-source, decentralized betting marketplace

#117

Post by hendzen » Mon, Aug 20, 2018, 6:44 PM UTC

anoncoward111 wrote: post #112

hedgew wrote: post #7

Augur will probably be used for betting but really it's a prediction market. https://en.wikipedia.org/wiki/Prediction_market Prediction markets are an interesting tool for determining the most likely answer or result for almost any question. Some economists hope that we could use prediction markets to make difficult political decisions. Many companies already use them internally. Sadly there's only one prediction mar…

There is a much larger global prediction market that comes with its own set of nuances and quirks, and that of course is the stock market. You can even get involved with no fee at all through Robinhood, but you will have to fill out some annoying and potentially costly IRS forms. If I could paraphrase Charlie Munger, in the stock market, the only people who are successful long term are those who bet massive sums, ver…

Actually, there are also people [0, 1, 2, 3, 4, 5] who are very successful betting small sums (relative to their total investable capital), very frequently, on securities they believe are slightly over or under valued.

[0] - https://www.rentec.com/

[1] - https://www.twosigma.com/

[2] - https://www.citadel.com/

[3] - https://www.mlp.com/

[4] - https://www.deshaw.com/

[5] - https://www.worldquant.com/

Re: Introduction to Augur, an open-source, decentralized betting marketplace

#118

Post by dorgo » Mon, Aug 20, 2018, 6:57 PM UTC

anoncoward111 wrote: post #112

hedgew wrote: post #7

Augur will probably be used for betting but really it's a prediction market. https://en.wikipedia.org/wiki/Prediction_market Prediction markets are an interesting tool for determining the most likely answer or result for almost any question. Some economists hope that we could use prediction markets to make difficult political decisions. Many companies already use them internally. Sadly there's only one prediction mar…

There is a much larger global prediction market that comes with its own set of nuances and quirks, and that of course is the stock market. You can even get involved with no fee at all through Robinhood, but you will have to fill out some annoying and potentially costly IRS forms. If I could paraphrase Charlie Munger, in the stock market, the only people who are successful long term are those who bet massive sums, ver…

But never forget: Market Can Remain Irrational Longer Than You Can Remain Solvent

Re: Introduction to Augur, an open-source, decentralized betting marketplace

#119

Post by adam » Mon, Aug 20, 2018, 6:59 PM UTC

GreenPlastic wrote: post #89

djhworld wrote: post #63

Earlier quoted context omitted.

Is there evidence of this working though, or is it the same concept as the 'wisdom of the crowds'

Yes, it works very well but not for the 'wisdom of the crowds' effect. It works because the people with the most information and best models sharpen up the price. Over time, the sharpest bettors grow their bankrolls or capital exponentially and place larger bets and have a disproportionate weight on the markets and their opinions matter more, making markets more efficient.

In theory you're right - but this isn't how it works in practice. The people who earn the most money are the best traders, not necessarily the people with the "most information and best models." The overall forecasts tend to be accurate, but you cannot look to individual participants, see who has the most money, and assume they know the most about the subject at hand.

Re: Introduction to Augur, an open-source, decentralized betting marketplace

#120

Post by MusaTheRedGuard » Mon, Aug 20, 2018, 7:00 PM UTC

berberous wrote: post #110

MusaTheRedGuard wrote: post #87

Earlier quoted context omitted.

Sigh. Copying my comment from below: Please note that an "active user" is an active address( i.e one that has made a bet on the platform) in the past day. This doesn't take into account users that made a bet in the past( most bets have long term horizons, >4 to 5 months) or users that have a current position but aren't betting anymore or users simply observing the markets( looking at a front end like predictions.glob…

By any metric it's a ghost town. But I think that has a lot to do with poor UX, low liquidity, etc., all of which could change as it improves. For example, you currently have to download an app to interact with Augur. There's also very few contracts, each with very little liquidity.

You don't have to download an app to interact with augur: augur.casino

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