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

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

#131

Post by biztos » Mon, Aug 20, 2018, 8:11 PM UTC

gammateam wrote: post #78

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…

The thing I don't like about prediction markets is the capped liquidity. I want to put my money where my mouth is but then find out there is only 1 share to buy in the market. What I like about financial/forecasting crypto projects like Pareto Network is that there is no capped upside, and you can still determine the conviction some people have about an outcome A close runner up is Numerai, given that you can tell th…

> determine the conviction some people have about an outcome

But in order to do that, wouldn't you also have to know a lot about those people?

If you bet $1 and I bet $50 that could just mean I have a lot more money than you. Or for a million other reasons, I'm pretty likely to have not exactly 50x your conviction. I may even have less conviction than you.

And even this is assuming good faith, because I might have reasons other than "winning" for placing my bet.

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

#132

Post by andrepd » Mon, Aug 20, 2018, 8:32 PM UTC

hendzen wrote: post #117

anoncoward111 wrote: post #112

Earlier quoted context omitted.

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/

It's called survivorship bias. With hundreds of millions of people making investments in the stock market, almost any strategy has many examples of people who "won" with it.

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

#133

Post by andrepd » Mon, Aug 20, 2018, 8:34 PM UTC

biztos wrote: post #131

gammateam wrote: post #78

Earlier quoted context omitted.

The thing I don't like about prediction markets is the capped liquidity. I want to put my money where my mouth is but then find out there is only 1 share to buy in the market. What I like about financial/forecasting crypto projects like Pareto Network is that there is no capped upside, and you can still determine the conviction some people have about an outcome A close runner up is Numerai, given that you can tell th…

> determine the conviction some people have about an outcome But in order to do that, wouldn't you also have to know a lot about those people? If you bet $1 and I bet $50 that could just mean I have a lot more money than you. Or for a million other reasons, I'm pretty likely to have not exactly 50x your conviction. I may even have less conviction than you. And even this is assuming good faith, because I might have re…

It could work, in democracy, if everyone is issued the same amount of "tokens". If it works with real wealth you have a recipe for disaster.

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

#134

Post by hendzen » Mon, Aug 20, 2018, 8:43 PM UTC

andrepd wrote: post #132

hendzen wrote: post #117

Earlier quoted context omitted.

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/

It's called survivorship bias. With hundreds of millions of people making investments in the stock market, almost any strategy has many examples of people who "won" with it.

I understand survivorship bias.

These firms make many thousands of trades per day, year after year. They have multi-year track records of exceptional returns.

If their edge was truly no better than random then they would have been bankrupted years ago. You can do some back of the envelope math to easily convince yourself of this.

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

#135

Post by AnthonyAguirre » Mon, Aug 20, 2018, 8:54 PM UTC

A real challenge for prediction markets (with real-money stakes) will be to get sufficient liquidity on relatively small-ticket items outside of sports and politics.

For such items platforms like metaculus.com and Good Judgement seem more likely to provide more useful predictions, but without the ability to hedge against events that prediction markets have.

I discuss this in depth in this podcast: http://rationallyspeakingpodcast.org/show/rs-214-anthony-agu...

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

#136

Post by 4bpp » Mon, Aug 20, 2018, 9:04 PM UTC

What if the subject of a prediction market is a matter that is subjective and/or politically charged? Suppose, for instance, the question asked is "Is the Trump presidency a net positive?", or something even more seemingly factual like "Did Hillary Clinton commit a criminal offense?" or "Is there a correlation between race/gender and $desirabletrait?". Not only will reporters' votes likely correlate with their political affiliation, but even the incentive structure is not aligned with producing the truth if we only grant that people assign nonzero monetary value to their tribe's status rising (as would happen if a prediction market agreed with it).

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

#137

Post by berberous » Mon, Aug 20, 2018, 9:16 PM UTC

MusaTheRedGuard wrote: post #120

berberous wrote: post #110

Earlier quoted context omitted.

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 Built on top of IPFS

Cool! So why did the main team insist upon the app approach (what's the benefit?), and what's this site doing to get around it?

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

#138

Post by kirillseva » Mon, Aug 20, 2018, 9:32 PM UTC

yellow_postit wrote: post #121

hendzen wrote: post #117

Earlier quoted context omitted.

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/

Depends deeply on the time period and this list is most likely due to survivor bias. See Warren Buffet's hedge fund bet as a good semi recent example.

He was daring a human-managed fund to outperform S&P500. I don't think Warren is an authority on market's microstructure and quant trading, which these companies exploit.

Basically on very quick trades machines outperform humans. For long term investment a prediction market (stock market index) outperforms humans and machines.

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

#139

Post by MusaTheRedGuard » Mon, Aug 20, 2018, 9:40 PM UTC

berberous wrote: post #137

MusaTheRedGuard wrote: post #120

Earlier quoted context omitted.

You don't have to download an app to interact with augur: augur.casino Built on top of IPFS

Cool! So why did the main team insist upon the app approach (what's the benefit?), and what's this site doing to get around it?

Decentralization. Anyone can run their own node of the software making it resistant to censorship, malicious control by the devs themselves or a third party.

Augur.casino runs their own node of Augur but runs it on IPFS, allowing others to connect to it.

Provides convenience if a user doesn't care about decentralization.

Just btw, I'm not affiliated with augur or augur.casino or any of these projects. I just find them interesting

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

#140

Post by drdeca » Mon, Aug 20, 2018, 9:48 PM UTC

gammateam wrote: post #130

drdeca wrote: post #88

Earlier quoted context omitted.

I'm confused. With Augur, "complete sets" can, aiui, be created by anyone, so I don't see why there would be a problem with only one share being available? Unless I guess if you want to make sure the trade goes through immediately?

the problem is the limited amount of money one can make off of a random market. makes it less appealing to some (or many) and less efficient in determining an outcome yes assassin markets and popular political events can now be traded in the US even if the Augur company gets sanctions, but for everything else this is an inefficient system.

Well, the money has to come from somewhere. In any case, someone has to be willing to take the other side of your bet, whether it is other participants or the people running the market/betting thing.

I'm not sure what alternative you are considering to not have that problem, or what it would look like for something to not have that problem.