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The Augur Crowdsale

by The Augur Team

Reputation (REP) Sale:
Information Guide

Crowdsale Details

Please note that crowdsale details are subject to change.

Length of Crowdsale: 45 Days


Crowdsale Start Date: 
August 17, 2015, 12 pm (EST)

Crowdsale End Date: October 1st, 2015, 12 pm (EST)


Number of REP in Crowdsale
: 11,000,000 (Eleven Million)

Sale Site: sale.augur.net

(logins open now)

Documentation & Sale Information
If you plan to buy Reputation (REP) in the upcoming software license sale, you must read the following documentation:

 In order for you to understand what REP truly is, please read our guide, which can be found here. We answer several frequently asked questions below. If you have any others, please put them in the comments, and we’ll update the blog post.

If you’d like to buy in with Ether scroll down for instructions.
General Overview

Augur is the future of forecasting. Instead of depending on pundits and polls, both of which are notoriously poor sources for predictions of future outcomes, Augur unleashes the power of prediction markets, harnessing the “Wisdom of Crowds.” Essentially, it's the idea that no one person nor any small group of people has a monopoly on the truth about everything at all times. Two minds are typically better than one — and a thousand, or a million or a billion, minds are even better.

As opposed to trusting individuals, whose intentions cannot be known, Augur encourages market participants to put their money where their mouth is. People talk, but what people do with their money "talks" more clearly, reliably and consistently. This, combined with a diversity of perspectives and knowledge, tends to lead to better pricing of event predictions and more accurate estimates of event probabilities.

Unlike most databases, the blockchain is distributed across the Internet, making it practically impossible to shut down, and it's secured by network consensus, making the historical record nearly impossible for any one individual or group to tamper with. Whereas the Bitcoin blockchain is a record of financial transactions, Augur is designed to be a robust prediction market platform. Entries stored in Augur can never be changed or deleted. This makes Augur an ideal platform for a wide range of forecasting applications, including politics, sports, product prototyping, climatology, academic research, business management, and much, much more. 

On Augur, we plan to allow users to use sidechained Bitcoin, Ether, and a host of stable cryptocurrencies with which users can participate in markets.

The crowdsale serves three vital purposes:

  • It will support development, operations, maintenance and internationalization / localization of the Augur platform, and associated legal, promotional, administrative and logistical expenses involved in securing its widespread adoption and success. Development expenses include work on network infrastructure, implementation of multidimensional / categorical / scalar markets, switchable market base currencies and Augur's new consensus algo, making the platform more scalable, security audits and bug bounties. Operational costs include paying for bandwidth and servers to support blockchain.info-style web wallets for users who don't want to run the full client.
  • It will empirically identify those who most highly value the platform, its goals and its future. This is vital because REP buyers will be the system's judges/referees/reporters/oracles responsible for reliably and collectively deciding whether predicted events on the system happened or not. The people assigned this important role must have a demonstrable, invested financial interest in the system's integrity, with their initial voting clout weighed proportional to the relative size of their financial commitment to the platform (also note that REP holders will collectively earn 50% of all system trading fees while users who create markets and provide initial liqudity earn the other 50%).
  • It will incentivize people who buy REP to report honestly because they have something valuable at stake if they don't.  If we simply gave it away people could easily sybil attack the system and wouldn't have as much of an incentive to report correctly. People tend to value what they pay for and pay for what they value.
Click to view demo
Software License Distribution:
11 million Reputation tokens

  Bonus Stages:

  • True Augur (15%): August 17- August 22, 12:00pm (EST)
  • Prophet (10%): August 22-  August 28, 12:00pm (EST)
  • Nate Silver (5%): August 28 - September 5, 12:00pm (EST)
  • Nostradamus (0%): September 5- October 1, 12:00pm (EST)

Forms of Currency Accepted:

  • Bitcoin: Bitcoin will be accepted directly at sale.augur.net
  • Ether: Scroll down for instructions to buy in with Ether
  • Other Cryptocurrencies: Using Shapeshift.io you will be able to buy into the license sale with any cryptocurrency.

How is REP actually distributed?

We distribute reputation in a way that both equitably distributes REP, yet rewards early adopters.
Because we are releasing all Reputation at the launch of the software (probably in Q4 ’15 or Q1 ’16), it is hugely important that the REP software token/license is distributed to as many individuals as possible, and that these people —  who will be future referees judging the outcome of predicted events on the platform — be those who most highly and demonstrably value the system and its integrity.

To do this, we developed a “live-action” sale model that adjusts distribution of rep in real-time as individuals pay to participate. Setting aside the 20% of REP pre-allocated to the founding team, advisors and open-source software foundation (the Forecast Foundation, which will use its REP to incentivize further development and maintenance, including bounties) that is building Augur, the remaining 80% is distributed to software license sale participants.

How does the live-action model work?

The bigger the percentage your purchase makes up of the total crowdsale, the bigger the percentage of all outstanding REP you will possess.

Let’s set aside the 20% of all REP reserved for Augur’s team, advisers and the Forecast Foundation and consider the following example:

Imagine a pie with 11,000,000 pieces to be eaten.

Now imagine that Alfonzo pays $1 (or the BTC equivalent) to the Forecast Foundation at the very beginning of the software license/pie sale.

Because Alfonzo is the only person to pay the Foundation thus far, he now lays claim to all 11,000,000 pieces of pie and/or software licenses.

However, shortly thereafter, a second person, Bo decides to pay $10 to the sale as well. Consequently, Alfonzo now lays claim to only 1,000,000 of the licenses/pieces of pie. Bo receives the other 10,000,000.

However, if a third person, Sarah, purchases $1,000, then the distribution of pie/software licenses is redistributed yet again. Of course, Bo and Alfonzo could always purchase more if they feel like they would like to have a greater impact on maintaining the Augur software through reporting. In this sense, the crowdsale works as a kind of auction.

At the end of the software license sale period, reputation will be distributed based on the amount purchased by each address participating and the point at which participants contributed (to reflect their discount %, if any)

The reason we did it this way is to let the market set a value for each rep instead of us. We capped the number of rep and let value fluctuate instead of having an unlimited number of rep but us choosing the unit price. It's more like an auction than a traditional sale. 

Since it's an auction, the distribution of tokens will be constantly shifting until the sale ends. Instead of setting a price per rep, we're setting a limit to total rep and letting the market price the rep itself (in the true spirit of prediction markets)!

How do bonuses work?

We provide early buyer discounts to those most eager to help us maintain this software by reporting on events. Thus, those who purchase early will receive a certain percentage bonus on the REP they receive (based off of the final price set by the sale plus the percentage bonus period they bought in.)

How do I get an Ethereum address for rep storage?

You can enter an Ethereum address to receive your rep anytime between now and the final launch of Augur.  You can change it anytime before then as well if you get a new address you want to use instead.

Note: Before the sale start on Monday it'll be possible to generate Ethereum addresses using the Augur sale site and client.  You can wait for that or follow the instructions below to generate an Ethereum address now.

1). Follow the steps under Geth for your respective operating system
2). Either in the terminal (OS X/Linux) or command prompt (Windows) type geth account new
3). Enter in a passphrase - make sure you don't forget this, write it down and save it somewhere safe!
4). Then it will output your address in the terminal or command prompt.  You can then copy paste that into the augur sale app at your convenience up until our live launch.
5). Next backup your key.  If on OS X go to ~/Library/Ethereum (Finder -> go -> go to folder or search), if on Linux go to ~/.ethereum, and if on Windows go to ~/AppData/Roaming/Ethereum.  Then copy the keystore directory somewhere safe and save the copy (maybe on Dropbox or a flash drive).  The keystore is encrypted with the passphrase you chose in step 3.  Now if your computer crashes and you lose all your data, your rep will still be safe!

How do I buy in with Ether?  

Follow the instructions at sale.augur.net

How will BTC/ETH buyins be calculated?

They will be accounted for using the USD value at the end of the sale.  So if you buy in 100 ether and someone else buys in 1 bitcoin and at the end of the sale they're worth $75 and $300 respectively, you'll own 75/375 or 20% of rep, the other person will own 300/375 or 80% of rep.

There seems to be too much time delay from the time of closing an event to refereeing on it. It seems that this process might take between a month or more, so if I was a customer (predictor) for example and I win my prediction it will take me up to a month to get my winnings. This seems like too long in my opinion.

After an event happens you can sell immediately. Since the event has already happened, people who lost will sell for as much (aka little) as they can get and people will buy the correct outcome if it's <$1 - fees (because on official resolution they'll get $1). So this pushes the correct outcome price near 1. Then people who want to can sell their shares immediately. They do pay another trading fee, but since trading fees will be logarithmic (aka bigger near even odds and smaller at the edges) it'll be pretty small.

So the reporting system is really useful for 2 things: 1) in a bush-gore scenario, to determine the outcome once the knowledge is known and 2) to report on outcomes, ensuring that there's a forceful incentive for the above to occur. The oracle system makes sure that the markets have an incentive to behave the way they do.  You can sell after an event has happened before the official referee payout is determined, but will pay a small trading fee. People who want to profit off the small interest between then will buy winning shares as long as they're <$1-fees.

Do I have to report on all events?
There's a few ways to scale the system (or we could even combine them)
  1. have a minimum number of events that people have to report on, anything beyond that they can choose to or not
  2. select a random subset of events for each reporter to report on
  3. encourage branching (aka separation into separate subject categories - i.e. elections, weather, etc.).
1 is the most doable (as in, it would definitely work & doesn't cause any major problems for the system), 2 is a bit more of a challenge, and 3 would definitely work as well.
Either way you're not reporting on all events.
I've been swamped with other stuff recently, but after this week I'm (Joey) going to focus on scalability more and write something up (i.e. a "Part Two" to the scaling augur post I made a while back).

We want it to take around a couple hours / two months to report - 200 seems about right for a minimum #, but we won't know for sure until we get some actual real life scenarios when beta testing (our alpha was more focused on making markets, buying/selling shares, etc).
Will you allow for multiple markets on the same topic? "For example, you can make "Donald Trump will Loose the Presidential Election" and try to market your Prediction Market to have more traction (investors/betters) than mine?"
You can make multiple markets about the same thing --- which is good for reporters because it means more fees.  So if a market maker chooses a 2% fee, 1% goes to reporters, 1% goes to market creator each trade.  But it doesn't actually make more work for reporters because all the similar Donald trump markets can use the same Donald trump event
So the market maker needs to provide liquidity to start a market, i.e. equal to what people will bet on one side or another until you get people adding in money on both sides, correct? So really the market maker will 'make the first bet' in the Prediction Market he sets.
Yep!
"I would assume that REPs will receive a % of the value of the Prediction Markets that they confirm. However ... what would that look like in general terms?"
In general terms people who create markets can set their trading fees.  Half goes to the market creator, half goes to reporters.  There'll be a minimum set of events that people need to report on (we haven't decided on the exact # yet because we want to see how long it takes to report in practice, but we want it to take ~2hr or so every two months).  Trading fees from events will be split up amongst people who report.  So beyond that core group of minimum events if you don't report on other events you wouldn't get the fees from them.
There is an alternative way to scale things, which entails having reporters report on a randomly selected subset of events, but this would change the security model by a good amount and not enough research has been done into it.  So for now the above is how we're looking at scaling things. 

Special note

In order to allow us to maintain development during the very pivotal period between the release of our Alpha (when we would have liked to conduct our crowdsale) and the point at which Ethereum was launched, we offered early REP buy-in to a handful of trusted friends of the project.

The amounts ranged from 17.5 to 120 BTC and totaled $100,000. The participants got an 18% discount compared to someone who takes advantage of the bonuses outlined above, but beyond that they received no other benefits. 

In the spirit of full disclosure, the people who bought in early to the sale were Vitalik Buterin, Bo Shen, and Erik Voorhees.

Previous Milestones

Augur Alpha Release


The alpha release of the Augur client includes having various subsystems operational.          

  • Creation of binary markets on Augur
  • Wagering in markets on Augur           
  • Reporting on outcomes of events           
  • Closing of markets and payouts
Upcoming Milestones

Augur Beta Release

  • Accounts on Augur website similar to blockchain.info wallets
  • Scalar, categorical, and multidimensional markets in UI
  • An improved, cheaper, and more accurate consensus algorithm
  • All current alpha bugs fixed

Augur Full Release

  • Augur goes live on the Ethereum network
  • Launch contingent upon passing and fixing any issues raised in security audits and doing months of testnet testing
More About Augur
GLOBAL MARKET OF PREDICTIONS

Anyone with an Internet connection and cryptocurrency can participate in what will be an expansive number of markets.

REWARDS AT EVERY STEP

Be rewarded for creating markets, making accurate predictions, and if you hold REP, reporting on the outcome of events (half of the trading fees weighted by how much REP you have).

CURRENCY AGNOSTIC

We plan on accepting Bitcoin, Ether, and stable cryptocurrencies in markets. Augur intends to be currency agnostic - open to all cryptocurrencies.

UNPRECEDENTED OPPORTUNITY

A prediction market platform like this, open to the participation of all, has never existed. What will you forecast?

Our sale address to monitor funds raised
Note: Do not send any funds to this (you cannot receive rep by sending directly to this address).  To buy into the sale make sure you do it from sale.augur.net starting at noon EST on August 17. 
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