Investing Idea: Augur (REP)


It is no secret that the world that we live in is full of risks. For instance, most people are aware that an accident can occur at any moment. So to minimize the impact of an accident, many protect themselves by buying insurance.

The idea of risk has been magnified by a lot of people in order to turn a profit. For instance, the online gambling market is expected to balloon to $100 billion by 2026 from $46.9 billion in 2017. That’s just the tip of the iceberg when it comes to monetizing risk.

According to the Bank for International Settlements, the gross market value of all contracts in the derivatives market is valued at a whopping $12.7 trillion. In addition to that, hedge funds across the world manage assets worth $2.91 trillion.

It appears that as humans, it is in our nature to eliminate risk in order to feel a sense of security. As they say, “failure to prepare is preparing to fail.”

What if you can prepare for any eventuality? When we say “any eventuality,” we mean any event that can possibly happen in the future such as:

  • Will it rain on your wedding day that is scheduled to be held outdoors?
  • Who will win a certain political debate?
  • Will a charitable organization that you’ve donated to actually meet their goals?
  • Will a popular celebrity couple file for divorce in a year?

You can prepare for these events and more through a decentralized prediction market platform that runs on the Ethereum blockchain: Augur. With Augur, you can place a bet on any possible future outcome and receive rewards if the results end up in your favor. With our tendency to desire certainty as humans, investing in Augur will likely grow your capital in the future.

Augur Value Metrics

  • Current Price: $14.55
  • All-Time High: $123.24
  • All-Time Low: $0.782968
  • YTD Performance: +85.82%
  • Market Cap: $160.05 million
  • Market Cap Ranking: 58th
  • ROI Since Launch: 889.95%
  • Primary Markets: HitBTC, LATOKEN, Coinbase Pro, Dcoin, CHAOEX
Augur crypto chart
Augur all-time chart | Source: CoinMarketCap

Investment Case

Our investment case for Augur rests on people’s predisposition to hedge. Before Augur, those who could protect their assets were mostly those who have disposable income. The decentralized predictive market protocol changes that by providing a platform where anyone can create a market for any possible outcome.

For instance, Michael is someone living from paycheck to paycheck. He notices that his house needs major roof repairs before a natural disaster such as a category four cyclone strikes. So instead of incurring debt to make the repairs, he can create a market or contract on Augur where he bets on the outcome that there will be a category four cyclone that will hit his city in 2019.

If no category four cyclone strikes Michael’s city this year, he may lose the bet but at the very least, he buys time to save for repairs. On the other hand, a winning bet may ruin Michael’s roof but he earns the money to complete all repairs. He may have a little extra left from his winnings after the rehabilitation because the odds of a category four cyclone passing through his city is likely to be low.

Augur sample markets
Sample of active markets in the Augur platform| Source: Augur

The idea itself is revolutionary. To be successful, Augur needs both market creators and bettors. However, it is in its nascent stages like most cryptocurrencies. State of the DApps reports that the forecasting market platform is experiencing a downtrend in terms of active users, transactions, and volume.

Users, transaction and volume of Augur
The platform is suffering from poor liquidity | Source: State of the DApps

Shortcoming of Augur

Many blame poor user experience as a major obstacle to boosting Augur’s liquidity. An average Joe may find it difficult to get a grasp of buy and sell outcomes and estimate profits. On top of that, winners may have to wait an extended period of time before receiving payouts. This happens because people can dispute outcomes. In some cases, disputes can take a long time to settle. For instance, the house market took six rounds of dispute before getting a final resolution.

Sample of a market that went into several rounds of dispute:

These issues are worth mentioning because these are the growing pains of the platform. You’ll be investing in an asset that has the potential to be worth billions, if not trillions, of dollars in the future based on the current statistics of the hedge fund market.

Improving UX and Updates in Augur

The good news is Augur is combating these issues through peripheral apps and core updates. For example, Veil is an app that makes the betting process a straightforward process to appeal to everyday bettors.

Sample of a market that was opened in Veil
Sample of a market that was opened in Veil | Source: BraveNewCoin

In addition, Augur V2 speeds up the reporting and the dispute phases so that markets can be settled in a more efficient manner.

The Bottom Line

Augur has the potential to be a revolutionary platform as it relies on the tendency of humans to desire security by attempting to eliminate or hedge certain risk. However, the decentralized market prediction platform struggles to attract new consumers due to poor user experience. Fortunately, the Augur community has responded by introducing peripheral apps and providing major improvements in its next update. These are steps in the right direction that can help increase demand for the use of Augur and its utility token: REP.
This is our investment case for Augur (REP).


Disclaimer: The author does not own Augur.
Featured image courtesy of Shutterstock.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.