5

The aspect of Augur that is most striking to me is that the system seems capable of establishing decentralized, reliable facts-as-a-service. Augur could provide smart contracts and DAOs with a trustless understanding of real world conditions and events.

I can imagine a couple ways of abusing Augur for nefarious purposes. Would Augur be regulated in some way to prevent the following scenarios?

1.

A Reporter buys vast sums of REP, and then reports falsely on a market (undermining the system at great financial cost). The falsely settled market triggers a condition in a smart contract (for example, an insurance policy), resulting in net financial gain for the attacker.

2.

An organization creates (or observes) a market for whether a particular event will occur. They then create a smart contract which uses the results of Augur's prediction market to guarantee payment to whoever makes that event come to fruition.

For example, the organization's smart contract could allow for anyone to specify the time that a future event will occur (requiring them to post bond as proof of their serious intent to make the event occur at that time). If Augur determined that the event in fact happened during that reporting period, the person who registered with the smart contract would receive their guaranteed payout.

This would be really bad. Terrorist organizations could anonymously pay large sums to anonymous individuals who commit acts of terror on their behalf. Anyone with money could anonymously incentivize whatever events they want to occur.


In summary, I'm curious: how could we mitigate the potential negative societal consequences of a decentralized truth market? And are there examples of extremely positive societal consequences? Do the positives outweigh the negatives?

4

It is possible to cause a market to finalize incorrectly via a 51% attack. However, there are strong guarantees (whitepaper will have all the math once it is out) that such an attacker will suffer significant financial losses (on the order of millions of dollars at current REP prices). The white paper does bring up the possibility of "parasitic open interest", which would be what you have described where some smart contract is using Augur as an oracle and attaching some amount of value to the result but that contract is not paying Augur security fees that it should be. We account for a limited amount of this by over-securing Augur, but it is definitely a concern that the amount of parasitic open interest could grow so large that Augur becomes insecure.

Assassination markets are a well known use case for prediction markets. Reporters do have the option of reporting that a particular market is invalid. We will simply have to wait and see whether the general community consensus is that assassination markets are acceptable or unacceptable.

Augur is designed to be censorship resistant. That means both the good parts of censorship and the bad parts of censorship. Thus, there is no way for Forecast Foundation (or any other individual) to stop people from using Augur however they like. Through the forking system, the community at large can "decide", or the system can split on philosophy (like ETH/ETC did).

  • 1
    It seems highly likely that the community will reject assassination markets. But it seems equally likely that other types of bad actors will find economic incentives to leverage Augur. – Benjamin Resnick Dec 12 '17 at 2:35
  • 1
    In the long term, I'm hopeful that Augur (or whichever decentralized truth oracle catches on) integrates a more nuanced notion of universal human morales and values, rather than simply reporting particular markets as invalid. I think it might be 10+ years before such a system of morales is even relevant, but it could be worth thinking about. Nick Bostrom's discussion of "the value-loading problem" in the context of AI could be relevant here. – Benjamin Resnick Dec 12 '17 at 2:41

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.