Published on Feb 21, 2020
Augur is a decentralized prediction market platform that runs on Ethereum. For a detailed, high-level explanation of how Augur works, please refer to the Augur whitepaper.
The stable Augur application is built and hosted at https://app.augur.net. If you want to use or help test Augur, you do not need to download or install anything! Just go to https://app.augur.net and start using it. (If you want to use our cutting-edge development client, this is maintained at https://dev.augur.net – warning, we push changes to augur-dev.firebaseapp.com pretty rapidly, so it can be a bit buggy! We suggest simply using https://app.augur.net for a more stable experience.)
Augur has its own dedicated Stack Exchange, which allows anyone to ask questions about Augur and get answers to those questions. It’s a great resource to find the answers for questions you might have that aren’t answered directly in these documents. Additionally, you can chat with us on Discord. If you’d like to join the conversation, just go to invite.augur.net and sign up. Most questions are best asked in the #dev or #general channels.
Augur is designed to work with a locally-running Ethereum node; however, if one is not available, Augur can be configured to use a hosted Ethereum node instead. A hosted Ethereum node is one that is hosted on a public server by the Augur development team. The sections below explain a bit about each setup and provide a diagram of what’s going on under the hood.
Augur allows anyone to create an openly tradable Market about any upcoming event. Augur maintains an Order Book for each of the Markets created. Any trader can place or take an Order on the Market’s Order Book. When placing an trade, that trade request will be Filled immediately if there is an Order on the Order Book that will fulfill it. If there is no matching Order, or if the trade request can only be partially Filled, the remainder of what wasn’t filled of the trade will be placed on the Order Book as an Order. Order Creators may cancel their Order to remove it from the Order Book. Orders are executed on a “first come, first served” basis.
The Augur UI offers users the best prices first when displaying the Order Book on each Market page. Orders are never executed at a worse price than the limit price set by the trader, however they can settle for better than the limit price. Orders can also be partially filled. The UI will automatically include multiple backup/fallback Orders to attempt to fill the Order in the event that the best Order was filled before the transaction was sent. These backup/fallback Orders are always within the limit price set by the trader.
Let’s use an example Binary Market trading on the “super big event” coming up. For this example, we want to go long on Outcome A. We would submit a trade request to buy 100 Shares of Outcome A with a limit price of 0.5 ETH, which will cost 50.0 ETH plus gas used to send the transaction.
If there are Orders on the Order Book that match our request for 100 Shares of Outcome A at a price of 0.5 ETH, or cheaper, then Augur will fill those Orders. We will now own 100 Shares of Outcome A and we will have lost 50.0 ETH plus gas cost.
If no Order is available on the Order Book that would partially or completely fill our trade request then a Bid Order would be placed on the Order Book. Whenever an Order is placed on the Order Book something of value is escrowed by the Market. In our example, the value we are giving to the Market to place our bid would be our 50.0 ETH. If we were attempting to sell Shares that we currently owned then we would escrow the Shares instead of ETH. If we cancel our Order we can get our 50.0 ETH back, the only currency lost would be the gas used to pay to place the trade and cancel the trade. When a Filler decides to fill our Order on the Order Book, we will get our 100 shares of Outcome A transferred to us.
