An analysis has been done and it shows that there are a number of irregularities. These can all be found in the Augur prediction market and this is not good to say the least. Namely they have also identified a potential attack on the discrepancies between the outcome date and the general market expiry date. A prediction market would really seem like the ideal outcome for blockchain because it would harness the nature of the centralized control. Augur have also come out to say that they use the blockchain and that this has a trust-less nature. Augur uses the ETH blockchain as this gives them the chance to create a prediction market and it also helps them to create a high-quality image of any definable event.
The market creator has defined what would be known as the topic and even the end date as well. They have also added an adjudicator if this is desired. Trading in an ETH dominated network will continue until the end of the event. At this point, Augur holders, or any designated reporter for that matter, will then work hard to try and cover the outcome. Token holders will also stake their REP on the line and this will help them to receive any settlement fees.
Aside from the illegal market choosing to cover such as terror attacks, it’s important to know that there are some key issues here. There is always going to be a steep learning curve but it’s important to know that Augur users do tend to rely on various website interfaces. This will offer non-standard features and they are also open to a lot of manipulation as well. In particular, it would appear that a lot of users are going to gravitate towards a market which may seem to be untrustworthy to others. This will create a somewhat feeding frenzy around the markets and it will also generate a lot of volume as well. The market creator may have manipulated this to some extent, so this is important to keep in account.
Disputed outcomes will of course, go to a voting procedure. When this happens, a lot of users will then state their REP and they will then receive a reward if they happen to choose an outcome that wins. This helps people to vote for the most popular outcome and it doesn’t really matter whether it is the true outcome either. On top of this, you have the validity bond. This is lost if a market does not appear valid. It remains fixed, and this means that bad actors are going to carry on creating bogus markets too.
A recent example of how the system in general can be manipulated is all based on the price of ETH at the end of March. This is the outcome date and it could even cause the contract to become invalid as well. If you were to create multiple outcomes, then one would be easy to achieve. You would however have to create some wash-trading so that this would lure a lot of punters in. The attacker would then limit the sell order and it would make it more than possible to have an easy outcome. This is a quote that is going to be above the invalid result and it would then become a good deal. Users would then fill in the order and it would also stop them from becoming stuck in a somewhat invalid market. An invalid market results in an equal share of ETH going to shares for every outcome. When you look at a three out-come market, you will soon see that each of them are going to be valid at a third of the market value. The majority of participants are of course going to be backing the easy option and they would also go to the unrealistic brokers too. Sure, Augur has already identified some of the many concerns that are circulating the market right now but it would appear that there has not been any kind of official announcement. Implementation is not going to going to improved and users are still being exposed to this kind of attack
Indeed, it would appear that the same creator has already entered the new market and this is called the ETH at the end of April. There are also a ton of copycat marketers springing up as well and this is going to make it even harder for people to be aware of this.