Early decentralized prediction market protocol Augur has released a new oracle infrastructure designed to make dishonest reporting extremely expensive in an effort to become a shared truth layer for other protocols.
In an
The new protocol will be developed by the Lituus Foundation, which was introduced last March as part of Augur’s ‘reboot’ and now oversees the development of the ecosystem, including treasury management. Augur said in the announcement that Lituus aims to “provide a shared, tamper-resistant resolution layer that prediction markets, DeFi protocols, and cross-chain systems can rely on.”
The system, described in a whitepaper on Github, is built around so-called “algorithmic forks,” a core part of Augur’s dispute process. When gamblers disagree on an outcome, the protocol splits into parallel “universes” for each possible outcome.
Holders of Augur’s native token, REP, must choose which universe they believe reflects reality and use their token holdings to vote on it. Outcomes that are not consistent with the truth are expected to lose all economic value.
Additionally, Augur Lituus introduced a new mechanism called ‘Migration-Based Universe Forking with Supply Restoration’, which remints and auctions REP tokens after a fork, forcing anyone trying to manipulate results to buy dominance twice.
New strategy
According to the document, attacks under this design would cost approximately 134% of the oracle’s fully diluted rating, compared to approximately 92% under the previous Augur design. The white paper reads:
“In game-theoretic terms, it establishes truth-telling as a strict dominant strategy equilibrium, and provides a more robust defense against attacks by using forking to exploit an environment in which the value of a network depends on maintaining a sustainable truth-telling equilibrium.”
The team also said that Lituus addresses a central problem for the prediction market sector, because markets need reliable truth under high stakes.
“[…] the sector looks very different. Many of the systems that were supposed to remove trust have quietly reintroduced it in new forms,” Augur wrote in Tuesday’s post
A test fork to demonstrate the new mechanism is planned for this year, although a specific date has yet to be announced.
REP responds
Following the release of the whitepaper on Tuesday, REP’s price briefly shot up 30%, from around $0.74 to $0.97, before returning to around $0.78 at the time of writing.
REP 7-day price chart. Source: CoinGecko
Founded in 2014 by Joey Krug, Jack Peterson, and Jeremy Gardner, Augur is widely known for being one of the first initial coin offerings (ICO) on Ethereum, conducting the REP ICO in 2015 to fund development. The platform went live in 2018 with a native REP token and an oracle system for reporting results.
In addition to the launch of Augur Lituus, Augur revealed in the same announcement this week that a separate team is developing a “new prediction market platform to be announced later.”