You should not exaggerate Betfair’s fees. Betfair charges 6.5% on winnings in any market. For market makers, this means that they can execute very high volumes in a market and only pay fees on the net profits. Many competitors have tried to take Betfair’s market share by offering lower rates, but none have been successful because traders value liquidity and reliability more than a few percent in fees. Similarly, Augur’s problem will be liquidity and performance. The only way for Augur to offer acceptable liquidity is for market makers to arbitrage with Betfair and other exchanges. The cost of doing this will be prohibitively high because of the low volumes; blockchain performance precludes any high frequency strategy for the foreseeable future. Market makers will also have to hedge their exposure to a volatile Ether exchange rate, which creates an additional cost that will manifest itself in the market spread.