2020 has the potential to be a breakthrough year for Augur and open prediction markets. Augur is well-poised to be one of DeFi’s headline success stories this year and one of the first DApps to bring non-crypto-natives to Ethereum. It’s still early days, and there will be growing pains, but I expect a big leap forward this year driven by v2 at the product level and the U.S. election cycle at the market level.
I think that predictions with no skin in the game should be taken as entertainment, nothing more. This is why in my newsletter The Augur Edge, I link to my Augur predictions and trades on the Ethereum blockchain, whenever possible. So take the following predictions with a grain of salt.
I made some predictions going into 2019 as well. Many of them were based on the expectation that v2 would ship sooner, which itself was a bad prediction on my part. Now that I’ve learned and thought a great deal more about Augur, hopefully I’ll make slightly less dumb predictions. We’ll see.
Note that a timely v2 launch will be critical for the bullish predictions here to play out.
1. Politics will trump other use cases in v2, collecting over 80% of trading volume. Markets on the Democratic nomination and general election, in particular, will dominate.
I see this as the first inning of a broader, long-term trend. Speculation on sporting events has dominated betting markets until now, but I think this is about to change. By decade’s end, global speculation on political outcomes will be orders of magnitude bigger than sports betting.
There are a few drivers, but the broad one is that the world cares more about political outcomes. That includes the biggest global markets like equities, debt, and currency exchange. There’s been no way to monetize or hedge political outcomes at non-trivial volumes…until now. Augur changes this, due to censorship resistance and limitless liquidity. In 2024, a hedge fund may pour millions into an Augur market to hedge the risk of a trade war.
2. Betting will be the main use case in 2020. Insurance, bounties, and more advanced financial instruments will take a back seat until further down the road.
3. The main product-market fit in (early) v2 will be high-stakes U.S. based political bettors. More casual bettors won’t come online until later when sidechains cut trading costs and other kinks get ironed out.
4. Over 90% of markets will resolve in under 48 hours, due to pre-staking, shorter reporting windows, and fewer ambiguous markets. By comparison, it took 100% of markets in v2 at least a week to resolve.
5. Something like 95% of volume will come from 10% of markets and 5% of market creators. Someday, Augur could be great for long-tail, niche markets, but V2 will see the dominance of a small number of markets and market creators. It will be easier to create markets in v2 due to UI improvements, but it will be harder to create markets that are visible to end users, due to higher upfront liquidity demands.
6. Augur will be one of the first DApps to reach beyond crypto natives, but it will take time to get there. For much of 2020, Augur will still be predominated by crypto folks.
7. Market creation, trading, and resolution will remain decentralized, but market curation will rely more on centralized forces to reduce risk for traders.
8. Augur will get more mainstream-ish news coverage than any other project on Ethereum. The 2020 election is the most covered event in the world and prediction markets are the third (and superior) “P” to polls and pundits that the media can use to forecast results.
9. Guesser will continue to reach new levels of success as Augur’s prime liquidity engine and play a big role in driving Augur forward. It has some some exciting plans coming up in 2020. Keep an eye on it…
10. Tradable Invalid won’t work (that well), but it’s okay. The proportion of Invalid markets will still drop significantly, due to market creation templates, curation, and improved incentives. Invalid risk will shift from deliberate scams and accidents to “black swans” e.g., price feeds going offline at the last minute. They will be rarer but more painful when they happen. The biggest markets though will use general knowledge as their resolution source and should be fine.
11. Affiliates will start to thrive in v2. There will be many flavors of affiliates, including odds aggregators, content creators, social media influencers, paid marketers, and builders making customized onboarding UXs and other services that improve access to Augur.
12. Sometime in 2020, Andrew Yang will tweet his Augur odds of winning the nomination. Amy Klobuchar won’t. (This prediction is especially dependent on when v2 is released!)
13. Lightweight services on top of Augur will thrive, including instant settlement, market curation, specialized onboarding UXs, and possibly browser extensions that enhance the UI (and collect affiliate fees). Overlays taking a walled-off exchange approach or trying to compete directly with Augur UI will suffer (if there are any). Overlays pooling liquidity, offering complementary services, and focused on market making will thrive. While most trades will happen on Augur UI, market discovery, navigation, portfolio tracking, and social activity and custom content around markets may be overtaken by other UIs.
14. Augur and PredictIt will be complementary at first, the former serving high-stakes bettors and the latter, more casuals. But competition will start to heat up by late 2020. PredictIt is already buying search ads for folks who google “Augur.”
15. We will see the start of a renaissance of developer activity in the augur ecosystem. Things built on Augur may include market making bots, political odds aggregators, arbitrage trackers, affiliate analytics panels, embeddable election odds widgets, mobile price alerts, and maybe even PDot Index for elections (ETF-like baskets of Augur shares that track the success of candidates).
16. Markets will remain inefficient and slow at pricing in news and developments, especially in early v2, leaving ample opportunity for savvy speculators, especially given the deeper liquidity on offer.
17. We will see some cool experiments around user acquisition, especially by overlays and affiliates due to their incentives and operational freedoms relative to the Forecast Foundation’s. I think one of the more successful strategies will be ”free rolls” (small amounts of DAI seeded in first-time user wallets) that are earmarked for Augur use and targeted at promising demographics like high-stakes PredictIt traders.
18. Poyo’s conversion from black hat cat to white hat cat will continue as it will become more lucrative on Augur to do good than evil. Poyo will be a successful “affilicat” helping grow Augur and will go on to become the most prosperous feline market maker and trader in modern financial history.
19. It’s still early days, and at a product and usability level, 2020 Augur will be inferior to, say, 2022 Augur. But the massiveness of the Market around the election cycle will forgive product limitations to a surprising extent.
20. If v2 launches by February 20th, 2020 (2–20–20), and Biden does not take Iowa or New Hampshire, Augur v2 will draw over 50 million USD in open interest. Otherwise…far less.
That last prediction and others assume there will be no *major* fires to put out after v2 launches, but accounts for the prospect of small to medium fires.