Augur v2 and the business case for decentralized prediction markets

Prediction markets have always been one of the expected use cases for blockchains. Vitalik Buterin cited prediction markets as an example in the original Ethereum white paper in 2013, among a handful of other applications like stable-value cryptocurrencies, token standards, decentralized name systems, decentralized autonomous organizations and others that have become staples of the recent growth in Web 3 applications and open finance.

While Augur is commonly referred to as a prediction market, it is simpler to think of it as a protocol for open financial markets. Users can create bets on future events (markets are futures with expiry dates), anyone can trade shares in the odds of those events (on peer-to-peer order books) and markets are settled by reporters who are holders of Augur’s native token REP (in exchange for fees).