7 min read
“Augur’s purpose is to democratize and decentralize finance. If Bitcoin gave us decentralized currency and Ethereum brought decentralized computation, Augur will enable a decentralized financial system.” – Augur Master Plan, June 2017
Act I: Introduction
Augur was founded on the principles of decentralization, censorship resistance, and freely available, open markets to all. Since its inception, the Forecast Foundation’s mission statement has been “to support the development of open-source trading protocols, oracle systems and related technologies that advance transparent, open and financially sound markets, as well as their underlying protocols and toolings”. The Foundation set out in 2015 to build the tools required to solve these problems, and over half a decade of development it has developed the frameworks and foundations required for these principles and ideas to manifest. Today, Augur takes its most decisive step toward decentralization with the introduction of AugurDAO.
From the beginning, Augur was envisioned as an entirely autonomous, decentralized system governed and owned by its own community. This was illustrated over the years in myriad design choices made, from being one of the first DApps in existence, to launching with no admin keys, no centralized user interfaces, no meddling or dependence on the Forecast Foundation for its operation or success, and all software being fully open-source and unrestricted by licensing regimes.
This approach has yielded many benefits, namely forcing the core developers at the Foundation to consider the web of financial and game theory incentives at play when users interact in markets with each other. This mandate spawned robust and economically secure protocols. However, the fully decentralized approach proved challenging; the Foundation could not rely upon traditional approaches to bootstrapping markets, incentivizing users, and testing and reproducing bugs on mainnet. For instance, it precluded trading or market making, creating markets, or paying for user acquisition.
When decentralization is your primary design factor, no single part of the puzzle can depend on a single group of people or individuals. We see AugurDAO as the final act and curtain call of the Forecast Foundation: the last remaining piece of the puzzle to set Augur free into a world in which it can be iterated on and developed without the constraints or limitations that have fettered the Foundation up to this point. We can’t wait to see what it will accomplish.
Act II: A Lookback
Augur v1 launched in mid-2018 as one of the first full-fledged (and the first fully-decentralized) applications on Ethereum. At the time, it was the most complex and in-depth set of smart contracts to ever be developed and deployed on Ethereum. The Foundation went through security audits for both the Serpent and Solidity compilers before launching in order to guarantee it had deployed on solid ground. At the time, gas prices hovered around 0.1 – 2.0 gwei, and a fully on-chain order book seemed like a much more feasible option then it might today.
Augur v1 settled over $20M in user bets and accurately resolved hundreds of markets, thanks to a robust group of reporters (REP holders) that ensured accurate outcomes on the protocol. So much was learned by both the Foundation and its community about how this all played out in the wild. Augur v1 was the first real world deployment of a free and open prediction market; it allowed the community to test many hypotheses and ideas that had been written about for decades prior by many academics, software engineers and free-market information enthusiasts - and will be written about for decades to come.
After Augur v1 came Augur v2: no more downloading and syncing your own ETH node, no more fully on-chain order book, no more needing to take on ETH price risk while taking a position in a market. Augur v2 launched on July 28th, 2020, a challenging environment for Ethereum, amidst the development of the Ethereum fee market. Soon enough, it became clear that Augur was too resource-intensive to live fully on Ethereum mainnet. Transactions were too expensive for retail users, and creating markets ate up nearly half an Ethereum block. Before we knew it, the Foundation found itself forced to develop and consider alternative L2 solutions on which Augur could run. Despite these speed bumps, Augur v2 still managed to reach a peak of $15M+ in open interest during the 2020 presidential markets - accurately resolving these significant outcomes despite adversarial trolls attempting to corrupt their on-chain outcomes.
Today, what we have created are secure on-chain oracles designed to economically secure real-world outcomes on a blockchain that has been time and trial tested. Millions of dollars in user money have been accurately, verifiably resolved and allocated. This lays the groundwork to bring us the pinnacle, golden dream of truly decentralized and free markets hinging on the outcome of any real-world event. While the technology underlying blockchains changes and adapts month-over-month, the theory, problems, and incentives of bridging this real world information on-chain remain the same, and they are what Augur tackled and resolved.
Act III: AugurDAO
The time has come to align the Augur protocol with its founding ideal of an entirely decentralized ecosystem. While the dream of taking this step has been discussed for many years, the relatively recent success of DAO structures for governing large communities has demonstrated to us that the world is ready for complex community-based management. In short, we’re no longer in 2016, and DAOs are no longer synonymous with “The DAO,” Instead, decentralized governance evokes myriad functional examples - including Compound, Maker, Yearn, and Sushi - of effective, democratic decision-making. Enough users are familiar with what it means to participate in DAOs for precedent to show that community governance can work - for the benefit of a project and its users.
The time has come for the Augur community to shine. Since Augur v1 launch, community members have built tools and projects on top of the Augur protocol that deliver the experiences they wanted to use and see succeed. For example, users built portals for exploring markets, systems for tracking precedents in the Augur reporting system, and even entirely new trading systems for Augur shares - namely Catnip, during the 2020 presidential election. Catnip’s model of using existing automated market makers to trade Augur shares significantly impacted the roadmap the Foundation pursued for the Augur protocol, leading ultimately to Augur Turbo’s launch in 2021.
Today, the Augur Discord is run purely by community volunteers, many of which have been involved through all stages and multiple years of Augur’s development; they understand the ins and outs of the protocol’s history and design, and demonstrate that no one is better-qualified to govern the protocol than those who actually use it. Augur Turbo brought in a new cadre of users who have contributed wonderful suggestions for how to improve the UX, governance, and system design of the entire Augur protocol. The variety of functioning L2 chains and rollups gives Augur options for solving the speed and cost problems it encountered in earlier iterations. The Forecast Foundation is fortunate to have been able to sustain development on the core Augur Protocol since 2015 while maintaining a treasury which can sustain the project into the future. These factors create ideal conditions for the creation of a DAO using that treasury with the directive to continue building upon the work of the Foundation and the broader community to keep pioneering the development of decentralized prediction markets.
Designing a DAO structure is tricky - especially for a project like Augur whose token (REPv2) was not initially conceived of as a governance token. Most DAOs are bootstrapped by a team holding a huge stake in the protocol, effectively controlling its governance. While this allows decision-making to function smoothly, it doesn’t match the goals of Augur. As a result, the Foundation has teamed up with DXdao, an existing DAO which governs products such as Omen,a decentralized prediction market platform based on Gnosis’ Conditional Outcome Tokens, and Swapr, a governance-enabled DeX. DXdao already has over 400 unique addresses participating in their governance system, and has shown the ability to build and scale DAOs in the real world. AugurDAO will use DXdao structures, but will be governed by REPv2 holders in which they will ultimately decide how to allocate future resources to further the development of Augur and decentralized prediction markets as a whole.
Act IV: Governance Process & Vision
An Augur DAO will be established using a DXdao Guild. A Guild is an ERC-20 governance structure which is a stepping stone to their full Governance 2.0 vision. This Guild provides methods for on-chain proposal creation, voting, and execution similar to Compound governance (without delegation). This version of the DXdao Guild contracts has been customized to work with Augur’s REPv2 and has been designed to allow for upgradability that will let the DAO vote on how to follow REPv2 forks during the Augur oracle resolution process.
The smart contracts and UI to support DAO voting are currently in active development, with the smart contracts scheduled for audit by the end of November, 2021.
Shortly after this announcement, a proposal will be made in the DXdao Forum on DAOTalk to discuss how DXdao can work with AugurDAO to help to ensure the security of the AugurDAO treasury as governance gets off the ground, and as how AugurDAO and DXdao can work together to build decentralized governance tools that serve both communities. Please check out the DXdao forum to read the proposal and participate in community discussions.
AugurDAO opens up the possibility for the entire community to work toward the success of the Augur protocol - from helping manage the community Discord or social media, to developing new features and porting Augur to layer 2 blockchains.
The expected timelines for next steps are as follows:
November 17, 2021 - Announce intentions and structure for AugurDAO. Begin taking feedback on the AugurDAO forum at daotalk.org on a variety of topics.
November 22, 2021 - Begin smart contract audits for ERC20 Guild-based governance for AugurDAO.
December 15, 2021 - Submit signal proposal to DXdao governance detailing DXdao’s support of and partnership with AugurDAO.
December - January 2022 - Initial funding of AugurDAO treasury plus release of governance
Act V: Looking Forward
Needless to say, this is a bittersweet moment for everybody at the Forecast Foundation. After half a decade of development and focus, Augur will be set free and released into the hands of those who use it. We’re proud to have been pioneers in the space of decentralized technologies and believe empowering the Augur community aligns with the ethos that has always propelled us to try to solve the problems we’ve tackled.
At the risk of sounding cliché, we cannot thank our community, users, early crowdsale supporters, and protocol contributors enough. Augur would be nowhere today without you, and we cannot emphasize enough how important you have all been to the development of this project.
While this may be the final chapter of the Forecast Foundation, it is the beginning of the next for the Augur protocol. Augur cannot deliver on its promise - that of being the ultimate decentralized, censorship resistant prediction market protocol we all want to see - with the Foundation playing a centralized role in the ecosystem’s development. We feel fortunate for the trust the community placed in us, and we look forward to seeing AugurDAO grab the baton, empowering the community that has animated it from day one to power the next chapter of the Augur protocol.
If you’re interested in finding out more about AugurDAO, make sure to ask questions on Discord and read current proposals and discussions on the AugurDAO Forum at DAOTalk. The DAOTalk forum is in private beta while the initial community and content gets built out.
It’s time to set Augur free. Join us.
The Forecast Foundation