Augur’s Golden Opportunity & Why Market Trumps Everything
Posted On January 8, 2020
“Market Matters Most.” — Marc Andreessen
The 2020 election cycle is a dream market for Augur and perhaps the most powerful beachhead available to any DeFi project in the world right now to establish momentum at the dawn of this new decade. Augur is broader than political markets, but this is an opportunity to gain a foothold with perhaps the most contentious election cycle in modern history and a market underserved by existing alternatives.
But whether Augur will capture this market is far from a given and largely depends on when v2 ships. The first presidential primaries are just weeks away.
Earlier this week, Augur’s v2 cutoff was pushed out to February 8th. Augur can still hit its Q1, 2020 release target, and I’m writing this to convey why I think that it’s critical to do not just that but to launch as soon in that window as possible.
Let’s take a sober look at where things stand right now.
After being delayed from September 15th of last year to January 1st, 2020 and later from January 1st to January 15th, the cutoff has now been pushed to February 8th. The way the cutoff works, the soonest v2 could launch is mid-February, which means the two earliest and possibly biggest primary elections, Iowa (February 3rd) and New Hampshire (February 12th) are off the menu for v2.
On PredictIt, the centralized prediction market, Iowa and New Hampshire already have 9.2 million and 5.2 million shares traded, respectively. More critically, Iowa and New Hampshire both feed into the Democratic Nomination market which has 86.6 million shares and is the site’s largest market at this point, even larger than the General election.
Big numbers *despite* limitations such as PredictIt restricting users to 850 dollars per market and charging 10% fees. Augur throws these limitations out the window. Augur’s 2018 midterms market drew 2 million dollars of open interest, despite bad UI, zero marketing, volatile currency, and slow payouts. V2 improves on all of these and has the potential to coincide with a far bigger election cycle, a far bigger Market.
Missing Iowa and New Hampshire is not good, but missing South Carolina and Super Tuesday would be a massive setback.
Augur can be many things in the long run, but right here right now, it‘s a dream product fit for a Market with poor existing alternatives: high-stakes political betting. If most crypto projects today are solutions searching for problems, this is the opposite: a Market searching for a solution, and Augur is the solution.
Betfair saw over 200 million dollars wagered on the 2016 election, and that was with limitations that disappear on Augur.
In his famed essay, The Only Thing That Matters, Marc Andreessen, the co-founder of Netscape, argues that there is one thing even more important than product and team: Market.
A great team with a great product won’t get anywhere if it lacks a Market, while an imperfect product can still thrive given a strong enough Market. In his words, “market matters most.” Product-market fit, he argues, is “the only thing that matters,” and Market, *not product* is the biggest piece of that.
The U.S. election cycle is the most watched, publicized, and predicted-upon event in the world. It is a multi-month (or year) saga filled with candidate announcements, drop outs, debates, poll releases, scandals, primaries, conventions and a gazillion other events that can drive trading activity.
Prediction markets have the potential to be the third (and superior) “P” to polls and pundits that the pubic uses to forecast elections. This means news outlets linking to prediction markets, candidates tweeting their odds, and developers building odds aggregators. All things that can drive usage. The virtuous cycle is powerful: more media attention equals more users equals better predictions equals more media coverage.
Citizens and media organizations are not the only ones who care about who wins the election. So do some of the biggest markets in the world, including the stock market. There is massive value in better forecasts, and mature prediction markets may someday deliver just that.
The election cycle is starting to heat up, and at this point in the game, every day counts. I think that a decent version of Augur that launches in a timely fashion gets more traction than a sleek, perfected version that launches late. Beyond Super Tuesday and the following primaries, late could become too late…at least to get a real foothold in 2020.
I think that Augur‘s team is hard-working and talented enough to deliver, it just may have let product ambitions take priority over Market and Timing. In late 2019, it bundled added features into a mega release, likely pushing out v2. I think that moving forward, getting out v2 is critical, even if it involves painful sacrifices at the product level (not security level!). The product can always be improved…the market can’t.
One of Augur’s biggest advantages is that it’s first to market. There’s no credible competition to Augur today in the decentralized prediction market space, but that could change. Another reason timing is key.
Launching fast isn’t just about getting traction and staying alive in a world where most startups die but about attracting talent into the ecosystem to start building things on Augur that will make it more accessible and robust. It’s probably 10x easier for that to happen during an election cycle. Just look at the cool things people are building on PredictIt, despite not being Open Source, Open Incentives and Open Data like Augur. Andreessen notes how a strong Market “pulls product out of the startup.” In the crypto world, a strong Market may pull product out of the ecosystem.
There are around 7000 hours till election day, hundreds till the first primaries. It doesn’t matter if you’re the best surfer in the world with the best surfboard…if you miss the wave.
Market. Matters. Most.
Thankfully, it’s not too late. Augur can still thrive in 2020 and establish a powerful beachhead with a prompt release. Here’s to the success of Augur v2 and the world’s first open, limitless prediction markets.
Thanks for reading. To stay ahead with fresh insights on the future of prediction markets, join The Augur Edge.
Thanks to Ryan Berckmans and Jose Garay for reading drafts of this