Heads up: this tutorial is geared toward folks who have used crypto before. If you’re new to this space, stay tuned for an upcoming tutorial that assumes no prior experience.
Just-launched Augur v2 is at the bleeding edge of betting and prediction markets. It is a user-owned platform with no betting limits and self-custody of funds.
Today, we’ll place a bet on the 2020 U.S. Presidential election. The market currently gives Trump 43% odds of winning the election. If you think his true odds are lower or higher, feel free to put your money where your mouth is and win some profit if you’re right!
Let’s first navigate to Augur UI. When the page loads, click “Connect” in the upper right. If you already have MetaMask/Web3, select that. If not, then email is the simplest option.
All bets on Augur are done with the currency DAI, which mirrors the value of a dollar. One DAI equals ~one USD. You can convert dollars into DAI or DAI back into dollars at any time.
If you don’t have any DAI yet, you can get your hands on some by going to Account -> Add Funds. You’ll be offered multiple payment and transfer options, pick the one that best suits you. You’ll also need a little bit of ETH, the currency of the Ethereum network used to pay transaction fees on Augur.
📣 Heads up! Transaction fees are high on the Ethereum network right now. This market features under 1% settlement fees, so if you’re betting a large amount, Augur may offer you the best deal in the world. Otherwise, you may want to wait until upcoming scaling solutions cut tx fees.
Once logged in, you’ll see the most popular markets on the platform. Our bet today is on this market, titled “Will Donald J. Trump win the 2020 U.S. Presidential election?”
Note: Since anyone can create a market on Augur, there are sometimes multiple markets on the same outcome. We’re basing this tutorial on the election market that has the best fees and spread at the time of writing.
You will now see the market’s trading page where you’ll find:
Info about the market
The ability to buy or sell shares of your preferred outcome
Current best bid and ask for each outcome and last traded price and a chart of historical prices
The order book, a list of the market’s open orders
Your own orders and positions (bets)
The market’s trade history
Take a look at (#3) for the “last price” for “Yes.” This is the market’s perceived odds that Trump will win the election. If that ends up happening, then each YES share will pay out one DAI, and each NO share will pay out nothing. If Trump loses the election, then each NO share will pay out one DAI, and each YES share will pay out nothing.
Let’s keep things simple and just look at YES shares today. Look at the best bid and best ask under YES. The best bid is the highest price someone is offering to buy YES shares at, while the best ask is the lowest price someone is offering to sell YES shares at. If you think Trump’s odds are higher than the best ask, you want to buy shares, and if you think his odds are lower than the best bid, you want to sell YES shares.
Let’s say the best bid for YES is .43, but you think his odds are actually lower. In this case, you may sell YES shares at .43. For each share you sell, you pay .57 (1 – .43) DAI and stand to gain .43 DAI if you are right. So if you sell 1000 shares, you will put up 570 DAI and win 430 DAI if you are right.
To sell YES shares, click on the best bid or to buy YES shares, click on the best ask. Now, turn your attention to the order box on the left (#2). Feel free to adjust the quantity or limit price or just leave as is. Below the order input, you’ll see max profit, max loss, and estimated tx fees.
While filling orders is expensive on Augur, posting orders is free. So if minimizing fees is more important to you than guaranteed and fast order execution, then select “Post Only” in the dropdown under the order inputs.
Once everything looks good to you, click the order button at the bottom. You will then be asked to sign transactions to interact with the contracts and execute the order.
Once your order goes through, you’ll see a notification on the upper right and you’ll see your position under “Positions” (#5) as well as on your “Portfolio” page. You can track your estimated profit/losses over time there as well.
And with that, you’ve now completed your first trade on the Augur platform and are an official early adopter of the future of prediction markets, congrats!
Thanks for reading. To stay ahead with fresh insights on the future of prediction markets, join The Augur Edge.