Binance Shows Augur (REP) Has a Contract Design Flaw Attack on its Prediction Markets
The Ethereum-based prediction market Augur (REP) seems to be facing a design flaw attack. The information was released by Binance Research in a blog post on April 1st. According to Binance Research, there is a malicious market creator that may design a market to exploit a purposeful flaw.
Binance Research Unveils Design Flaw Attack on Augur
Augur is known in the market for offering users prediction markets without a trustless centralized authority and operator. Although Augur is the most popular predictive platform that runs on blockchain technology, there are several issues that the network is currently facing.
Binance Research says that the network is facing barebones usability functions, low liquidity and participation rates and a complex voting, settlement and forking mechanism. Apparently, there is a controversial market that bets on the price of ETH at the end of March. This bet expired o April 1, 2019, a few hours after the end of March 31st.
As the contract expires before that tie, this should be considered invalid by the network. At the same time, this market has also experienced wash trade in order to inflate the volume.
On Reddit, users talked about this issue and share their experiences with the community. The Augur core developer Joey Krug noted that the cryptocurrency community has exaggerated the scope of this scam. However, he admitted that they are working on this issue and that it should be updated in Augur version 2.
Until now, prediction markets have been working properly showing that blockchain technology can be applied to this industry. If they work properly, they are able to protect users from governmental actions and also censorship.
These prediction markets are currently in a situation that is not clear for regulators to control. It is not easy to understand in which jurisdiction they fall or which rules should apply to them.
At the time of writing this article, Augur is the 40th largest digital asset in the market with a market capitalization of $172 million. Each REP can be purchased for $15.68.