Which dApp Has A $153M Market Cap And 38 Users?
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Although gambling remains a multi-billion dollar industry, placing bets is an illegal activity in many jurisdictions. Multiple states in the USA either ban it or heavily regulate it; gambling is only permitted in China in outposts such as Macau; and in most of the Middle-East in remains prohibited on religious grounds.
Australia, which used to be very favorable to traditional gambling, passed new restrictions on online gambling sites last year.
Augur (REP), as the name may suggest, is a decentralized platform that enables users to make predictions and place bets on them. The project was established in 2014 and having held its ICO in 2015, it took over three years for the project to launch its dApp on the Ethereum (ETH) network.
One of the main benefits of being decentralized is that it enables users to place any bets they want without being stopped by regulators. Augur presents itself as the blockchain successor to the riverboat gambling casinos, cruising the Mississippi river to avoid state authorities.
The increasing anticipation surrounding the dApp release in July caused REP tokens to surge in value, spiking at nearly $40. It came as no surprise when a surge of Augur users made it the most popular application on the Ethereum network as soon as it launched.
Following the bear market crash, REP tokens have seen a mild uptick in price since the beginning of the week; increasing by nearly 10% from Sunday’s low of $13.80. Although promising, the slight increase will contribute little to rallying REP holders; the token’s value has more than halved in value in the space of a month.
Interest has all but dried up: Google Trends, which analyzes the popularity of searched-for terms, puts ‘Augur’ and ‘REP token’ at some of their lowest points since the start of the year.
How things have changed.
Shrimp farming is more popular than betting
The number of Augur users has declined since the summer. Information collected by DappRadar shows the project has had 38 active users over the past 24 hours, well below the number of people using applications like CryptoKitties and Kyber Network (KNC).
The predictions app has fewer users than Ether Shrimp Farm, a dApp that simulates – you guessed it – being a shrimp farmer.
Fewer users mean fewer predictions, leading the market to stagnate. Rather than popular riverboat casinos, Augur has more in common with the Marie Celeste.
Some have suggested that Augur’s main problem is the predictions themselves. When it first launched some were quick to point out that it enabled anyone to place a macabre bet on the death of someone (in)famous. The Independent, a British newspaper, ran a full-length feature into the number of predictions placed on US President, Donald Trump, being assassinated. Media outlets panicked that Augur could create functioning death markets that incentivized some to hire hitmen to kill their targets.
These assertions were overblown. The vast majority of bets, around 800 in total at the time of writing, are crypto price predictions, such as betting on the price of bitcoin (BTC) to reach a certain price by a certain time. Even so, Augur is vetted by a team of moderators, rewarded with a share of the betting fees, that review predictions place and remove any, like death bets, that could encourage illegal activity.
The project’s main drawback is that it is has a high barrier to entry. Potential Augur users have to first download the application before they can even place their first bet: this process can be fairly rapid, according to some users – but re-downloading the dApp for updates can be tedious, and other users have reported waits of up to 2 hours.
On top of this, users also need to download an Ether wallet service like Metamask that can interact with the platform, or connect to a cold storage wallet like Ledger, before being able to place bets. There have been frequent complaints that Augur still has fundamental bugs that haven’t been fixed, which stop users from placing bets without warning.
Augur’s difficult UX means it has excluded a large number of potential customers, looking to place a quick, fun prediction.
How to increase Augur users.
Augur isn’t the only cryptocurrency betting platform. Both Gnosis and Stox are decentralized predictions market that runs off the Ethereum network; MegaDice (previously Satoshi Dice) is a website which accepts bets in bitcoin.
That said, Augur should be the market leader. As Crypto Briefing’s Andrew MacDonald highlighted, the project has better solutions than its competitors to keep it decentralized and maintain a high enough liquidity.
This needs addressing. Users shouldn’t have to download an entire blockchain before they can begin placing predictions and not being able to access Augur via the internet stops people from trialing the platform before using it more frequently. The fact that the cryptocurrency exchange IDEX, which can be accessed over the internet, is the most popular Ethereum application is no coincidence.
If the project can lower the barrier to entry, then it will almost certainly see an influx of new Augur users. Gambling may be frowned upon by large swathes of the world’s authorities, but it is a popular and lucrative pastime; casinos are expected to make a gross-yield of $130bn from bets placed in 2019. How Augur eats into this gigantic pie is currently uncertain.
On the many lessons to be learned from gambling, the American author Hunter S. Thompson once mused that “the harshest one of all is the difference between having fun and being smart”.
Augur had its fun when it launched at the height of summer. As the days shorten, it needs to be smart.
The author is invested in BTC and ETH, which are mentioned in this article.
This article has been updated to reflect different user experiences of delays in downloading the dApp, and to note that a Ledger wallet is an alternative to MetaMask for connectivity.