In Augur, there are three different types of markets that can be created – binary (yes/no), multiple choice, and scalar. While anyone can create a market on Augur, it’s important to put the time and effort in learning how to create a good market on Augur.
What is the question the market should attempt to answer?
Post a question about the future topic of something with widespread interest, and likely to be widely reported on. You will lose your market bond if the reporters cannot understand your question clearly.
Tips for asking a good question:
Before you settle on a certain wording, pretend you’re a reporter searching for what the outcome of the question is. Is it obvious what source of information will honestly report the answer to this question? If not, be sure to specify this under extra information.
Do some words in your question have multiple meanings that can be confusing? If so, change your wording to be more specific.
Will the date and time that the answer to the question becomes common knowledge be obvious to reporters? If not, specify an exact date and time as apart of the question itself.
It the answer to your question easy enough to rig using violence that reporters would consider it unethical? If so, explicitly exclude violence in your question, or choose another topic to create markets on. It is possible for reporters to consider more than incentivizing the initiation of force to be unethical, so be mindful of how your market might encourage unethical behavior and what is deemed unacceptable to society.
The three different types of markets that can be created on Augur:
Yes / No – Markets
Ask a question that has a simple yes or no outcome.
Yes / no markets are for questions that have only two possible mutually exclusive outcomes.
Example: Will the Golden State Warriors win the 2017 NBA Championship?
Outcomes: Yes or No
Multiple Choice – Markets
Ask a question and provide a set of potential outcomes.
Multiple choice markets are for questions that have more than two possible mutually exclusive outcomes.
Example: Who will the Cleveland Browns select with the first pick in the NFL draft?
Outcomes: Myles Garrett, Trade The Pick, Any Quarterback, Reuben Foster
Numerical Range – Markets
Ask a question that has an outcome within a range of numbers.
Numerical Range markets are for questions in which the outcome can be any number between the limits you set.
Example: What will the high temperature (in degrees Fahrenheit) be in San Francisco, California, on July 1, 2017?
Outcome: Range of 0 – 110, trades at 55.5.
Where will reporters and traders be able to learn more details about the resolution for this market?
You have two options for picking a resolution source:
a) Outcome will be covered by local, national, or international news media.
b) Outcomes will be detailed on a specific publicly available website.
If choosing a publicly available website, be sure to enter a URL where reporters can find the outcome. Ideally, you want the outcome to be clearly displayed, such as an API endpoint. While reporters do not need to use this resolution source, it’s best practice to link some place where it will be reported upon. If choosing option a), no resolution source is needed.
What is the date and time in which your event will resolve?
This is the date and time in which your market will close trading. It’s important to choose a date and time that ends accurately depending on your question. For example, you don’t want the time of the NBA championship game to be an hour after the game has started. Times are shown to you in your local timezone (recognizes automatically) but are ultimately settled in UTC.
Provide any additional details required to either understand or report on your market.
In the case in which your question may need clarification, additional details is the field to enter any extra information that may not be applicable for the market question. This field can be used to provide any extra information that may help a trader or reporter better understand your market and question.
Specify the general category of the event the market is for.
The event topic is what is used to categorize your market within Augur. On Augurs landing page, you will see markets categorized by their topics. It’s important to choose a general category that fits your question, as this is the main keyword used for market discovery.
Add up to two keywords to help with the categorization and indexing of your market.
Additional keywords (up to 2) are allowed for markets, on top of your main topic. This is not for categorization, but for discovery via searching Augur. You should enter keywords that are relevant to the topic and market question, but encompass more specific targeting.
Taker / Maker Fees
Specify the fee paid by both those taking an existing order and adding a new order to the order book.
The maker fee is the fee you charge to traders who help your market by adding liquidity and giving orders to your markets order book. Liquidity is required for a market to function, and because of this, the industry standard is to set the maker fee as a discount from the taker fee, possibly to zero.
The taker fee is the fee you charge to traders that reduce liquidity and remove orders from your markets order book. As liquidity is required for a market to function, the industry standard is to put most, if not all, of the fee burden on takers.
The primary factor that determines what fee you should set is the amount of customers you expect your market to get. The more money you expect to move through your market, the lower you should set your fees. Typical fees are expected to range from 0.1% for the largest markets, up to 8% for the smallest of markets. Remember that there is a cost to seeing a low fee: every time you cut your planned fee in half, the cost of your validity bond and market creation fee doubles.
Adding initial liquidity into your market.
Once you create your market, you have the option of buying or selling shares like any other trader to provide starting liquidity. Liquidity is the most important thing to obtaining visibility in categorization and search engines, as well as the website in general.
The more orders you place on the order book, the more attention your market is likely to receive. Traders will be more incentivized to trade on your market. A good strategy is to only provide a small amount of liquidity, as doing so will make your market more visible than the large number of markets that will have no activity.
Liquidity added during this phase will be deduced from your account balance.
Review & Create
You are now ready to review and create your market. Check to make sure you’re not missing anything, and that you’re being as specific as can be with your market question.
The cost for creating your market, the bond, and gas costs are also displayed here. The bond is refundable assuming your market resolves not unethical or indeterminate, and the creation fee covers the cost of creating the actual market on Augur.
Create markets that are determinate to avoid losing your validity bond.
Create markets that are ethical to avoid losing your validity bond.
Create markets on subjects that have high information inequality as to attract traders.
Create markets on subjects in which increased knowledge of the future is valuable to economic planning as to attract traders.
Create markets that have low competitive fees as to attract traders.
Create markets that have high competitive fees as to minimize the required initial liquidity and validity bond.
Create markets that have high competitive fees as to maximize trading fee income.
Create markets that trade in currencies that traders prefer in order to maximize trading fee income.
Create markets that have an expiration date near the present to decrease opportunity costs.
Create markets that have an expiration date close to the event occurrence to attract traders.
Feel free to drop us a comment below with any questions around creating a market.