There’s been an insane amount of hype surrounding Augur.
Although it’s only been officially live for about 8 months (following a 2-year beta), the prediction market has already been celebrated as part of the holy trinity of crypto, and even proposed as a potential bulwark against a dark, dystopian future:
Safe to say, expectations have been set high.
But how much of it’s real? With its current market cap of just north of $142 million and a cool +78.1% gained in price over the last 2 months, Augur’s REP stands out as one of the most intriguing ERC-20 tokens to date.
To separate fact from fiction, we decided to take a closer look at the REP network, analyze its lifetime transactional activity, and spot prevailing trends in Augur token’s adoption and network maturation.
But first, a word on the project itself:
What is Augur?
Augur is a decentralized prediction market protocol built on the Ethereum blockchain. The platform lets you create open markets for – or bet on the outcome of – a particular future event.
Augur attempts to predict how likely said event is to happen by utilizing the ‘Wisdom of the Crowd’ theory, which posits that if you ask enough people to predict the outcome of a future event, their average answer will be more accurate than even the most experts’.
Augur’s native asset is REP (short for reputation), which lets its holders report or dispute the outcome of events wagered on the platform.
Sincere reporters get rewarded in trading fees proportionate to their REP balance, while those reporting untruthfully (against the consensus) lose REP in favor of their honest counterparts.
The whole Augur ecosystem, of course, is a tad more complicated than that, and would require a separate article. For more information about decentralized prediction markets, check out Augur’s whitepaper and FAQ.
With that out of the way, let’s jump right into the data:
REP Network Overview
What’s peculiar about Augur is that it actually migrated to a new contract twice in one year:
- Augur’s very first contract was 0x48c80f1f4d53d5951e5d5438b54cba84f29f32a5
- On July 28th, 2017, Augur first migrated to 0xe94327d07fc17907b4db788e5adf2ed424addff6
- Finally, on July 9th, 2018, Augur migrated to its current contract address: 0x1985365e9f78359a9b6ad760e32412f4a445e862.
Accounting for these frequent migrations, we’ll start with a fundamental overview of the REP network:
- Lifetime total of REP transactions: 466,212 trxs
Splitting trxs by contracts:
- First (oldest) contract: 146,221 trxs
- Second contract: 224,834 trxs
- Current contract: 95,157 trxs
- Lifetime total of addresses that ever touched REP: 131, 235
- # of current REP holders: 8880
Regardless of the token’s proposed use case, exchange activity plays a significant part in virtually every network. In this analysis, we’ll aim to differentiate between those transactions tied to exchanges and other, non-speculative transactions.
When somebody wants to make a deposit to an exchange, two transactions occur:
- Coins move from a personal wallet to a temporary wallet, created by an exchange for each separate user.
- Coins move from that temporary wallet to the main exchange wallet.
We call these temporary addresses deposits or deposit addresses, and have just recently launched a set of deposit metrics for everyone to use.
Here’s what happens when we group addresses by the number of transactions involving the REP token. Deposit addresses are in yellow, while all others are painted blue.
As in most networks, addresses with a grand total of 2 REP transactions make up the lion’s share, mainly due to deposit activity. The pattern is simple – a single incoming transaction is recorded from the user to a deposit address, followed by a single outcoming transaction from a deposit to the main exchange wallet.
The most active address in the REP ecosystem – and by a fairly wide margin – is 0xb2d955733e6a470533f68f72d0af442070f24f55, which belongs to the ShapeShift exchange.
The address has little over 95k REP transfers, or about 21% of all REP transfers. This does not include deposit addresses.
Charting Network Maturity
We can learn a lot about the speculative interest in REP over time by plotting all REP-related deposit addresses against the total amount of unique addresses that are active on the Augur network.
As deposit addresses are purely trade-related, they can serve as a reliable proxy for the level of speculative activity on the network. Here they are contrasted against all other, non-deposit addresses:
For added clarity, we can also calculate the share of daily deposits in daily active addresses, essentially charting the relationship between speculative and other network activity over time.
Below is the share of deposit addresses in total daily active addresses for the Augur network. The dark blue line shows the average share of deposits addresses for the past 90 days, while the light blue outlines the daily values. The red lines mark the two contract migrations:
Both of the above graphs tell the same story: prior to 2018, the share of deposit addresses remained more-less the same, at about 28% of all daily active addresses. However, following last year’s initial bear run, the relative share of deposit addresses gradually began to dip.
This indicates that the Augur network has, over time, become less speculative in nature, with a growing number of people using REP for utility than trading on a daily basis. In other words, despite the price of REP rallying over the past few months which might’ve invited further speculation, the Augur network looks more mature today than this time last year.
It’s not all good news, though. While the share of deposit addresses in total daily addresses dipped significantly over time, so too has the absolute amount of daily active addresses on the network. In other words, while there may be less speculation relative to total network activity, there’s also less network activity overall.
That said, the amount of daily active addresses has been fairly stable ever since REP’s last migration on July 9th. Augur doesn’t seem to have lost (nor gained) much in terms of network activity in the last 8 months:
The most recent major spike in network activity (around January 15th) corresponds to the launch of Veil, a peer-to-peer prediction market and derivatives platform built on top of Augur, 0x, and Ethereum.
Like with most other networks, the number of daily transactions is tightly correlated with the price of REP:
Again, the red lines on the graph mark the two contract migrations.
The first migration seems to have prompted a slight dip in the overall transaction number. It’s likely that this is just people waiting to hear the news of successful contract alteration before resuming activity.
Conversely, the second migration had no effect on the number of daily REP-related transactions.
It’s also interesting that contract migrations align squarely with spikes in mean transaction values. Our hypothesis is that this is down to traders and/or exchanges rebalancing their portfolios. It’s also possible that the crowd was anticipating a bull run following the news of successful contract migration:
We can gain additional insights by splitting all REP transactions according to parties involved. This helps us differentiate between:
- Deposit transactions – all transactions connected with deposit addresses.
- Outcoming transactions from exchanges – mainly user withdrawals.
- DEX transactions – outcoming and incoming transaction to DEXes.
- Other transactions.
As the sea of blue suggests, the major portion of all REP transactions has been tied to exchanges: specifically deposit addresses or main exchange wallets.
Further of note is that there are virtually no DEX trades within the Augur network: the asset is almost entirely traded on centralized exchanges.
However, we can once again see the share of ‘other’ transactions (in purple) growing steadily since the beginning of 2018, signaling that REP token is no longer used just for mere speculation.
On-chain and exchange metrics only tell half the story. To put these in proper context, we must also look at social chatter and viral buzz surrounding Augur from its inception until today.
We’ll use our Social Trends tool to gauge the social prevalence and popularity of Augur on crypto-related Telegram groups, subreddits, discord channels and hundreds of professional trader chats.
Here’s what happens when we search for mentions of ‘Augur’ or ‘REP’ in the last 6 months:
As expected, there’s been a massive spike in Augur-related chatter around the launch of Veil, corresponding to the biggest REP rally over the past 4 months.
However, ebbs and flows aside, we can see that the chatter around Augur never dies down entirely, and it’s easy to see why.
The project seems to have amassed a loyal following both in traders and customers, and now has a fully-realized, front-facing product that’s actually used by people: still a colossal feat in crypto.
For now, it’s still unclear if Augur will ever fully live up to its (ridiculous) expectations. In the meantime, its native token’s analysis does show signs of progressive network maturation and healthy transactional activity – still more than many crypto projects have to show for at this point in time.
P.S. Interested in doing deep network analysis like this yourself?
If you’re a researcher, fund or simply interested in using our custom on-chain and social metrics to contextualize a specific crypto project or market event, don’t hesitate to connect. Santiment’s mission is to bring clarity and deep learning to crypto. We can provide you access to our data sets, help build your own custom dashboards or create insights for your own customers/peers. Get in touch at [email protected] or by joining our Discord channel.