Decentralized betting platform Augur has become a hub for pulling scams with its flawed design.
According to a March 19 Reddit post, scammers are profiting from a massive flaw in the Ethereum-based blockchain platform, which, due to Augur’s rigid design, is hard to rectify.
Launched in July 2018, Augur allows anyone to create a betting market on blockchain based on smart contracts. Users can stake on the platform to bet on the outcomes of a given event.
The fraudsters are creating any random betting markets with subtle mistakes, which finally make the market an invalid one. In such a situation, the entire stake of the bet is divided equally among all the participants.
“This makes Augur unusable at this point since basically every single character in the market description can be used to render it invalid. The staking model doesn’t work because the majority of REP holders doesn’t participate, the Reddit post noted.
How Entrepreneurs Fail at Blockchain StartupsGo to article >>
Providing an instance of such scams, one Redditor noted: “One example is the one about the ETH price by the end of March. Look for yourself if you spot the ‘mistake.’”
In the above case, though the prediction mentioned the “end of March,” the expiration date of the prediction market was set for 1:59 p.m. UTC on March 31 – several hours before the actual ending of the month. This made the betting market a flawed one, and the smart contract finally flagged it as invalid.
Developers are Only Spectators
Though the developers of the platform are fully aware of the flaw, nothing can be done to fix the issue immediately as only a hard fork to the network is a solution.
Speaking about this issue, Augur’s co-founder Joey Krug told The Next Web: “There’s another fix, too, which is to allow trading on whether a market is valid or not, so in order to profit from it, a troll would have to repeatedly bid for it to be ‘invalid,’ which could trigger a UI filter to alert users. But again, that can’t be done without an ‘on-contract’ update.”