DEFINITION of ‘Augur REP Token’
BREAKING DOWN ‘Augur REP Token’
Built on the Ethereum blockchain, Augur aims to create a highly precise prediction market that is based on the concept of “Wisdom of the Crowd” – the idea that the average prediction or reporting of enough people is far more accurate than that of a select number of experts.
On the Augur platform, one can trade on the outcome of any event, like a soccer game, and benefit by buying and selling derivatives like instruments using Augur REP tokens.
Each such event or market is created by creators who provide initial funding and liquidity by backing it up with Augur REP tokens. They receive a portion of the fee, in Augur REP tokens, for creating and running the markets. Other participants speculate on the outcome using Augur REP tokens, and win or lose the currency.
After the event is finished, a large number of participants report the outcome of the event using the Augur token (REP) and get rewarded or penalized for correct or incorrect reporting.