Research: Ethereum-Based Prediction Market Augur Currently Faces a Design Flaw Attack

Ethereum-based prediction market Augur is currently facing a design flaw attack, according to research by cryptocurrency exchange Binance released on April 1.

The aforementioned attack involves a controversial market described as betting on the price of ETH at the end of March, which expired on April 1, 2019, 1:59 AM, a few hours off from the actual end of March 31.

The market has also been reportedly wash traded by a few wallets, presumably to inflate the volume.

If the market is deemed invalid, then all users that contributed will see their shares valued at one-third of their initial value.

The report also further notes that the market - already covered by Cointelegraph - "Which party will control the House after 2018 U.S. mid-term [sic] election?" was another instance of such an attack.

This market, which reportedly exhibited a total volume of more than $2 million, featured a market settlement date was on Dec. 11, 2018, while the change in the U.S. house was effective as of Jan. 3, 2019.

The research also suggests potential solutions to the exploitable nature of Augur's mechanics, such as a price-based refunding mechanism, clearer references and market validators with non-trivial stakes.

Per the report, prediction markets appear to be one of the best blockchain use cases, since they necessitate trustlessness and decentralization to work correctly, protecting themselves from both governmental actions and censorship.

Prediction market regulation is particularly unclear, as a centralized prediction market can fall under the scrutiny of the regulators of multiple states.

Ireland-based prediction Markets Intrade and TEN have seen the United States Commodity Futures Trading Commission file a civil complaint over their violation of the off-exchange options trading ban.