The Ethereum-based prediction market (ETH) Augur is currently facing a design error, according to a Binance cryptocurrency exchange study published April 1.
The aforementioned attack includes a controversial market, described as a bet on the price of ETH at the end of March, which expired on April 1, 2019, 1:59 (UTC + 8), a few hours from the actual end of March 31. ,
Since the contract expires before this connection, it can be considered invalid in what Binance researchers call a design error. The market also reportedly sold several wallets, presumably to increase the volume.
Reddit users have already raised this problem with the expiration date of March 20, when the main Augur developer Joey Krug noted that the crypto community exaggerated the scale of fraud, while recognizing that protection against such activity is currently not working properly and should be updated. in the version of Augur 2.
According to a Binance study, the attacker also reportedly sent a limit sell order for a more realistic result (i.e., the price would be between $ 100 and $ 1,000) “at a quote that is higher than the reward for an invalid result, but significantly lower than that. which unsuspecting participant can find a good deal "to lure a novice.
If the market is declared invalid, then all users who have contributed will see that their shares are valued at one third of their initial value.
“Which party will control the Chamber after the mid-term [sic] elections of 2018 in the USA?” It was another example of such an attack. This market, which, reportedly, had a total volume of more than $ 2 million. The United States was notable for its settlement on the market on December 11, 2018, while the change in the United States was valid as of January 3, 2019.
In this case, users did not consider the market invalid and agreed to the Democratic victory as a result. The study also offers potential solutions for the exploitable nature of Augur mechanisms, such as price-based refinancing, clearer links, and market validators with non-trivial rates.
According to the report, prediction markets seem to be one of the best options for using the blockchain, since they require trust and decentralization in order to work properly, protecting themselves from both government action and censorship.
However, according to Binans, Augur has other significant flaws, including low liquidity, basic functionality, complex mechanics, an unclear management approach, and the aforementioned ongoing attack.
Regulation of the forecasting market is particularly unclear, since the centralized forecasting market may fall under the control of regulators of many states. For example, according to forecasts based on the Irish market, Markets Intrade and TEN, the Commodity Futures Trading Commission (CFTC) filed a civil complaint in connection with a violation of the ban on trading options outside the stock exchange.
