In crucial information shared by Block’s Data dashboard, Open interest on Augur’s prediction market has passed the $1 Million mark.
In the chart below, the growth patterns of Augur V2 open interest started becoming noticeable in the last week of September when it started picking up. Once that momentum caught up, it has been consistently on a rise taking the October figures to a new high exceeding $1 million.
Source: Dune Analytics
The overall trading volumes as well as open interest are not very remote concepts. While the trading volume accounts for all the contracts that have been traded in a given period, open interest takes into consideration the number of open positions by market participants at any given time. This means that open interest is calculated by adding up all the open positions in the market irrespective of whether they are long or short. This is then dedicated to those positions which have been closed.
The new surge in the open interest activity could be due to the increasing set of activities in Augur due to the US Presidential elections. Apart from this, the addition of trading interfaces like Catnip Exchange has also contributed to the cause.
A few months ago in July this year, the second version of Augur was launched. It did not garner much attention and eyeballs because it involved a high-friction user-onboarding process. Soon after the launch was done, the team at Augur commissioned a V2 redo which was released with the motive to find the issues connected to the initial launch.
In the legacy markets, traders keep a tab on the changes in the open interest trends very closely. Analysts believe that this indicator is good to indicate the strength behind the price trends and market sentiment. Higher open interest means that the capital flowing in and out of the market is on the higher side and active. If more capital inflows are registered, then the open interest will increase and vice versa. Hence, an open interest showing a continual increase just like the illustration above is indicative of a bull market, and its decrease may indicate a bear market.
In regular circumstances, analysts monitor the correlation between the asset’s price, volume, and open interest in order to calculate the market sentiment.
Augur posits a decentralized oracle and peer-to-peer protocol for prediction markets. Prediction markets are exchange-traded markets that are created in order to trade the outcome of events. The market prices can then indicate what the crowd thinks the probability of the event is. The Augur protocol attempts to solve one of the most trying and difficult problems facing engineers leading to develop practical applications for blockchain technology especially the smart contracts which is the oracle issue. The Augur oracle allows information to be migrated from the actual world to a blockchain without the need to rely on any intermediary or third-party. Augur is easily accessible through a desktop client app, very similar to interacting with an Ethereum or Bitcoin node.