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Market Resolution Explained
How to think about Reporting and Disputing
The reporting process, at a high level, is when a group of participants come together to adjudicate the results of a market; so that the winners may be paid and the market resolved.
After the market's end date is reached, the reporting phase begins with Designated Reporting.
Once a market enters reporting, the Designated Reporter (DR), chosen during market creation (and typically the creator, themselves) has 24 hours to submit a report on the market’s outcome including staking REP on that outcome.
Whichever outcome the DR selects becomes the Tentative Winning Outcome. Once a DR submits the tentative winning outcome, it is open to dispute. If the market ends up resolving to another outcome, the DR will lose their REP stake.
In open reporting, any user holding REP may report on the outcome and will receive the forfeited No-Show Bond if the market ends up resolving to the outcome that they report. Open Reporting requires holding REP to participate but does not require any staked REP on the part of the reporter.
Once the market receives its Initial Report, reporters will have 24 hours after the designated reporting window closes to dispute it.
Anyone can dispute a market’s tentative outcome by staking REP on a different outcome that they believe to be correct.
Note: If you stake on an outcome that the market does not end up resolving to, you will lose all your staked REP.
If you stake REP in favor of an outcome that the market ends up resolving to, you receive a 40% ROI on your staked REP (except in the case of an unused pre-stake). If you stake on an outcome that the market does not end up resolving to, you lose your entire stake.
Only stake in favor of the outcome that you believe to be correct!
If the initial report does not receive a challenge (i.e. another outcome has not received the full dispute bond, the threshold of REP necessary to dispute), the market will resolve as the outcome that was reported and become finalized.
Otherwise, if an outcome other than an initial report receives the necessary threshold of REP staked, it becomes the new Tentative Winning Outcome.
This process repeats with each successive dispute round, and a higher Dispute Bond is needed to shift the Tentative Winning Outcome. A user may contribute the full Dispute Bond or fill it partially, along with other users.
When the Tentative Winning Outcome does not receive a successful challenge (i.e. the dispute bond for a different outcome is not filled), the market will resolve as that outcome and become finalized.
After a market’s initial report, it will wait for the current dispute window to end before entering into the ‘Currently Disputing’ tab. This is the time for users to dispute a Tentative Outcome if they believe the market has been reported on incorrectly. Markets awaiting their first or next dispute round can be seen in the ‘Awaiting Next Dispute Round’ tab. An exception to this is when markets have been selected for Fast Resolution.
How to dispute an outcome
A market has to have one of its non-tentative outcomes bonds filled in order to successfully dispute the current tentative outcome. Choose a non-tentative outcome to either fill the bond completely using your own REP or contribute a smaller amount as part of a crowd sourced bond. If a bond for a non-tentative outcome is successfully filled then that outcome will become the new tentative outcome and the market waits for the next dispute round. This process can repeat itself until a Tentative Outcome is unsuccessfully disputed during a round. Each round the REP stake required to fill a dispute bond is increased.
How a market resolves
If a tentative outcome is not successfully disputed during a dispute round then the market resolves with the current tentative outcome becoming the winning outcome and the reporting phase for that market is over.
The benefits of reporting
Users who correctly staked on the Winning Outcome get to take a share of the REP that was staked on the incorrect outcome(s). This means you can potentially earn 40% ROI by disputing (i.e staking) against liars and reporting the truth. This keeps the Augur oracle secure and ultimately the Augur platform working how it should.
Users can add extra support for a Tentative Winning Outcome by pre-staking REP that will be used to dispute in that outcome’s favor in the event that is no longer the Tentative Winning Outcome. Pre-filling can help accelerate a market’s resolution.
Pre-filled Stake yields ROI if and only if:
1) the market resolves to the staked-on outcome and
2) the pre-stake ends up being used to dispute in that outcome’s favor
If the market resolves to the staked-on outcome but the pre-stake is not used, you will receive back the pre-stake but no ROI. If the market does not resolve to the staked-on outcome, you will lose the pre-stake.
The dispute window is a week-long cycle. Reporting fees from settled shares are deposited into the next upcoming window.
At the end of the dispute window, those fees are allocated to REP holders who exchange their REP for participation tokens. When the disputing window ends, users can redeem their participation tokens for a proportional amount of the fees generated.