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Forking Explained

What to do in a Fork
TL;DR: If a market in Augur v2 forks, REP holders have 60 days to participate or you will lose all your REP.

What is a Fork?

When a market is disputed enough, it reaches a fork state. Forking is a special state that can last up to 60 days. Forking is the market resolution method of last resort; it is a very disruptive process and is intended to be a rare occurrence.
Every Augur market and all REP tokens exist in unique versions of Augur called universes. REP tokens can be used to report on outcomes only for markets that exist in the same universe as those tokens. When a market forks, new universes are created. Forking creates a new child universe for each possible outcome of the forking market (including Invalid).
This market is referred to as the forking market, as it has implications for the other markets that currently exist. While an Augur market is in this state, no new markets can be created and the reporting process for all other markets pauses. All REP holders who want to use Augur then have to decide what the correct answer is for the forking market.
Market creators and traders also have to decide on which universe they want to participate in as well. It is assumed that all regular users will want to interact with the truthful one. A forked market can no longer be disputed and is considered finalized once the fork is complete.

How it Works

When a fork is initiated, disputing for all other non-resolved markets is put on hold until this fork resolves. The forking period is much longer than the usual fee window because a fork’s final outcome cannot be disputed and the platform needs to provide ample time for REP holders and service providers (such as wallets and exchanges) to prepare.
New universes are created for each potential outcome, spawned from the current genesis universe where the forking market originated from. Each universe is separate from all the other universes (they don’t share markets, trading fees, etc).
For example, a “Yes/No” market has 3 possible outcomes: Yes, No, and Invalid. Thus, a “Yes/No” forking market will create three new child universes: universeYes, universeNo, and universeInvalid
Figure 1. Forked Genesis Universe Example
Initially, these newly created universes are empty: they contain no markets or REP tokens. Deciding which outcome is correct means staking REP on that outcome, which means moving REP into that universe.
This choice should be considered carefully, because migration is one-way; it cannot be reversed. Tokens cannot be sent from one sibling universe to another. Migration is a permanent commitment of REP tokens to a particular market outcome. REP tokens that exist in one universe cannot be used to report on events or earn rewards from markets in another universe.
REP tokens that migrate to different child universes ought to be considered entirely separate tokens, and service providers like wallets and exchanges ought to list them as such. When a fork is initiated, all REP staked on all non-forking markets is unstaked so that it is free to be migrated to a child universe during the forking period.
Whichever child universe receives the most migrated REP by the end of the forking period becomes the winning universe, and its corresponding outcome becomes the final outcome of the forking market. Unfinalized markets in the parent universe may be migrated only to the winning universe and, if they have received an initial report, are reset back to the waiting for next fee window to begin phase.
This means that those markets will have to go through the dispute process from round 1 which can additional delays to those markets resolving. The only exception is the REP staked by the initial reporter when they made the initial report. That REP remains staked on the initial reported outcome and is automatically migrated to the child universe that wins the fork
Reporters that have staked REP on one of the forking market’s outcomes cannot change their position during a fork. REP that was staked on an outcome in the parent universe can be migrated only to the child universe that corresponds to that outcome.
Since users presumably will not want to create or trade on markets in a universe whose oracle is untrustworthy, REP that exists in a universe that does not correspond to objective reality is unlikely to earn its owner any fees, and therefore should not hold any significant market value. Therefore, REP tokens migrated to a universe which does not correspond to objective reality should hold no market value, regardless of whether or not the objectively false universe ends up being the winning universe after a fork.
In the event of a fork, any REP staked on any of the market’s false outcomes should lose all economic value, while any REP staked on the market’s true outcome is rewarded with 50% more REP (via newly minted REP) in the child universe that corresponds to the market’s true outcome (regardless of the outcome of the fork).
Note: Forking periods can be less than 60 days: a forking period ends when either 60 days have passed, or more than 50% of all genesis REP is migrated to some child universe.

What Do I Need to Do?

If you don't own REP, nothing.
If you own REP, be on the lookout for communications regarding a forking market.
  • You will have 60 days to choose an outcome. If you do not choose an outcome, your REP will be frozen and will not be recoverable.
  • If pushed to a fork, REP holders who dispute false outcomes in favor of true outcomes will always come out ahead, while REP holders who staked on false outcomes will see their REP lose all economic value.
  • Reporters who have already staked REP on one of the forking market’s outcomes cannot change their position for that REP during a fork.
🔮Tip: Help with navigating a fork will always be available in the Augur Discord!