- Augur Forks with 100
$ETH$ open interest. All$REP$ is converted into Auction Participation Tokens. Open interest is locked behind these participation tokens. -
$REP_{true}$ universe conducts Initial Coin Offering using dutch auction: We auction$REP_{true}$ until we have raised 100$ETH$ that is paid to true-share holders. Each Auction Participation Token entitles participation to the auction (relatively to the amount of tokens held) using the open interest stored in it + they can add more (in open auction?). If 100$ETH$ is never raised, the universe doesn't function. -
$REP_{false}$ universe does the same for false-share owners
-
$\text{REP Market Cap} > \text{current open interest}$ (otherwise there's incentive to trigger fork to steal open interest) -
$REP_{true} \text{future value} >= \text{current open interest}$ (we need future rep holders to buy out the open interest holders
- First Auction Participation Tokens holders can move their open interest share over + add bonus in ETH.
- If all the open interest is covered the auction ends, all the participants are paid minted
$REP_{true}$ according their total payment (everyone gets the same price) - Free for all dutch auction begins. Participants should be incentivized to buy rep when
$\text{REP Market Cap} < \text{future value}$
- Augur forks and
$REP$ holders move the open interest into right universe. If some$REP$ holders do not participate (eg, the lying$REP$ ), rest of the open interest is covered with more open auction by dilluting$REP_{true}$ holders.
- Open interest = 100
$ETH$ , attacker buys cheap lie shares with$\epsilon$ , open interest becomes 9100$ETH$ ,$REP$ mcap = 500$ETH$ , attacker owns 100%$REP$ - Attacker moves all open interest to rep false and gets 9100 ETH and loses REP's mcap 500
$ETH$ (loss of 400$ETH$ ) -
$REP_{true}$ freezes as nobody wants to pay 9100$ETH$ for all the REP, as it's only worth 500 eth. True traders lose 9100 ETH
This attack breaks