How Disputes & Bonds Work

Disputes are the core mechanism that makes Augur work. When people disagree about an outcome, they challenge each other using bonds—financial commitments that keep everyone honest.

A Real-World Example

Imagine a market asks: “Will BTC reach $100,000 in 2025?”

Reporter A says YES and locks up REP as their report bond
Reporter B disagrees and says NO—they lock up 2x the initial bond amount to dispute
Reporter C thinks B is wrong and says YES again—they lock up 2x B’s bond (4x initial)
This continues escalating until everyone agrees… or the bond reaches 275,000 REP and a fork is triggered

What is a Dispute Bond?

A dispute bond is REP (Augur’s governance token) that you must lock up to challenge an outcome. It serves three purposes:

Skin in the game: Disputers must risk their own capital to challenge outcomes
Spam prevention: High bond amounts deter frivolous disputes
Fair resolution: If your dispute is correct, you get your bond back plus a fee

The Dispute Process Step-by-Step

┌─────────────────────────────┐         ┌─────────────────────────────┐
│  STEP 1: Initial Report     │         │  STEP 2: First Dispute      │
│                             │         │                             │
│  Reporter submits outcome   │────────▶│  Someone disagrees          │
│  Example: "YES"             │         │  Posts 2x initial bond      │
│  Locks up initial bond      │         │  Submits: "NO"              │
└─────────────────────────────┘         │  If no further dispute →    │
                                        │  Market settles             │
                                        └────────────┬────────────────┘
                                                     ↓
┌─────────────────────────────┐         ┌─────────────────────────────┐
│  STEP 4: Fork Trigger       │         │  STEP 3: Escalation         │
│                             │         │                             │
│  Bond reaches 275,000 REP   │◀────────│  Another disputes back      │
│  Instead of continuing,     │         │  Posts 2x previous bond     │
│  FORK IS TRIGGERED          │         │  Submits: "YES"             │
│                             │         │  Process repeats...         │
│  → 60-day fork period       │         │  Bonds keep doubling        │
│  → REP holders govern       │         └─────────────────────────────┘
└─────────────────────────────┘

Bond Escalation Example

Here’s how bonds grow with each dispute round:

Round	Bond Size	Risk Level
1st Dispute	1,000 REP	Low
2nd Dispute	2,000 REP	Low
3rd Dispute	4,000 REP	Medium
4th Dispute	8,000 REP	High
5th+ Disputes	16,000+ REP	Extreme

Actual bond amounts vary based on protocol parameters, but the doubling pattern is consistent.

Why 275,000 REP?

The 275,000 REP threshold was chosen as a balance:

ACCESSIBILITY: Low enough that disputes can escalate naturally
SAFETY: High enough that only serious, well-funded disputes trigger forks
GOVERNANCE: Ensures protocol-level disagreements go to REP holders to choose

Bond Economics: Winning and Losing

OUTCOME	WHAT HAPPENS TO YOUR BOND
Your Dispute Is Correct	You get your bond back + a fee The fee is additional REP awarded for being right
Your Dispute Is Incorrect	You lose your bond It gets redistributed to winning disputers or the protocol

How Fork Risk is Calculated

The fork meter shows a simple calculation:

(Largest Dispute Bond ÷ 275,000 REP) × 100 = Fork Risk %

Understanding the Formula

Largest Dispute Bond: This is the single largest bond currently active across all markets. Why track the largest? Because it determines how close we are to the fork threshold.

Example: If the largest active dispute is 150,000 REP, the next challenger would need to post ~300,000 REP to dispute it—which exceeds 275,000 and triggers a fork immediately.

Two Calculation Examples

EXAMPLE 1: LOW RISK

Current largest dispute bond: 15,000 REP

(15,000 ÷ 275,000) × 100 = 5.5% risk

Interpretation: Disputes are active but still far from fork. The next dispute would need ~30,000 REP.

EXAMPLE 2: HIGH RISK

Current largest dispute bond: 200,000 REP

(200,000 ÷ 275,000) × 100 = 73% risk

Interpretation: Close to fork. The next dispute would need ~400,000 REP, exceeding the threshold. Fork is likely with one more escalation.

What Happens When Fork Conditions Are Met?

Once a dispute bond reaches or exceeds 275,000 REP:

FORK PERIOD: A 60-day window begins for REP holders to migrate their REP
MARKETS FREEZE: No new trades on disputed markets
REP MIGRATION: You choose which fork version you support
WINNING FORK: The fork with the most REP support becomes canonical
RESOLUTION: Markets settle according to the winning fork’s outcomes

Strategic Considerations

For Dispute Participants

High-conviction disputes are only worth posting if you’re confident you’ll win
Later dispute rounds become prohibitively expensive for casual participants
High-stakes disputes push the system toward fork, affecting all markets

For Market Users

Monitor disputes if your outcome is challenged
Disputed markets settle slower than undisputed ones
High-risk markets might not settle until after a fork resolves

Key Takeaways

Disputes escalate: Each new dispute doubles the bond size (approximately)
Forks are triggered mechanically: When the largest bond hits 275,000 REP
Risk is measurable: The fork formula lets you calculate exactly how close we are
Escalation is expensive: High-stakes disputes require serious financial commitment
Fork is ultimate resolution: When community disagreement is severe, REP holders decide

Next: What To Do at Different Risk Levels →

[[ How Disputes & Bonds Work ]]