There are two types of oracles in Amoveo: Question Oracle and the Governance Oracle. The purpose of the first one is to deliver information about past and present facts, thus ensuring the operation of the prediction markets and other smart contracts. The purpose of the second is to manage the development of the Amoveo network via futarchy: network participants collectively determine the answer not by voting (the answer that gets the most votes is True), but by betting (the answer that gets the most total amount wagered for is the True outcome).
Both oracles rely on the futarchy method to answer questions. In this and subsequent sections we will primarily discuss the Questions Oracle, and in section 4 will show how Governance Oracle implements similar mechanisms.
Even outside of a smart contract any participant can ask a Questions Oracle anything. For instance, to test it, from the command line it looks like this: “api:new_question_oracle(Start, Question)”. Where the word “Question” should be replaced with the actual question.
The AmoVEO oracle will not search for answers on external sites, instead it will redirect the question to network participants. They can choose one of three answers: “true”, “false” and “bad question”, or elect not to answer. A participant backs his answer with a wager, which points to the degree of his confidence in the answer. If there are no more bets after a certain period of time the oracle closes the question. The oracle sums and compares the amounts wagered on each answer, the answer with the most amount of bets determines the winner. The other bets are divided between those who bet on the winning answer.
The gaming theory dictates that, if the answer is well known, participants are unlikely to lie, as they will probably find themselves in the minority and lose. If the answer is not well known, then the majority will likely choose not to answer and so the true answer is determined by a smaller group of “experts”. And, if the answer is accessible to anyone, but requires a bit of work, such as comparing information from various sources, financial interest will motivate the participants to carry out diligent analysis to be confident in the winning outcome.
Such an approach does not guarantee that all the answers will be genuine, but, at the very least, can ensure the degree of probability of reaching the correct outcome is increased in comparison to a a “public opinion” scenario (net sum of user opinions regardless of their competence level). At the same time, it is simple and straightforward.
Example 1. A network participant asks a question: “Is the current U.S. president bald?”
The oracle won’t search for the president’s photos but will redirect the question to the network participants. Suppose that three users bet 5 VEO each on “false”, one as a joke bets 1 VEO on “true” and another to express his displeasure with the question bets 3 VEO on “bad question”. The total bet on “false” comes to 15 VEO and this answer is determined TRUE (winner). The remaining 4 VEO is divided amongst the users who bet “false”. Donald Trump is not bald. The author of the question gets an answer and thus can judge the efficiency of the oracle.
Example 2. A network participant asks a question: “Is the current Russian president bald?”
Here the answer is not obvious. Strictly speaking, Vladimir Putin is not bald. But as per a Russian joke Russian heads of state alternate between bald and “haired”, many consider him to be “bald”. Depending on how the question is perceived, literally or as a joke, the answers can split unpredictably. With that in mind, the majority of network participants will likely choose not to risk their money. But, let’s suppose that one user, disregarding the joking nature of the question, bets 5 VEO on “false”, another, being aware of the joke puts 5 VEO on “true”, yet other two users realizing the inherent ambiguity wager 3 VEO each on “bad question”. In that case, the winners by a narrow margin will be users who bet on the third option and win they will win 5 VEO each.
Though, the losers may not be happy with the result, as they answered truthfully, even while not realizing that their opponents are right in their own way. They can challenge the outcome, which we will discuss in section 5.
Example 3. A network participant asks a question: “Is the present King of France bald?”
This is no longer a joke, but a famous question posed by Bertrand Russell in his article Philosophy of Science as meaningless. France no longer has a King, and therefore he cannot be bald or not.
This isn’t a question people are going to guess about. Even those, unaware that it’s been a while since France stopped being a monarchy, may hardly venture an opinion about the King’s hair. Most likely, this bet will be placed only by people who know that France doesn’t have a king. And the majority, say 5 users, will bet from 1 to 8 VEO on “bad question” option. We can also assume that 2 people bet 2 VEO each on “false”, mistakenly thinking that “if there is no king, he cannot be bald”. Nevertheless, the “bad question” option will win and it’s hard to argue against that.
Though, this example is given with the assumption that most of the network participants are reasonably smart. It is possible that the same question posed to elementary school children would get more “False” answers due to their lack of logical thinking at that age.