I think about this all the time, trying to get it to work, but actually it doesn't make any sense at all!

This idea implies that if the Oracle misbehaves, they'll lose some collateral. But how do you ever know that the Oracle misbehaved? My solution, to use a simultaneous coordination game, and redistribute ownership, is actually a pretty weak solution, but it really is the only solution I've come across (aside from the similar and non-scalable Baysian Truth Serum). Its the only thing that provides any reliable meta-information for assessing honesty.

The only way this could make sense would be to have a separate mechanism, with a greater emphasis on accuracy and less of an emphasis cost (speed, effort, employed-capital). If someone has one, but more importantly, a way of triggering it, I'd like to hear it. The tricky part is that if the cost to triggering an audit is too low, people will trigger audits all the time, to attack the network (ie it might make attacking easier), and if it is too high, it actually encourages attacks or and make threats-to-attack more credible. Its the same problem as before: what costs more for the attacker?

I invite you all to read this section of my FAQ, which discusses incentive-systems: https://github.com/psztorc/Truthcoin/tree/master/docs#why-dont-you