Produced by: Shenchao TechFlow Research Institute

Written by: Sleeping in the Rain

*Note: Gamblefi is subject to different degrees of legal constraints in different countries and regions. Please strictly abide by local laws. This article is for popular science only and does not constitute any investment advice.

When Ethereum is no longer hampered by performance and efficiency, which areas are most likely to explode?

GambleFi (decentralized casino) may be a relatively niche answer with a huge narrative.

The main reason for the development of GambleFi is the common concern about casinos in the traditional world - black box operations, that is, cheating. Gamblers worry that their counterparties or casinos will cheat to gain unfair benefits for themselves, and deploying on the blockchain can better solve this problem.

The openness, transparency, verifiability, and permissionlessness driven by blockchain technology will make GambleFi a more attractive Internet casino facility, and the fairness and privacy of gambling can also be guaranteed.

I was once deeply impressed by the prosperous gambling ecosystem on EOS. But the gambling Dapp on EOS is completely different from the current GambleFi narrative:

  • Development potential: Although gambling Dapps are built on EOS, and the handling fee is cheap, the EOS operation experience is not good and the procedures are cumbersome. In the end, history has given us the answer - with the decline of EOS, the above applications have gradually disappeared in the history of blockchain. Ethereum Layer2 has more high-quality and fertile soil, with more user base and better interactive experience.

  • Real income: Another commendable aspect of GambleFi is that it follows the trend of real income narrative. This has introduced new incremental users to GambleFi - investors. In addition to gamblers who participate in the protocol, investors who are optimistic about GambleFi can also obtain dividends by purchasing protocol tokens and staking protocol tokens. The token economics with higher scalability is unmatched by gambling Dapps on EOS.

Next, let’s briefly introduce some GambleFi protocols built on Ethereum Layer2 Arbitrum.

Arcadeum $ARC

Arcadeum is a GambleFi based on Arbitrum deployment, providing gamblers with seven traditional casino applications including roulette, dice, rock-paper-scissors, etc. QRNG gives the final result through random number generation. Before gambling, users can clearly see the odds geometry. Arcadeum's gambling fairness is supported by quantum random number generation (QRNG).

Arcadeum's liquidity is achieved by users providing USDT. Although similar to the GLP model, Arcadeum's ALP is completely non-volatile (ALP deposit/withdrawal fee rate is 1%). Gamblers participate in gambling, winners win, ALP loses; losers lose, ALP gains.

$ARC is the native token of Arcadeum. Based on $ARC, Arcadeum extends to three other token forms:

  • $sARC: Staked ARC, users can capture 15% of the betting fee income and ALP deposit/withdrawal fee income by staking ARC;

  • $xARC: Burnt ARC. Users can directly exchange ARC for xARC at a 1:1 ratio. The underlying asset ARC is destroyed. Staking xARC can obtain 70% of the betting fee income and ALP deposit/withdrawal fee income.

  • $esARC: Escrowed ARC. ARC Stakers will receive esARC. Staking esARC will receive 15% of the betting fee income and ALP deposit/withdrawal fee income.

JustBet $WINR

JustBet, developed by WINR Labs, is a GambleFi based on Arbitrum deployment, providing users with a fast and tamper-proof gambling experience. JustBet's services are similar to Arcadeum, but the variety is richer than Arcadeum. In the future, WINR Labs will launch an SDK for gambling-related products to provide product and liquidity support for all gaming protocols that want to build casino products. JustBet's gambling fairness is supported by verifiable random functions (VRF) and oracle services SupraOracles.

JustBet's liquidity is achieved by users providing WTBC (15%), WETH (35%) and DAI (50%). Market fluctuations and gambler wins will lead to WLP losses, and a swap fee of 0.15%-0.75% will be charged for both buying and selling WLP. WLP income comes from gambler losses, $vWINR emissions, 25% commission income share (gamblers will pay a 0.02%-0.1% commission for each bet) and 25% swap fee share.

$WINR is the native token of JustBet. Users can stake $WINR to receive a share of protocol revenue. Alternatively, users can convert $WINR into $vWINR. Stakers will receive a share of both the handling fee revenue and the swap fee, but $vWINR is twice as weighted as $WINR. The revenue will be given to the staker in the form of WLP. Similar to Camelot's native tokens GRAIL and xGRAIL, vWINR to WINR has a vesting period of up to 6 months (1:1) and a minimum of 15 days (1:0.5). Part of the protocol revenue will be used to repurchase and destroy $WINR in the market.

ArbiRoul $ROUL

ArbiRoul is a GambleFi deployed on Arbitrum. The significant difference between it and the previous two GambleFi is that it has richer gambling services, such as traditional gambling services, sports competitions, casual games and customizable games, suitable for gamblers of all levels to participate. This boosts the user audience to a great extent.

At the same time, unlike the above two casino protocols, ArbiRoul's liquidity is provided by SushiSwap's ROUL/ETH. After adding liquidity, users will receive RLP (a 2% fee will be charged). While receiving DEX transaction fee income, users can also stake RLP in the casino to provide liquidity and profit sharing for gamblers. The benefit is that ArbiRoul increases the on-chain liquidity of $ROUL while providing more income to ROUL/ETH LP providers. And $ROUL is also the medium for gamblers to place bets on ArbiRoul.

Another innovation worth noting is that ArbiRoul issued an NFT collection High Rouler NFT. High Rouler NFT Holder will obtain staking privileges, 11% platform revenue distribution and DAO governance rights.

at last

We can see that from the development of casino protocols, the main development directions of decentralized casinos based on blockchain technology are mainly concentrated in two aspects:

  • Casino services: GambleFi's product competitiveness lies in the services it provides to users. Each casino has different focuses, some focus on e-sports event betting, and some focus on traditional casino business. In order to attract more users, GambleFi will continue to expand its gambling product services to meet the various needs of different users;

  • User loyalty: The rich expansion of token economics has brought more incremental users to GambleFi, while attracting users to stake tokens and participate in the protocol's revenue dividends. At the same time, users with higher loyalty can obtain higher income weights;

Taking the three protocols mentioned above as an example, although the token economics of each protocol has different focuses, most of them attract liquidity through income and provide income dividends for token/NFT pledgers. Pledgers who lock tokens can obtain higher income weights to attract more investors to join the GambleFi ecosystem. The protocol income will be used for token repurchase and destruction, and the increase in token prices will be driven by reducing supply, and the increase in token prices will attract more users to the protocol.

This is a potential flywheel.

So, if the protocol logic is established, will GambleFi prosper again due to the rise of Layer2?

From the current perspective, the rise of Layer2 essentially provides GambleFi with a high-quality development environment, and the innovation of DeFi protocols and the reform of token economics triggered by Layer2 also provide GambleFi protocols with good ideas for building token economics. When the chain is prosperous, GambleFi may also usher in a new opportunity for development.