Case Study: Sports Betting
Previously we shared an article on Decentralized Insurance, and we figured it’s time for another deep dive into one of the many usecases that ORAO is unlocking with the shift to general data. So today we will share our thoughts on betting, as it relates to sports, esports, elections and much more.
The Case for Decentralized Betting
The global sports betting market was estimated to be around $20 billion in 2006, and is now sitting at over $70 billion, and growing rapidly by the year (Though expect a little bit of an exception for 2020 and 2021, because Covid). Throw in non-sports betting, like election outcomes, and the market is even larger.
So where does crypto come in? Is this a market ripe for the picking? Centralized betting platforms, while they do compete with each other, operate very lucrative businesses. Odds are calculated in such a way that no matter which way a bet breaks, the house always wins. If you lose you lose, and if you win a small fee on your winnings may not seem like a big deal, but when you break down the money coming in and going out, fees on the major betting platforms can go as high as 1–5%, depending on specialized the bet is and how many platforms offer it.
To be sure it’s possible to find platforms with lower than 5% fees, but at the end of the day there is a centralized authority sitting in the middle, sucking money out of each bet to pay for offices, bureaucracy, CEO bonuses, shareholder dividends and advertising. And this distorts the odds. If you’re about to flip a coin, you want a coin that gives you double or nothing, not 1.90 or nothing.
Moving Betting On-chain
We have had gambling dApps on the blockchain for years. In the 2017 bullrun, many similar dApps sprung up on Ethereum, EOS and Tron, offering a variety of different gambling protocols. The problem, of course, is that while you can prove randomness and fair draws and coinflips, there is no native support for blockchains or smart contracts to take in data from the outside world. When the Chicago Cubs beat the Whitesox, nothing happens that a dApp can see.
Earlier oracle platforms have failed abysmally to support the kind of general data that would be required here. Financial data is continuous, changes gradually, and is frankly quite easy to track and rate. If a data provider sells bad data, they are discovered quickly, and may lose their stake for probably very little profit. This difficulty in finding a pivotal moment to provide malicious data is an additional layer of security for financial data oracles. With a use case like sports betting, however, the outcome of a title match for example is announced only once, and is the first and only of its kind. When that data is bought by a smart contract, there is no previous data to compare it to.
ORAO solves this issue with our proactive rating system, which analyzes the trustworthiness of data before it is even sent to the buyer. Even when no previous data exists, products are compared to the data offered by other sellers and validators.
20% of the total supply of ORAO tokens has been set aside for validator rewards, creating a healthy market with strong economic incentives to ensure that even for new protocols and one-of-a-kind data points, there is a strong presence not just of data suppliers, but of competing suppliers and of validators to go with them. This 20% allocation will begin to vest three months after the TGE, and will unlock slowly over the course of five years. We believe that this is a good timeframe for ensuring long term stability and incentives to grow the ORAO network.
If you would like to learn more about ORAO, you can check out our website, dig into our whitepaper, or join our Telegram channel to speak directly to members of the team and our community.
