This week I will be looking at a token from another hot sector, GambleFi. GambleFi merges the excitement of gambling with the security and transparency of blockchain technology. Essentially traditional casino games and sports betting is brought on chain to make online gambling more verifiable and transparent. The hard truth is that bull or bear market, vices such as gambling will always be popular amongst people.
The biggest platform in this space is Rollbit. Rollbit is a crypto casino who claim to have 1M registered users. They also claim to have an estimated 40M wagered per day with more than 5B wagered overall. Rollbit was launched in 2020 has introduced various new features since then. Since June 2023 their native token RLB has been up a whopping 530%.
1. Price Action and Catalysts Year to Date
As the graph shows the 2 key growth drivers was the migration to Ethereum and the launch of the buy and burn feature.
2. Product offering: Online Casino
The first product of Rollbit is their in-house casino games which currently earns them about 70% of their total revenue. They offer all the games you would see in a typical casino such as Slots, Blackjack, Baccarat and many others. They have a total of 4621 games on their platform. Prominent B2B providers for live casino games such as Evolution Gaming and Pragmatic Play are supporting many of the games on Rollbit.
Rollbit earns when the house wins money and as we know more times than not the house always emerges as the winner in the long run. In addition, Rollbit charges a rake fee which is a 3–5% cut of each bet placed.
Their whitepaper mentions that they are fully licensed and authorized by the government of Curacao. However, the license holder is not authorized to offer its services in the territories of Curaçao, France, Netherlands, Australia, UK, Spain, USA, or any other jurisdiction that the Central Government of Curaçao deems online gambling illegal or are blacklisted.
Technically Rollbit’s market size is quite limited. How then are they able to achieve all their reported numbers? For context Rollbit’s annualized revenue from its online casino and sports betting is close to 1/3 that of 888 holdings. 888 holdings is an international sports betting and gambling company, owning numerous brands and is listed on the London stock exchange.
3. Product offering: Leveraged Crypto Trading
Users can trade futures on the 20+ top crypto currencies with no bid-offer spread and up to 1000x leverage. Under the flat fee option, they charge 0.04% to enter and exit a trade. Under the PnL option, a 5% cut from an user’s trade is taken if its profitable. Rollbit claims to offer instant trade execution with zero slippage. They claim to have processed over 100 billion in volumes as well.
A high-level comparison of 24-hour volume data across major CEX and Perps shows where Rollbit stands. I find it hard to believe that Rollbit can outperform established crypto derivative platforms such as GMX, DyDx and Synthetic. Rollbit’s future volume is even higher than that of the spot trading volume on Coinbase which is a leading CEX.
Rollbit is likely the counterparty to futures trading which means they lose when traders win and vice versa. Using GLP as a proxy, the amount of revenue generated by their futures platform seems too good to be true.
In their whitepaper no information is given on liquidation mechanisms, how zero slippage is achieved and how there is no bid-offer spread. Being able to offer 1000x leverage at such low costs seems too good to be true.
4. Product Offering: Sportsbook
Sports betting provides around 11% of Rollbit’s total revenue and like the casino, they charge a 3–5% fee on each bet placed. Rollbit supports betting on all the big sports from soccer to table tennis even. SSC Napoli is even their official European betting partner.
5. Buy back and Burn
30% of the revenue from futures trading, 20% of the revenue from the sportsbook and 10% of the revenue from the casino will be pooled towards buying back RLB every hour. From the bought back RLB, 10% is distributed to Rollbots (Rollbit’s flagship NFT launch) and the remaining 90% will be burnt.
I plotted the cumulative RLB burnt daily, and the chart is almost perfectly linear suggesting daily revenues are consistent. The regression equation generated has a R-square value of 99.4% and suggested that around 1.3M RLB tokens are burnt daily.
Forecast this for the NTM suggests an additional 10% of the total supply will be burnt. The linear increase in cumulative RLB burnt almost seems to good to be true. How can there be no ups and downs in daily revenues. One explanation could be that on the bad days, past reserves are used maintain the burn which is also supported by their whitepaper.
6. Utility of RLB Token
Base level of rakeback available to every Rollbit user is 5%. Players can increase their rakeback by up to an additional 10% depending on the amount of RLB they hold. Rakeback is a % of the betting fee that is returned back to the user who placed the bet.
In addition, the higher the amount of RLB owned, the greater the discount on the 0.04% future trading fee. Paying this fee in RLB will further reduce the amount of fees paid.
7. Tokenomics
Currently around 68% of the circulating supply sits in a Rollbot Deployer Contract. RLB from this Rollbot Deployer Contract is transferred to Rollbit’s ERC-20 Hot Wallet. An analysis of the large transactions done by the hot wallet show that most of the RLB is being used to provide liquidity on Uniswap.
Just in a span of 3 months, 12.5% of the total supply of RLB has been released by the Rollbot Deployer Contract. It’s not fair to consider the RLB in the deployer contract as circulating supply and the amount released by the wallet will add to the inflationary pressures.
8. Risks
There is an overall lack of transparency with no way to verify their revenue and futures volume figures. The token itself is thinly traded at just 0.63% of its market cap in the last 24 hours. No code audits have been conducted since launch. No information on the roadmap ahead is given. Their whitepaper does not seem current, and the lack of details given is a big red flag for me. Too many aspects of Rollbit seem too good to be true and it seems like a big bubble waiting to burst.
9. Conclusion
I do love the idea of GambleFi and gambling being brought on chain. The potential market for gambling is huge and I do see this vertical gaining traction moving forward. However, I am just not convinced with Rollbit. The RLB token itself can only be considered deflationary if you don’t consider token movements from their Hot Wallet. If their revenue and futures volume figures reported are true, then it’s a great project. Until there is some way to verify this, investing in Rollbit is no different from taking a gamble on them.
