Photo Finish Live Tokenomics

Greetings Photo Finish Live virtual horse racing fans. The final tokenomics blog dropped so we’re going to break it down in an easily digestible manner and explain why the tokenomics of Photo Finish Live (PFL) have created a very powerful flywheel effect.

First, some background. Photo Finish Live has two tokens:

1. DERBY — DERBY is the in-game token of PFL, is not market traded, and operated like xbox points in that 80 DERBY = $1.00. Players purchase DERBY with credit cards or crypto to buy horses, pay entry fees, breed, and more within the game. Winners of races are paid in DERBY. You can cash it out for USDC at any time.
2. CROWN — CROWN is the utility token of the ecosystem. It is market traded on exchanges and fluctuates in price. You can stake CROWN on the game’s race tracks and receive 20% of race entry fee revenue paid out in DERBY which you can cash out for USDC. In other words, CROWN receives yield from the game.
3. There are 250 million max CROWN with the following allocation:

• 125m to holders of PFPs who stake them over 26 seasons which are four weeks long.
• 53m for the team with a 1 year cliff, 2 year vesting schedule.
• 18m for early investors with a one year vesting schedule.
• 55m to juice race purses at 4.2m per season for 12 seasons.

4. The NFTs are available here and CROWN can be purchased on Jupiter here. If you want to learn more about this incredible game, here’s an in-depth guide.

5. In real life, WAGERING is what allows race tracks to provide huge purses to incentivize horse owners to race. While Photo Finish Live has legally compliant wagering built in, its growth will be a long process and it will be some time until enough wagering happens that it can properly incentivize virtual horse owners. As 20% of race entry fees go to CROWN stakers, as it stands, most horse owners would lose money. Those owners need to be incentivized to keep playing.

6. As we outlined in our Photo Finish Live Investment Thesis, Madden Football brings in over 1 billion dollars per year in revenue and FIFA soccer more than 5 billion. The potential revenue of the Madden Football, the FIFA Soccer of horse racing for its 600 million fans is massive. But bootstrapping such an ecosystem for a startup would be difficult.

The question then becomes, HOW do you incentivize horse owners in the short term while the game grows to the point that wagering revenue is able to sustain the ecosystem? What’s the solution when it’s so critical that these owners, even if their horses aren’t very good, continue to buy, race, and breed? The cutting edge founders of Photo Finish Live realized that a cryptocurrency with excellent tokenomics could be that unlock. And they’ve finally unveiled the specifics. Here’s the most important parts (we’ll explain why we’re so excited in a bit):

A. 20% of entry fees paid by racers go to CROWN holders who have staked on race tracks. The other 80% goes to the winners just like in previous betas.

B. 100% of breeding fees and marketplace fees in $DERBY will be set aside for race purse subsidization. This always results in MASSIVE amounts of DERBY being returned to racers.

C. Every single race purse that has an entry fee is subsidized with $CROWN. Every horse that enters, regardless of finish position, earns a $CROWN reward. The first 9 seasons will have 4.2m CROWN for this purpose. Thereafter it will drop to 2.9m season 10 and continue to drop about 10% per season after that.

D. In previous betas, 48% of the purse went to first place. Under this model, they will receive 40%.

Now that racing has begun, let’s look at how this is playing out. As of May 4th, 2023 CROWN is approximately 6 cents each (click for current price) and here are the eight LEAST profitable stables in DERBY revenue:

Courtesy RacersEdge.app

The two columns we need to pay attention to are “Profits” which is in DERBY and “CROWN Gifts” which is the number of CROWN they’ve received. Let’s break down their actual profit and loss based upon these numbers.

What the above chart tells us is even a very low CROWN price makes this game sustainable while wagering is slowly built up over the next year. The WORST performing stables in the game are actually near break even or even profitable! In addition, when $CROWN is received it can be staked for additional yield in DERBY which we are not accounting for here.

And what happens if CROWN goes even higher? At a certain point, all racers are paid to race.

Edit — September 2023. At present, $CROWN is worth more than $0.20 each making each of the above stables very profitable and in many cases, your $CROWN gift per race is worth more than you pay in entry fees making PFL +EV.

Edit — October 2023. At present, $CROWN is worth more than $0.30.

Edit — November 2023. At present, $CROWN is worth more than $0.50.

Edit — December 2023. At present, $CROWN is worth more than $0.75.

But WHY would anyone want $CROWN? Won’t racers just dump it all? Some will of course and that’s ok. But remember, if you stake $CROWN on a race track, you receive 20% of the race entry fees. You get yield. And many investors LOVE yield which is why billions flow into US Treasury Bonds and Bills every month.

Our internal model shows, at $0.06 CROWN when extrapolating season 1 data, yearly yield of 51.97%.

Edit — September 2023. Due to the increase in horse population and entry fees being paid, for season 6 those who bought CROWN at $0.06 would be enjoying 111.54% yield as shown by this calculator.

Edit — October 2023. For season 7, those who bought or earned CROWN at $0.06 are enjoying 120.11% yield.

Edit — November 2023. For season 8, those who bought or earned CROWN at $0.06 are enjoying more than 200% yield.

The Flywheel Effect

What all this means is that a flywheel is in effect. People race the horses because it’s fun. However, win or lose, they earn enough CROWN where almost every race is profitable, especially with CROWN staking. As such, they want and thus buy or breed more horses to race which means more entry fees are paid. That results in an increase in yield for CROWN stakers so more people buy CROWN which increases its price. This results in races being more profitable so people buy and breed more horses and ‘round the flywheel goes.

So the question becomes. Will this game become the Madden Football, the FIFA Soccer of horse racing for its 600 million fans? Considering Churchill Downs, owner of the Kentucky Derby partnered with Photo Finish Live, we’re not alone when we say there’s a reasonable chance. Welcome to the power of web3 and crypto.

Ready to get started? Click here to create a Photo Finish Live account.

Not financial advice. Do your own research.