My career has always been at the intersection of entrepreneurship, software, and finance. On top of that, I’ve been an avid sports bettor for a very long time. This combination has given me a unique outlook on risk-taking and how to use algorithms to manage it.
Working on BarnBridge, whose goal is to wrap risk into different tranches to give investors more options to hedge their positions, we realized that tokenizing risk actually has many more use cases than pure financial ones. This is why we are determined to open up that door.
- I, Tyler, self-funded this — I paid for all of this code (outside of what the BarnBridge team built specifically for the DAO that already existed & what our partner PoolTogether already had). We did not use BarnBridge money for this.
- This is an experiment. It will get audited (the PoolTogether staking pools are already audited), but there is a possibility that this ends up being a toy for the community and never gets built out in the way it deserves. In this case, nobody lost money but me.
- Community funds and treasury funds won’t be used unless the project grows organically and the community decides it’s worth building out.
- Our main focus still lies on the $200t debt derivatives market.
- This will plug into the BarnBridge DAO and will be powered by the community. In the same way protocols are permissionless — DAOs can be as well. This means nobody needs permission to connect protocols to our DAO. However, you run the risk of nobody recognizing or voting for the protocol.
- Lastly, I want to make one thing very clear: I don’t want to deal with another token. I don’t want to manage an array of tokens and I don’t want the regulatory risk of being tied to an array of tokens. This is why I made the $BOND token power bond.bet. You can look at it as a delayed Christmas gift to myself and the community.
Here is where my head is at on all of this: I have a vision how crypto and DeFi will evolve. I call our current state DeFi² and I think we are moving towards DeFi⁶⁴.
DeFi² projects are essentially protocols built on top of base layer DeFi primitives. I like to think DeFi² is normally at the protocol level. I thought of this theory to show how derivatives work and why we’ve seen an explosion in the DeFi derivatives layer over the past year.
⁶⁴ is similar to how squared is ^2. This is extrapolative building on top of building and the syntax is pulled from CFA level finance and is the mathematical models that are built for derivatives built on derivatives.
The future won’t only consist of protocols, it will also consist of the merging of technologies and protocols to build application interfaces that potentially use numerous protocols and numerous base layers to accomplish a goal. The outcome is simultaneous: a world where gaming, streaming, gambling, money management, finance, and entertainment is woven together in a fashion that utilizes amazing user experiences powered by base layer permissionless protocols.
Imagine a world where you have a limited NFT that is extremely powerful in a video game. You are live-streaming eSports, and you have a massive bet on one side of the game. You can now essentially enact your NFT to help your preferred side. Gambling, betting, and live streaming all become interwoven. The streamers are no longer only picking sides, they are a part of the game.
With DeFi, we are gamifying finance. When we add that into gaming, gambling, and media — we have D64!
We all know that gambling is directly related to risk management and has a huge market in the real world. We also know it has a lot of problems: lack of transparency, security, privacy, and provability. This creates a strong reason for moving it to the blockchain.
I am disappointed that no project ever gotten prediction markets on the blockchain right and the reasons are yet unclear to me. It might be because prediction markets are made by deep developers who don’t bet on sports or that the DeFi audience is not familiar with functioning and intuitive products yet.
I am determined to change that. It is why I self-fund Bond.Bet and don’t use any Barnbridge funds. This is also why I joined with a project that was already live and partnered with PoolTogether (https://pooltogether.com/). It has been an amazing and fruitful collaboration so far.
So What is Bond.Bet?
Bond.Bet is a betting protocol and a no-loss gambling protocol. A lot of the technology will plug into other protocols like BarnBridge and PoolTogether (more collaborations are in the making). This means, most fees will flow back to those protocols or will exist at the user interface level. Since Bond.Bet doesn’t have a token, value should flow back to the BarnBridge DAO.
No Loss Savings Game: The First Use Case
Our no-loss savings game that utilizes $BOND is a start to a fruitful relationship with PoolTogether. Users enter the pool by staking the tokens & should stay invested until the winner is determined and earns the interest from the pool while everyone keeps their principal.
A fun way to think of this is a $BOND savings account that you use to play a savings game but your principal is not a part of the savings game. Instead, the interest earned from your principal is what the winnings of the savings game are derived off of.
Some of the contracts were created by PoolTogether and they govern what is hosted on their platform. What we build into it longer-term can be governed by the BarnBridge DAO. However, as of right now, this is an experiment for the community.
There are two types of no-loss savings pools:
- Staking pools: for these, we basically allocate $BOND to PoolTogether for $BOND for $BOND staking with rewards, our interface will plug into PoolTogether’s interface and they aren’t charging fees. This is the one piece I will use a miniscule amount of community funds for, as the only people eligible for the staking savings game are community members (basically anyone with $BOND tokens can participate without worrying about losing their $BOND tokens). Anyone who doesn’t have $BOND tokens, can’t.
- Yield Pools: this is the longer-term play here. Basically, our Pool 3 (the #hodl pool) will convert to DAO staking rewards for $BOND for $BOND staking. I guess everyone can talk about the long term sustainability of whether this is evergreen but I realized you could plug PoolTogether’s contracts into our DAO and let you run a no-loss savings game through the reward system and I thought that was fun.
A third one might come further down the line. PoolTogether will likely build integrations into our smart yield products because the fixed income component fixes a few issues and helps users calculate rewards ahead of time. This area has a ton of potential for our other use cases that diverge from no-loss lotteries. The code will be built out depending on the success and reception of Bond.Bet and our partnership with PoolTogether. More details on that later.
We have bigger & longer-term plans for Bond.Bet, including no-loss tokenized sports bets, BTC/ETH futures bets, tokenized money lines, and even using BarnBridge’s smart alpha technology for hedging the bet line itself. We can use what we are building as BarnBridge for 90% of that.
In short, the bets act as tokenized risk where you can tranche out your risk position and re-sell it on a secondary market for tokenized risk. Our concept for bigger and longer-term plans where you can “be your own bookie” stems from this. Betting on the betting line itself moving (as a hedge) takes it one step further.
No Loss Slots
This is a pool where you pay per roll and funds are locked but you get your principal back. The longer you stay in the pool the more spins you get. Funds will be returned every week so you can either reroll or you can pull out your principal. Winners take the interest gained from the slot money that is locked in staking contracts until the funds are requested to be released.
Tokenized Sports Betting
Tokenization of sports betting decentralizes the sector, brings transparency, enhances liquidity, and increases efficiency. Multiple goals can be achieved by tokenizing betting, such as player tokenization that enables you to invest in a player’s contract or even tokenizing a team so that people could invest in it and drive more capital to the team.
Tokenizing bets will have to be built out. We are sure in the long term we will be able to do a number of things that were not possible before blockchain. The tokenization of sports betting creates opportunities like no-loss betting where interest gained from money locked in bets would fund the rewards of the winning bets. Below you can see our rough model of how this would work:
No-loss betting not only creates value but also potentially helps people who have a betting addiction. This is an alternative for people to safely bet and still have fun with their money.
This will be the biggest project for Bond.Bet. We have to integrate with around 26 of the leading sportsbooks which is the hardest part. There is no clear timeline on this yet, but as soon as we have news — we’ll share them.
Betline Movement Bets
Bet on the actual movement of the betting line and whether you think that odds will rise or fall in the future. Do you ever think Vegas has it wrong? It would be nice to bet on those adjustments between the weeks. Say hypothetically you take a $100 Super Bowl bet in March on the Browns (+10000) to win and 6 weeks after the season starts the Browns are now (5–1) on top of the AFC and odds for the browns to win the Superbowl have shifted to (+800). You should be able to sell off this bet for a profit if someone is willing to pay the price for the bet. In some cases, bettors will take a discount to sell off the risk while these bets still look healthy. This also creates secondary trading markets which is our next use case.
BTC & ETH Futures Bets
We can apply the above-mentioned to assets and even bet on the volatility of an asset or the percent change in price on a specific day. Here we can get extremely creative with what we would want to offer: odds or bet on the upside of the traditional derivatives and futures. The secondary market also allows you to place bets on someone else’s claim. For example, I feel ETH will hit $1000 before March 1, 2021. Once we make this claim, we can have people bet on it and the blockchain will determine if it happens and pay out the bet. You would also be able to bet on the overall price movements of the assets and bet on whether it goes up or down on a specific day.
Gas Price Futures
Bet on Gas price futures and try to predict the markets and if Gas prices will rise or fall in a certain time frame. Tokenization of Ethereum Gas has many use cases and is already being applied by other companies and projects like Gas Token and Ugas. Don’t you hate spending gas? What if Gas was storable and you could save it for later? It can be done with the tokenization of Gas and being able to sell Gas on a secondary market at a discount to the market but still make a profit or save it for later use. This year we experienced rising Gas prices as a huge problem. It would be nice if you could’ve stored GWEI from 2017. This is almost like buying a call for Gas at a later price but you can either use it or sell it. Some people don’t value Gas and just pay the gas but how much has accumulated over the years? Platforms like Fees.wtf (https://fees.wtf/) track this and would allow to hedge Gas fees risk on a yearly or monthly basis.
Swap.Bond.Bet will be a secondary betting marketplace. It enables bettors to sell bet lines to other bettors for a profit. With tokenization of money lines and betting lines, you can sell off future bets at later dates for a profit or loss. This creates an entire secondary market that the blockchain can manage so others can have a safe and secure market for trading bets to each other. Secondary markets allow you to be your own bookie and create easier and safer P2P betting transactions. The potential is limitless and we can create numerous new systems for betting. Secondary betting markets offer their own unique use cases that can take the house at least partially out of the picture.
Questions & Features
How are We Making a Decentralized Lottery?
To build a no-loss lottery in a decentralized fashion we are going to use Chainlink Verifiable Random Function (VRF) and Chainlink Alarm clock to ensure a truly decentralized no-loss lottery system.
What is a No-Loss Game?
These games are a way for people to have fun with money but not risk the principal. The winning pools are created off the interest from the principal locked in the games. When someone hits the Jackpot or wins the lottery, they take 75%, and 25% is rolled over into the next pool to start gaining interest.
Provably Random / Incorruptible
Current lotteries are built on trust and in some cases, we have seen that lotteries are rigged for large sums of money. This should never be possible. Blockchain lotteries can fix this with verifiable smart contracts and in that way reduce the chance of being hacked or manipulated. The most important reason for using Chainlink is that it can be proven, trusted, and everyone is treated fairly.
Lower Cost for Everyone
Not only does a no-loss lottery save you money, it also saves platforms like us money by reducing the overhead costs like staff, tickets Flair, Casinos, etc… The servers are replaced by the blockchain and staff is not necessary.
What Happens to My Funds When Someone Wins?
Funds will be released every week for the no-loss games. You can either replay or quit playing. The pot will stay and you can reroll your money.
Can I Remove My Funds Before Someone Wins?
Funds will be released every week for the no-loss games so you can either replay or quit playing.
What Assets Are You Using for the No-Loss Games?
We are mainly using BOND. We also will eventually use USDC & DAI but they will be used for different games.