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The Revolutionary Nature and Bright Future of ICONbet

Disclaimer: This content is for informational purposes only, you should not construe any such information or other material as investment, financial, or other advice.

Background

By this point, if you are an active member of the ICON community — or perhaps even the blockchain community — you’ve probably heard of ICONbet, the first decentralized casino to launch and operate on the ICON network.

ICONbet officially launched on July 30th, 2019. At that point in time, a casino built and operating on the blockchain was nothing new. In the first quarter of 2019, according to an analysis by DApp.com, gambling DApps made up 44% of users, 77% of transactions, and 85% of volume when you combined the Ethereum, EOS, Steem, and TRON networks.

So when ICONbet announced their impending launch, not everyone was impressed. Here’s an example comment from the ICON subreddit:

So they launched a dapp that we have from ETH like 4 years ago,and there are more than 50 of those crypto casinos.Nice one,inovation

And another one, implying ICONbet was just a copycat:

its like the whole TRON blockchain running on ICON 😁

However, when it comes to ICONbet, there are a number of important distinctions that make it unique in both the online gambling industry, and the blockchain gambling space.

First — and perhaps most importantly — is the fact that ICONbet never holds user funds. All players participate by interacting with the blockchain and playing directly from their ICON wallet. At no point is a user required to make a deposit into a wallet held by ICONbet, which means your funds can’t be frozen or confiscated for any reason. In an industry full of stories of frustrated players who couldn’t withdraw their funds for weeks or months — or had their funds frozen entirely — this is a critical distinction. This is not unique to online casinos either. While brick-and-mortar casinos use chips for several reasons, one may be the most important from their perspective — so they can refuse a payout or even seize chips from a player if they determine there is a valid reason to do so.

Meanwhile, the ICONbet platform’s source code for both the platform and each individual game is entirely public on the blockchain. This is certainly not the case for non-blockchain casinos, and usually not the case even for casinos built on the blockchain. This means that ICONbet players can be 100% confident that the odds are what the casino (via the source code) says they are, and that the games operate in a fair manner.

Similarly, this also means that all transactions and bet history can be viewed on the blockchain, adding in additional transparency. For instance, Dan Brehmer of iBriz.ai was able to conduct an extremely thorough statistical analysis of ICONbet based on the open nature of the smart contract and transaction history.

As an added bonus, the open source code nature of ICONbet also means that players don’t even need to visit the ICONbet website to gamble. Instead, they can simply build a bot that interacts with the smart contract, with the bot being written to perform bets in a manner that the user thinks provides the greatest strategic advantage. In fact, the game DAOLevels, which has already launched on ICONbet, specifically makes it easier for users to implement their own script to play the game. This type of direct interaction with the casino’s smart contract is unique to ICONbet.

There is also the fact that ICONbet serves as a platform for other developers to build games on top of, and receive a portion of the profits generated by their game. In other blockchain casinos, games are sometimes built on separate platforms and simply “leased” by the casino in a profit-sharing arrangement, or the code is bought and sold. While this may make minimal difference to the user on the surface, it does lead to less transparency and raises concerns about the integrity of the host casino, as they’re not fully in control of all of their games. ICONbet is in control of theirs, as all games are built and hosted directly on the platform.

Finally is the fact that those who play the casino can become part owners, via the TAP token. Not only does the TAP token entitle holders to a portion of the revenue from the casino, but it also serves as a governance token, giving holders a direct say in the future direction of the casino. While many other blockchain casinos provide the former, few — if any — provide the latter.

The end result of all these factors is a casino that is more transparent with a complete technical inability to take advantage of users — either by cheating them in the way games are run, or in the fact that it can withhold funds. Furthermore, by making users the owners, the incentives lean toward maximizing the user experience both now and moving forward.

All these combined make ICONbet unique among traditional online casinos. But this is also the case compared to other blockchain casinos as well. While casinos built on other blockchains will claim to offer the benefits of blockchain, what usually ends up happening is they are “blockchain based” in the sense that you can play with cryptocurrency instead of fiat; but that’s where the distinction ends. ICONbet promises to deliver blockchain gambling with all the benefits of blockchain technology, not just some.

This is important not just from an ethical standpoint, it’s also critically important from a marketing standpoint. To elaborate, lets dovetail briefly into examining casinos in Las Vegas.

Simply put, the experience of gambling is basically an interaction with a math formula, presented in a more pleasing manner — the sound of a ball rolling on a roulette wheel, the cheering spectators during craps games, or the jingles of slot machines — all exist to make the math formula more enticing and pleasurable to interact with. But each experience is basically the same — poker at one casino is essentially the same experience at a different casino.

That’s why casinos spend so much money on other things that aren’t gambling. High-quality restaurants. World class entertainment. High-end hotel rooms at relatively reasonable prices. Free drinks and meals at the buffet. The more people you can lure into your building, the more people will likely end up gambling there. Because the gambling experience itself is so uniform, casinos have to innovate in other areas to draw in players.

The factors I listed above provide a similar advantage for ICONbet. In an industry where the user experience is virtually the same across all online gambling platforms, being able to distinguish itself by offering clear advantages to potential users over other platforms may be the most effective marketing technique available.

In other words, if you can play poker on a platform that might freeze your funds, or one that allows you to play directly from your wallet, which would you prefer?

Tokenomics

In the prior section, I described how the TAP token provides users of ICONbet with a stake in ownership, both in terms of governance and in terms of profit share.

First, lets look at governance. Ownership of the TAP token entitles holders with the right to participate in decisions about the future of the platform, with their voting weight proportional to the total amount of TAP they hold and choose to vote with.

Thus far, there have been several successful votes from the TAP community. Most have involved whether or not to approve the addition of new games onto the platform (not surprisingly, all votes were essentially unanimously favorable). However, a vote has also been made to the structure of the casino as well, the ICONbet Improvement Proposal, which contained a number of adjustments and also passed successfully.

Now, lets look at how TAP is distributed. Here is the breakdown from the ICONbet white paper:

TAP tokens represent ownership of the ICONbet platform. There will be 625,000,000 total TAP minted, and the team will start with 125,000,000 TAP tokens. During the first 250 days of operation, 1 million TAP Tokens will be mined per day by users.

After 250 days, the daily mined amount will begin tapering down by 0.5% per day. For example, 995,000 TAP Tokens will be mined on day 251 (1,000,000 x 99.5%), 990,025 will be mined on day 252 (995,000 x 99.5%) and so on. The taper will stop at a daily mine of 25,000 TAP Tokens per day, eventually completely running out of TAP tokens after 3,224 days of mining.

In terms of how TAP is distributed on a daily basis, here is the formula (again, from the whitepaper):

Distribution to Individual Player​ = (Individual Player’s Betting Volume / Total Betting Volume) x TAP tokens available for mining today

Simply put: as time goes on, it will become harder and harder to earn TAP. Let’s say a user bets 10,000 ICX in a given day. Meanwhile, the total wager volume among all users that day is 500,000 ICX, and that day’s TAP distribution is set at 350,000.

The user would be entitled to earn 2% of all TAP distributed that day (10,000/500,000). 2% of 350,000 is 7,000.

Now, the next day, let’s assume the user wagers the same amount, and 500,000 are once again wagered by all players (the odds of this happening are essentially impossible, but let’s just pretend for the sake of this example). However, since TAP distribution decreases by 0.5%, the total amount of TAP distributed is 348,250. That same 2% now gets the player just 6,965.

Here is a graph I created to show how daily TAP distribution will decrease over time:

At the end of the blue line, the distribution then stagnates at 25,000 per day for several years, before ending entirely.

The tokenomics of this model have played out as one would expect as shown by the mining rate (as determined by the amount of ICX one must lose via wagers in order to receive one TAP token):

(Credit for this image goes to Heemadeep for his analysis of ICONbet data)

In other words, for the month of September, a player would have to lose 0.033 ICX gambling to earn one TAP token. This is almost twice as much as what it would have “cost” in January. Simply put, as time goes on, it’s going to be harder and harder to earn TAP by playing in the casino, just as over time it’s harder and harder to mine Bitcoin.

Meanwhile, to reflect the increased mining “cost”, the price of TAP on the open market has increased as well. Here is the price chart from ICONSWAP, the only mechanism currently available to buy/sell TAP/ICX:

You can clearly see an uptrend visually. But to be more specific, the price of TAP (paired against ICX) in May of 2020 (when ICONSWAP launched) was .0153 TAP/ICX. The price as I write this in late October 2020 is .039 — a more than 2x increase.

So now we’ve covered the case for the supply side tokenomics, which is fairly straightforward: over time, the supply will decrease.

Now what about demand? What’s the case for valuing the TAP token? Governance rights are certainly worth something, although quantifying that is difficult. However, it’s much easier to quantify the immediate financial benefit of owning TAP.

First, let’s look at how dividends (aka profits) are distributed to TAP holders, as described in the ICONbet white paper:

At the end of each day, any excess ICX held in the ICONbet treasury will be distributed to TAP holders and the ICONbet founding team. Given the Wager War allocation from the section above, the formulae for calculating an individual TAP holder’s daily earnings are below:

My Rewards ​= (0.8 — Wager War) x Treasury Excess x My TAP / mined TAP

The short version of this is: the more profit (excess) the casino makes that day in ICX, the more TAP each holder will receive.

Here is the daily payout, since January, if someone were to own 1 million TAP tokens:

(Credit for this image goes to Heemadeep for his analysis of ICONbet data)

(As of October 28th, the average payout for October 2020 has been 40.3 ICX per day.)

It’s important to keep in mind that ICX price has fluctuated fairly significantly during this period, which partly, although not entirely, explains the discrepancies from month-to-month.

Over time, as more TAP is distributed, each individual’s share of the day’s excess will decrease, all else being equal (due to the fact there is more TAP that is entitled to a share of the dividends). Here is a chart showing how payouts over time will work:

(Credit for this image goes to Heemadeep for his analysis of ICONbet data)

So, if the average daily excess were to remain stagnant, each TAP holder would receive slightly fewer dividends each day. However, if the excess grows, so will the dividends.

So the financial incentive exists to account for demand. Holding the token entitles you to money basically every day. As it stands, we know supply will decrease over time. But will demand (in the form of increased excess/profits leading to increased dividends) increase over time?

Roadmap

When ICONbet launched in July 2019, it had only one game: DAOlette, which was ICONbet’s version of roulette.

Over time, it has added more games including dice, blackjack, lottery, levels, and baccarat.

Some of these games are primarily played just to mine more TAP. For instance, with dice, roulette, and levels, a player can simply turn on autobet to run for 24 hours at a high win percentage (~95%), and come back to see how many TAP they earned for the day.

The other games, such as blackjack, lottery, and baccarat are more traditional gambling games, where players play for entertainment and the chance to win money. While they of course also earn TAP for the players, they don’t earn it at a very high rate.

Accordingly, it’s clear that a lot of the volume of ICONbet is currently driven by those who want to earn TAP via mining. This was planned, as shown by TAPs distribution schedule (the high amount of TAP available in the early days encourages early momentum for the platform).

But, clearly, as TAP is harder to mine in the future (and eventually no longer distributed), it will become clear that ICONbet can no longer be a casino used to mine TAP, but operate as a more traditional casino.

Some people have initially expressed concern that once TAP is gone, so will demand to play ICONbet. However, it’s important to note that 99.99% of casinos in the world operate without TAP — the opportunity to play serves as enough incentive for users.

That’s why, over time, ICONbet will transition into operating more like a traditional casino. It’s why the following games (and their estimated release date) are currently in development:

Q4 2020

  • DAOwar
  • DAOcolors
  • DAOplinko

Q1 2021

  • DAOholdem
  • DAOslots

Q2 2021

  • DAOsports
  • DAOpools

Q3 2021

  • DAO3card
  • DAOraces

While each game individually will draw in players on their own, the most important of these two in terms of the long-term success of ICONbet are DAOholdem (poker) and DAOsports (sportsbook).

When it comes to the sportsbook, ICONbet will utilize decentralized oracles (for instance, ChainLINK or Band protocols) as a determinate for the outcomes of games. This means players can be confident that the blockchain smart contract will accurately determine the winners and losers of sporting events.

More importantly, as alluded to before, ICONbet doesn’t hold the users funds in a wallet. That means they can request a payout from the smart contract as soon as the outcome of a game is official, as signaled by the oracle. Having complete confidence that you will instantly receive a direct payout for a successful bet gives ICONbet a major leg up on other traditional (either online or otherwise) sportsbooks that hold user funds.

Poker, meanwhile, creates benefit due to the fact that the casino is guaranteed a profit for each hand, based on the fact that a percentage of each pot is taken as a fee, which is currently planned for 5% of each pot for each hand.

Of course, some tables will have higher pots than others, based on the minimum buy-in and the size of the big/small blinds.

Below is a hypothetical table estimating how much daily excess that poker might be able to generate. The number on the left is the average ICX rake (fee) per hand. The number on top is the total number of active tables (each table can hold up to 6 players). These numbers assume 20 hands played per hour with that rake per hand remaining constant, over the course of 24-hours.

For instance, if tables are generating an average of 3 ICX per hand in fees, and there are 10 tables operating (meaning 60 active players) for the entire 24 hours, ICONbet can expect an excess of 14,400 ICX per day, just from poker alone. If ICONbet can increase the average bankroll of each player (by bringing in higher buy-in players), and/or increase the total number of users, the excess will increase accordingly.

For context, here is a list of the Top 10 online poker websites, ranked by the number of users online as I write this:

Under Cash games (games not played as part of tournaments), PokerStars currently has a bit under 10,000 users online at this moment. With 6 people per table, that would be approximately 1,600 active tables. iPoker, which ranks 10th, has about 200 tables, based on their current users. While these websites are the upper echelon of websites, they show what is possible.

Taken together, the above numbers are obviously encouraging if you are currently holding TAP.

So how do we know those players will actually show up to play poker, bet on sports, and place bets on all the other games coming down the pipeline?

Endgame

Thus far, the extent of ICONbet’s marketing has been organic promotion on ICON’s social media channels and word of mouth, with a handful of promotional events sprinkled in throughout the months. In short, it’s been fairly minimal.

Despite that fact, ICONbet has thus far been a relative success for what is essentially a startup. Here are the overall numbers since January of this year:

(Credit for this image goes to Heemadeep for his analysis of ICONbet data)

Nearly a quarter billion of ICX has been wagered through the casino, leading to around 3.7 million ICX in revenue. In addition, according to DApp.com, ICONbet typically hovers around 100 active users at any given time .And again, that’s with a marketing budget of virtually zero.

But the ICONbet team has indicated that true marketing efforts will indeed increase starting next year, once there are enough games to ensure that when people visit ICONbet, they’ll stay at ICONbet.

This includes utilizing traditional marketing channels such as websites, podcasts, or other media dedicated to gambling news, analysis, and strategy.

It also includes more modern marketing techniques such as a Twitch channel or YouTube streaming based around poker on ICONbet.

In addition, the ICONbet team also plans to implement a new token into the ecosystem called “COMP,” which serves as a VIP reward token. Here is how the COMP token is described in the ICONbet proposal:

Many people have asked, what happens when all TAP is mined? Where will the volume and excess come from? Our answer has always been to attract new players and gamblers by offering more games, more promotions and rewarding gamblers for playing.

As a DAO, we have to be a little more creative to reward our players. Centralized casinos are able to easily offer ‘First time deposit bonus’ or a ‘Reload Bonus’. The COMP token would be our reward to our players

This would be ICONbet’s ‘VIP’ reward system giving back to the players who lose on any given day filling the excess and making our TAP more valuable.

While COMP may not be as significant as the other benefits of ICONbet, it does provide a nice allure for prospective players in the future.

However, possibly the most significant step toward an increased user base is the eventual integration of Bridge. If you’re unaware of what Bridge is or how it works, here is a description from the announcement of the project:

The mission of Bridge is simple: remove all friction when using blockchain apps. When consumers are using applications built on ICON, Bridge will hide everything and anything associated with blockchain technology. To the end user, all they will know is that they created an account using an email address and deposited some money into their account.

Unbeknownst to the user, Bridge will create a Magic wallet linked to their email address. When a user deposits fiat currency, our banking partner will take custody of their currency and Bridge will then mint fiat-backed stablecoins for the user. To the end user, all they have done is log-in with their email and deposit money into their Bridge account.

Equipped with fiat-backed stablecoins and an ICON wallet, users are now free to interact with any application using ICON’s technology without ever having to understand what a blockchain is. Bridge brings together several different existing blockchain services (fiat-backed stablecoins, fiat on-ramp, fiat off-ramp, and private key management) into one seamless user experience.

In other words, the most significant impediment to increased usage for ICONbet, ICON, and crypto as a whole — onboarding onto crypto from fiat — will be removed, allowing end users to participate on ICONbet without having to purchase ICX directly.

While the other steps the ICONbet team has taken — and will take — are likely enough on their own to build a significant userbase for ICONbet, adding in Bridge capabilities is the icing on the cake.

Conclusion

As of today, ICONbet is the most successful DApp built on ICON thus far, as measured by overall community interest and transaction volume. However, based on the factors above, it will hopefully become among the most successful DApps within the entire blockchain space.

Based on it’s unique decentralized and open-source structure, its tokenomic incentives, and it’s future roadmap, this goal isn’t as far fetched as it may seem.

In addition, as an added bonus, as ICON gains in popularity — either through gradual adoption over time, or through another cryptocurrency bull run, it will inevitably draw more people into the ecosystem, many of whom will inevitably stumble upon ICONbet and see the same promise in the DApp that many ICONists have already discovered.

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ICONOGRAPHER

ICONOGRAPHER

ICON contributor and analyst, ready to hyperconnect the world. Twitter: @iconographerICX