InfinitySwap and VaultBet have announced our intention to collaborate on a variety of different levels in order to further the development of the Internet Computer ecosystem, including the integration of our Bitfinity Wallet into their platform
VaultBet is a decentralized betting exchange. An alternative to bookmakers and centralized betting exchanges that allows users to buy, sell and trade bets on sporting events fully on chain.
By using smart contract technology, VaultBet enables a truly peer-to-peer, trustless, and secure marketplace for bets. On VaultBet, users are in control and the market determines the odds of a game, not the bookies, making sports betting fairer, safer, and more fun!
Sports betting is a fast-growing industry that already processes more than $230 billion in transaction volume each year. However, most of that goes through large bookmakers, which poses several issues.
· Betting with the bookie, you always lose.
It is not in the interest of a bookmaker to offer fair odds and instead, they bake a profit margin into the odds they offer punters, called the overround, which can go as high as 30% in some markets. This skews the odds in their favor such that bookmakers will eventually win, so long as you continue to bet with them.
As well as this skew, central bookies limit the position and odds you can take by only offering you the opportunity to accept their listed bets. They do not let you negotiate odds in any way and they rely on increased marketing, rather than offering more competitive odds, to attract business from competitors.
Finally, a bookmaker’s profit is directly related to the outcome of the event. This incentivizes them to further manipulate their own odds by banning punters with a winning track record or limiting the size of their bets.
As a decentralized betting exchange, VaultBet solves these issues.
· What is a betting exchange?
A betting exchange is a marketplace, where punters can bet amongst themselves. They work much like a stock market, with users able to buy and sell bets at odds they have decided via a ‘peer-to-peer’ auction. Effectively, users are both the punter and the bookie, taking both sides of the bet.
This makes the odd possibilities endless and allows users to trade markets based on their assessment of an event’s true likelihood. Users offer each other odds until a trade is made, thereby setting a market price for that moment in time. As with any market, the price (i.e. the odds) will adjust over time as new information arises or sentiment changes.
The exchange itself does not care about the event outcome. Odds are determined by the laws of supply and demand as users compete to buy and sell bets at attractive odds. This brings the odds of an event much closer to a true representation of an event’s likelihood than those offered by traditional bookmakers, as the overround is competed away.
An exchange is much more technical and fun than betting through a bookmaker. Users can trade as they would on a stock market as they search for ‘mispriced’ odds and react to news and events, both before and during a game. The value of an agreed and struck bet changes as the odds for a given position fluctuates from market forces. With betting exchanges, you can use your sports expertise to beat the market and profit long-term. There is no bookmaker or user with their thumb on the scale.
However, for all their advantages, centralized betting exchanges have a key flaw. Their whole system relies on users trading bets peer-to-peer and cutting out bookmakers as a central authority. Yet, a centralized betting exchange does not allow true peer-to-peer trading as they act as a trusted intermediary to hold funds and administer bets, opening users up to counterparty risk. Centralized betting exchanges themselves become a centralized authority and a potential source of failure.
· Why is VaultBet different?
VaultBet is a decentralized betting exchange run completely on the Internet Computer blockchain. This sets them apart from centralized exchanges and allows them to truly fulfill the potential of a betting exchange.
Their exchange, as well as the bets traded, from creation all the way through to payoff, are all managed by smart contracts. This allows for true peer-to-peer trading without any counterparty risk. Smart contracts ensure that VaultBet does not have access to traded funds and cannot tamper with users’ bets.
VaultBet uses cryptocurrency for payments, ensuring a seamless market that runs 24/7 and offers liquidity and the very best odds to a large global user base.
· How does VaultBet work?
In order to facilitate trading, VaultBet splits bets into ‘Bet Contracts’. Each bet contract is worth a total of 1 ICP pay-out to the winner and contains locked funds from both the Buyer and the Seller of the bet. The amount each party contributes to the betting contract creates a risk-to-reward ratio and thereby determines the odds of that position.
Bet contract and implied odds
In the above example, the buyer of the bet has contributed 0.4 ICP to the betting contract and the seller of the bet has contributed the remaining 0.6 ICP. As the buyer stands to win 1 ICP, for a layout of 0.4 ICP, this implicitly determines their odds to be 3/2.
Users can then increase the absolute value of their bets by increasing the number of bet contracts they enter into.
Bets are struck and market odds are determined through an order book system that manages the bidding process. Our order book is fully automated and managed by smart contracts.
Users send orders to the order book at the odds at which they are happy to buy or sell bets, along with how much ICP they are willing to bet. This way, the market determines fair odds through supply and demand.
In order to eliminate counterparty risk, the funds required for a bet are sent to and held by the order book in a ledger canister (a type of escrow smart contract built by the Internet Computer blockchain) whilst they wait for a potential match. This allows the process to be fully autonomous and ensures no counterparty risk ensues.
Once odds are agreed by two opposing parties, a bet is struck. This bet contract holds the funds of both the buy and sell side punter until it determines the result of the wager and pays out the winnings accordingly.
In order to determine the results of an agreed bet, bet contracts monitor data from a reliable sports data API feed through https outcalls running on chain, a process native and unique to the Internet Computer that ensures security when using off-chain data. As such, bet results are determined without intervention from VaultBet. Once the winner of the betting contract is determined, the smart contract pays out the winnings to the winner’s wallet.
· Vision for 2023
VaultBet is looking to grow rapidly in 2023, by enabling Bitcoin transactions through Internet Computer integration, providing a secondary market system and increasingly adding more sports betting markets.