Kimkibu is run by making sports bras. Its main trading platform is Betfair, one of the largest online betting exchanges, where bets are placed using British pounds, US dollars and other legal tenders. It is based in South Korea. Last year, he began trading on cryptocurrency sites such as Polymarket, Degens and SXBit, largely because commissions deducted from profits were cheaper than Betfair.
Kimkibu said, “If I get something similar with cheaper commissions, I’ll move there.
However, only 10% of Istanbul residents’ trades are placed on these alternative betting sites. Kimkibu said, “I wish I could completely switch from Betfair to these sites, but unfortunately they don’t have enough traffic.
If you lurk in more than six Discord or Telegram channels dedicated to sports betting, you can find thousands of people who share the same passion as Kimkibu.
These gamblers are looking forward to launching the best blockchain-powered sports betting service with audited smart contracts, user-friendly policies, low commissions and fees, and high volume. They are frustrated by the high cost and lack of innovation of existing exchanges.
Anyone who offers such a service will be rewarded big time: Grandview Research predicts the global sports betting market will grow from $76.75 billion last year to $182.12 billion by 2030, as new developers enter the fray, Kimkibu and other clients expect. Market and formal betting companies are experimenting with decentralized technologies. Regulators are keeping a close eye on them.
A traditional saying in casinos, “The house always wins,” describes how the odds are always stacked against the player. Numerous problems have plagued online betting, including account limits, payment rejection, a general sense of distrust and injustice, and deposits and withdrawals.
In traditional sports betting, winners are often not paid lavishly. Betfair charges players who win more than £250,000 a 20% commission, which is treated as premium tax. In addition, certain centralized sports betting sites have the right to set the maximum rate. If you are an overly successful gambler, your bets and potential prizes may be limited.
Some believe that blockchain technology will address all of those issues through decentralized, transparent platforms that allow users to manage their money independently of outside interference. A smart contract or self-executing software program controls each transaction. Users do not need to entrust their money to decentralized prediction markets.
Although it may seem bad, sports betting can be beneficial for those who prefer not to participate. Sports markets give traders the opportunity to put their money where their mouth is, in the prediction market for events such as elections or the weather. If these markets develop to a point where they are significant and liquid, the potential profits may motivate them to share their accurate predictions on the outcome of events. In turn, this provides the general public with a more accurate and credible representation of “expert opinion” than that of pundits or sportscasters.
A few blockchain add-ons, especially decentralized finance (DeFi) activities such as product farming and liquidity support, can help generate sufficient volume and liquidity to produce high-quality data.
Thousands of transactions each day involve sports betting. Decentralized sports betting exchanges have been hit by high gas costs on-chain.
Peer-to-peer betting market SX Bet, originally known as SportsX, was launched in March 2018 and is built on Ethereum, the second largest blockchain. SX will have to stop adding new betting markets during the “DeFi winter” of 2020 due to the gas price increase on Ethereum. Then it changed to Polygon, the Ethereum-complementary network, where the fees were reduced. As Polygon fees begin to increase, the SX and Polygon teams have partnered to create a blockchain specifically for sports exchanges in May 2021 to further reduce transaction costs.
All of these initiatives are still looking for a place to call home. Different blockchains have different features that may make them more attractive to different markets. “It’s just going to be an experiment,” says Clay Grabard, founder of media and data startup Baserate.io and a longtime follower of prediction markets. “As we develop alternative methods of producing energy or communication.”
Some decentralized sports betting protocols, such as Divvy, Aver, and BetDEX, are based on the Solana blockchain, known for its low transaction costs, speed, and scalability. Carlos Liang, the creator of the decentralized betting protocol Divi, said that gamblers would never return if there was any delay.
However, Solana has experienced many disruptions over the past 18 months.
The unspoken problem
The obvious challenge for all prediction markets, including sports betting exchanges, is gaining regulatory approval. Some, like Gnosis, gave it their best shot but failed in the short term, so they changed course and now invest in these projects.
“We tried to apply for a license to run prediction markets in Gibraltar. And it took a while before we gave up,” said Stefan George, founder of Gnosis.
The Commodity Futures Trading Commission (CFCC) fined decentralized forecasting platform Polymarket $1.4 million and ordered it to stop trading with US citizens earlier this year. In addition to sports, Polymarket also offers bets on politics, coronavirus, cryptocurrency and other topics. After only three weeks, the enforcement action continues to support traders in other regions of the world and has created new data markets.
A few months later, Polymarket hired former CFTC chairman J. “Giancarlo is a really valuable addition to the team,” said Harry Jones of Polymarket. “To return to the US as a CFTC-regulated offering” is Polymarket’s goal.
Decentralized sports exchanges may not accept US funds for the time being. Kalshi, a centralized prediction market platform, has been approved by the CFTC to list event contracts. (The CFTC has granted an exclusive license to PredictIt, a popular betting market website.) Calci’s picks, however, do not include any sports markets. Not surprisingly, with the CFTC expected to view it as illegal gambling, cryptocurrency derivatives platform ErisX has scrapped a proposal to market futures contracts linked to the results of National Football League games.
Former CFTC Commissioner Brian Quintenz said that if the CFTC improves its stance, such markets could become a legitimate risk-control tool for corporations involved in sports, just as wheat futures protect farmers from predictable price volatility.
Quintenz, now a member of the Kalshi board but speaking in his personal capacity, said, “If you own a restaurant whose business is changing like the success of a sports team. [and] There is now a contract to prevent certain accidents, why is that any less legal?”
Going full steam ahead
Some of the older sports betting companies seem to be doubling down on their cryptocurrency ambitions while pursuing up and coming developers of decentralized sports betting projects.
Sports betting firm DraftKings has joined the Polygon Network as an authenticator following a $44 million sale on its marketplace. The ability to accept cryptocurrency payments from customers is a “win/win” proposition in DraftKings’ open development roadmap. DraftKings has revealed that it wants to accept cryptocurrency payments from customers. Stake.com is a step up from DraftKings and then some because it only works with cryptocurrency. Stake.com is a Curacao licensed online casino.
Compared to the blockchain-based sports betting firms that are emerging, the easy adoption of cryptocurrencies is insignificant. However, small efforts by centralized businesses can attract more retail users to Web3 and cryptocurrencies, increasing the size of the pie.
BetDEX Labs Inc. Varun Sudhakar, CEO and co-founder, believes that any application created in the ecosystem is useful for targeting the widest possible user base and bringing it in gradually.
The game is on!
According to George at Gnosis, if the company wants to establish a decentralized sports betting network, today is at least a very good time. However, there are still many issues that need attention. The lack of volume is very obvious.
In July, SX Bet was about a week away from reaching $200 million in total since its launch. More than half of this amount is in the last six months alone. However, according to Kimkibu, Betfair can handle that much activity in a month.
There are also solutions in the works. Some initiatives plan to use Diffie technology to increase volume and attract liquidity. The novel liquidity pool design, in which Gnosis is a stakeholder, allows any liquidity provider to contribute to the pool and gain exposure to any betting markets on the protocol. The pool funds are used to provide initial liquidity for thousands of betting markets.
Gnosis has finally learned the lesson that whoever can draw in the next wave of users will win this race, even if it returns to being a background fan in this region. A wonderful place to start. A convenient service for many participants, including Kimkibu, is long overdue.
Kimkibu said, “With all the new platforms coming in next year, I expect to bring at least 50% of my business to these projects.
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