Decentralized finance (DeFi) provides new opportunities for innovation and transformation in many traditional industries. In particular, this applies to the field of iGaming and betting platforms. In this article, we’ll focus on the most important DeFi elements used by betting platforms and examine how they change the rules of the game and create new opportunities for users.
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Key Elements of DeFi on Betting Platforms
DeFi brings revolutionary changes to the field of sports betting, giving bettors complete transparency and control over liquidity and greatly expanding their options within the betting industry.
“With the Web3 gateway and DeFi concepts, there are numerous benefits to the betting platform market. They make it easier for users in problematic geolocations to enter this market. Cryptocurrencies enable the interaction of innovative financial instruments with the quite old sports betting market,” says Ivan Muller, CMO of Dexsport.
Oracles and Data Provision
Decentralized betting platforms use oracle or validator technology to provide reliable data about sports events, such as game results and player statistics. This guarantees the honesty and transparency of sports betting results.
Betting Protocols and Smart Contracts
Sports betting on Web3 platforms is fully automated through blockchain-based smart contracts. This ensures that betting conditions are fulfilled without intermediaries, reducing the risks of fraud and delayed payouts.
Moreover, smart contracts are open-source so that everyone can explore the protocols by which obligations are executed. Bookmaker representatives, in turn, order security audits from trustworthy companies to further emphasize the reliability and openness of their algorithms.
Decentralized Exchanges (DEX) and Tokens
DEXs are among the technologies that are unique to the Web3 sphere. You can find literally any tokens on them, and they’re also a specific element of decentralized finance. Betting platforms, operating based on blockchain networks, can issue their own tokens of various types: native, utility, and governance tokens, among others.
Already completed sports betting stakes can also be presented as tokens. Additionally, many sports clubs issue their own fan tokens, whose total capitalization exceeds $397 million, according to CoinMarketCap. And all of these assets can be traded on DEXs with the appropriate liquidity pools there, generating additional revenue opportunities.
Liquidity Pools and Liquidity Management
A liquidity pool in DeFi is a smart contract that combines user assets to provide liquidity to various decentralized protocols. They’re a currency pair and enable the exchange of assets between each other.
When it comes to Web3 sports betting platforms, liquidity pools are used in the same way — bettors can provide liquidity to pools linked to native tokens of a particular platform and in return receive a percentage of the invested funds as passive income.
Moreover, liquidity pools enable the assessment of the scale of demand for a particular protocol, its financial stability, and management features, i.e., to get a general idea about the reliability of a specific project.
Major Decentralized Platforms for Betting on Various Events
Decentralized platforms are actively used for betting, but not only for sports betting. For example, here are some of the largest projects of this type:
- Augur. One of the first and most well-known decentralized betting platforms that uses the Ethereum blockchain network. Users can create their own markets and place bets on different events, including sports, politics, economics, etc.
- Gnosis. An Ethereum-based blockchain platform that includes decentralized apps for market predictions and betting on events. One such application is Omen, a decentralized protocol that offers bets on a variety of events, including political elections, cryptocurrency releases, economic indicators, and more.
- YieldWars. A DeFi platform that combines gaming mechanics with betting on various events and financial instruments. The project offers bets on crypto pairs, sports events, and political and economic news. Users can also earn money by participating in liquidity pools and receive rewards in platform tokens.
- Dexsport. The first fully decentralized sports and cybersports betting platform that accepts cryptocurrencies. It’s a multichain project that supports smart contracts on BNB Chain, Polygon, OKC, and Avalanche networks. It has its own token and offers bettors participation in liquidity pools.
Blockchain platforms of this type offer a variety of betting opportunities and financial tools that can attract users with different interests and preferences.
Future Prospects for DeFi Integration in Sports Betting
Decentralized finance is already making the field of sports betting more accessible and transparent, offering more options for personalizing bets, creating different scenarios and even their own prediction markets. Users will have more and more tools to invest in the success of their favorite teams and players. Plus, smart contracts reduce transaction costs and set the stage for the industry to continue scaling.
“DeFi’s continued integration into the online betting marketplace will only increase, opening up tremendous growth prospects for the market and allowing users to interact with new-age financial tools. Blockchain technology will continue to change Web2 betting traditions and stereotypes,” summarizes Ivan Muller, CMO of Dexsport.
All in all, the use of DeFi in the sports betting industry will lead to more transparent, secure, and accessible platforms that offer a higher level of control and options for users.