To date, on-chain betting has yet to gain any traction because protocols have yet to adequately incentivize liquidity providers (LPs).
Today marks the beginning of a new era for on-chain betting. Paradox is a peer-to-peer betting protocol built on Ethereum designed to scale betting liquidity on the blockchain
LPs must be able to profitably and passively provide liquidity in prediction markets. We offer a parimutuel pricing model which (1) lowers entry costs to provide liquidity and (2) protects liquidity providers from the adverse selection bias which runs rampant in prediction markets.
The betting platforms of tomorrow will not compete against their users but simply connect them. Paradox is the future of betting.
Traditional betting markets have been unable to scale liquidity because there is a subset of users who bet only when news is not yet factored into the odds. If you know LeBron isn't playing before anyone else, you can bet against the Lakers and lock in a highly profitable position when that news reaches the market.
This creates a negative feedback loop where marketmakers/LPs are unable to offer large limits because they also have to limit losses from these -EV news-related bets. This problem is magnified on-chain where users are unable to be banned and limited.
The odds received for betting into a parimutuel protocol depend exclusively on the ratio of money bet into each pool at the start of the event. It does not matter when a user makes a bet; all users who bet on team A will get the same odds. The arbitrage opportunity presented by any mispricing in the pool relative to traditional betting venues is expected to incentivize the normalization of the pool odds to the current market odds, up until the pool locks.
Paradox revolutionizes parimutuel betting by distributing all of the 1% commission fees to earlier bettors. Paradox protocol extracts no rent. The commission is proportionally distributed after each bet based on the amount you bet. If you have bet 500 units and the total pool has a total of 1500 units in bets after your bet, you would receive 33.33% of the commission paid on the subsequent bet.
Everyone who makes a bet is providing liquidity because the pool grows with each bet. Traditionally, LPs have to be matched to have a bet.
Nobody is able to take advantage of news changes. Odds are only assigned when the game starts and betting is closed. This means even if you bet against the Lakers before LeBron is ruled out, you should get odds that are based on LeBron being out (assuming an efficient market).
There are no limits to the amount you can bet and the pool will always be incentivized to rebalance near Vegas odds. If you bet 1,000,000 units on heads when there is 10 units on tails, people are incentivized to bet tails. With adequate time, market participants and awareness you should still expect to get fair odds.
The earlier you bet, the more edge you have because you are earning commission for every single bet that comes after you. This is the first betting protocol that incentivizes you to bet as early as possible.
When you make a bet, you are depositing stablecoins to mint Team Tokens. 1 Team Token represents a 1 unit bet. If you bet 101 units you will receive 100 Team Tokens, and 1 unit will go to the commission pool.
After the pool settles, to collect your winnings you can redeem the winning Team Token back for stablecoins. For example, if 100 units were bet on Team A and 200 units were bet on Team B, one Team A Token could be redeemed from the protocol for 3 units (if Team A won), and one Team B Token could be redeemed for 1.5 units (if Team B won). Losing Team Tokens are worth 0 units.
Root is an Ethereum-native, permissionless ERC-20 wrapper that creates fungibility and composability for Beanstalk Silo Deposits.
Bean holders can deposit Beans in the Silo to earn yield in the form of a portion of new Bean mints. Beanstalk is the first stablecoin issuer that distributes the seigniorage of its stablecoin transparently and autonomously to holders of the stablecoin (Bean) itself.
Root provides a fungible and composable wrapper for Silo Deposits to be easily used in various on-chain markets.
In essence, this allows a bet on Paradox made in Roots to earn passive yield until settlement, removing the opportunity cost of making bets in markets that have a long duration (e.g., the World Cup). From an economics perspective, Roots are expected to significantly reduce the opportunity cost of providing liquidity on markets like Paradox.
Paradox will continue to evolve and become more and more decentralized. Our current version relies on admins from around the world to enter scores and create games. Final scores are sent to the contract when 3 of 5 signers on a Gnosis multisig input the same bet result. See Docs.
Our goal for the first version of the contract is to determine the merit of this new type of betting. We prioritized usability first and foremost and believe we have developed a protocol that will usher in a new era of betting.
You can read the full documentation:
https://paradox-3.gitbook.io/paradox/
You can follow us here:
https://twitter.com/BetParadox
You can check out the contracts here:
https://github.com/Paradox-Protocol/ParadoxCore/tree/main
You can read the halborn audit reports.
You can visit the official Paradox UI here: