What is GambleFi and How Did It Influence Online Wagering?

GambleFi (Gamble Finance) is the application of blockchain principles in the gambling and sports betting industry. It is a direct offshoot of the broader DeFi (Decentralized Finance) movement, which uses distributed ledgers to replace or enhance traditional financial services. GambleFi addresses concerns about trust and fairness in the gambling industry. By leveraging the transparency and immutability of blockchain networks, GambleFi provides tamper-proof and fair wagering platforms for everyone.

GambleFi spawned a new breed of betting platforms and gaming solutions that let people place wagers or play casino-style games using tokens instead of relying on traditional gambling intermediaries. These new platforms feature provably fair games built with blockchain technology that are far more transparent and fair than conventional online casino games that rely on RNG (random number generator). Provably fair games became popular as users can check the outcome of a betting round and see that the results were not tampered with.

Beyond simple gambling, GambleFi projects often issue tokens with revenue-sharing characteristics. This means token holders have a minority share in the gambling platform and can earn a slice of the profit from the “house”. These GambleFi coins can also be traded or sold on crypto exchanges, further enhancing the token holder’s earning potential.

History of GambleFi

Gambling is one of cryptocurrency’s first use cases. In the early 2010s, several online casinos accepted Bitcoin deposits and withdrawals for the first time.

DeFi rose to prominence around 2019, with projects like MakerDAO, Compound, and Uniswap introducing ideas like interest-earning tokens and automated market-making. Inspired by these successes, developers began exploring how to apply similar concepts to online gambling.

So what is GambleFi in its early form? The first GambleFi projects in the 2020s experimented with unique tokens that allowed users to stake, vote on platform governance, and earn from revenue sharing. These projects aimed beyond simple crypto-based betting and incorporate decentralized finance principles.

By 2023, GambleFi projects had started to mature and were offering a broad spectrum of casino games, betting pools, and staking functions. Users could stake native GambleFi tokens or stablecoins in liquidity pools to serve as a bankroll for various games, earning a portion of the house revenue in return.

GambleFi Limitations

The gambling industry has its fair share of problems that blockchain can’t solve. Additionally, blockchain integration also comes with its own set of risks:

Customer support: Casinos and sports betting sites often have subpar customer support, which turns off players. Excellent customer service is one key to keeping players engaged and loyal, but that can’t be solved by decentralization.

User experience: While GambleFi projects have superior transparency and global accessibility to traditional online casinos, the barrier of entry is also higher. The user must have some crypto know-how to get started, which is terrible for user experience. For GambleFi to appeal to the general gambling audience, it needs to match or surpass the user experience offered by traditional platforms.

Volatility: The price of Bitcoin, Ethereum, and major cryptocurrencies is volatile. GambleFi tokens are even more volatile and pose even greater financial risks for token holders.

Regulatory uncertainty: Blockchain and gambling regulations are still evolving. What’s legal now may not be in a few years. Since GambleFi is both blockchain and gambling in nature, projects may need crypto and casino licenses to operate legally in certain regions.

How GambleFi Works

GambleFi relies on smart contracts to automate the betting process. A smart contract is a self-executing code that runs on a blockchain. Once deployed, it can hold funds, accept bets, generate or access random outcomes, and distribute winnings without the need for centralized administrators. These contracts are in a public ledger so that anyone can review them. That transparency builds trust, as players can verify how winnings are calculated and distributed.

A typical GambleFi game might involve a user connecting their crypto wallet to a decentralized application (dApp). They then select a game, place a wager, and confirm the transaction on the blockchain. The smart contract determines the outcome based on an RNG mechanism. If the user wins, the contract returns their winnings to their wallet. If they lose, the contract retains those tokens. The contract also manages additional fees or house edges, ensuring consistent rules for everyone.

Some GambleFi platforms use liquidity pools where participants stake tokens to act as a shared bankroll for the platform. These stakeholders may receive a portion of the house’s revenue, typically distributed in the platform’s native GambleFi coin or stablecoins. However, it also means they could face losses if the house experiences negative rounds over a period of time.

Top GambleFi Projects

Although numerous GambleFi projects exist today, these platforms have gained the most traction and have millions of daily active users.

DoubleUp

DoubleUp.fun is a community-first decentralized gambling ecosystem on the Sui blockchain. Beyond standard casino games, players can take part in prediction markets, lotteries, raffles, and weekly contests with prizes in $SUI. In addition, users can stake cryptocurrencies in Unihouse to earn profits based on the platform’s performance.

One of DoubleUp's unique features is that players can connect their crypto wallets and engage in betting activities without the platform holding any unused funds. In addition, the game logic takes place on the Sui blockchain (with the exception of slot games).

Rollbit

Rollbit is a platform that offers casino games, sports betting, and even crypto trading. To date, the platform has processed around $10 million in deposits from its one million registered users. Rolbit uses cryptocurrency for deposits, but the game logic itself takes place off-chain.

The platform’s gambling token, Rollbit Coin ($RLB), has a market cap of around $153 million at the time of writing. $RLB holders can enter a lottery that distributes a percentage of the casino’s daily profits. In addition to its payment function for games, $RLB provides loyalty perks such as reduced trading fees, multipliers in games, and rakeback.

Shuffle

Shuffle is a GambleFi platform that offers lotteries and classic casino games. The platform currently has more than 62,000 unique players, and total deposits have reached $4.3 million. Deposits and withdrawals are in cryptocurrency, though the game logic remains off-chain.

The Shuffle’s native gambling token, $SHFL, has a market cap of around $47 million at the time of writing. $SHFL functions as the primary wagering asset and incorporates a buyback-and-burn mechanism. Wagering in $SHFL also enhances future airdrops through a multiplier system. In addition, users can stake their SHFL tokens for a chance to win USDC each week.

BetFury

BetFury is a crypto casino platform known for its wide range of betting and gaming options. Players can deposit cryptocurrencies to wager on various original in-house titles and games developed by the leading online casino game developers.

The BetFury ecosystem uses the “BetFury token” ($BFG), to reward loyal users, distribute dividends, and stake. Players can even mine or earn $BFG by placing bets on supported games. At the time of writing, the token has a market cap of $22 million.

TG Casino

TG Casino is the first platform to bring casino games to Telegram, and it’s inspired plenty of copycats since. The site offers a rakeback welcome bonus and regular promotions like random airdrops and seasonal deals, which keep players coming back for more.

$TGC is TG Casino’s native gambling token. It is used for betting while offering financial perks to players like cashback on losses and staking rewards. The casino also uses part of its profits to buy back $TGC on the open market. Then, 40% of those bought tokens are burned to reduce the total supply, and the other 60% goes to a staking pool that can generate passive income for participants.