Is DeFi Gambling?
Education about DeFi and the cryptocurrency sector, in general, is still low among the masses. Developers focus on coding and put almost zero effort into teaching ordinary investors about their products.
DeFi’s primary goal is to bring financial services to everyone without restrictions. Banking is a core part of it, as it even seeks to replace traditional banking. Users own DeFi accounts that serve all banking functions like conventional bank accounts. The difference is that DeFi accounts can be opened in minutes and anonymously. They are also non-regulated and give the user up to 100% control of funds. DeFi users can save, invest, and take loans just like traditional banking. The difference; DeFi is decentralized, fast, and more efficient.
Blockchain-built applications (dApps) such as Compound and DAO connect lenders and borrowers peer-to-peer. This means that anyone can lend and earn interest or borrow. The products available are way superior to the standard saving accounts when it comes to saving. DeFi users earn high interest in their saving accounts since no third parties and monopolies exploit them. Gambling utilizes DeFi just like casinos have bank accounts. Therefore gambling is the tip of the horn in DeFi. Of course, there are numerous unique DeFi-built gaming and gambling products, but they still make a drop in the ocean of the entire decentralized finance industry.
How DeFi Matters to Crypto Gamblers
Crypto gamblers have been the most disadvantaged. Some governments like China have banned banks from dealing in crypto. With DeFi, crypto gamblers are at liberty to transact and move any amount of money with zero limitations. When it comes to betting, DeFi has introduced new levels of fairness. It’s hosted on the blockchain and runs without external third-party interventions. Blockchain technology is immutable, transparent, and safe, creating a sterile gambling environment with limited fraud and gameplay manipulation risks. A trustless gambling ecosystem is what DeFi brings. Let’s not forget the volatility risk that crypto gamblers face.
Digital coins are hardly stable. Players would be forced to take in huge losses whenever their portfolio tanked. DeFi gives them an alternative to hold their funds in staking or liquidy pools and earn interest which could cover losses if prices plummet. On the other hand, they gain even higher profits if prices remain stable. Players can also hold their funds in stable coins such as USDT and swap between different cryptocurrencies instantly at meagre fees. Anyone who has interacted with products like Augur will agree that innovation is perhaps the biggest reward of DeFi to crypto gamblers. Augur promises to lead bettors to a risk-free gambling future. Imagine a wagering platform that refunds your stake when you don’t win?
Types of DeFi Gambling
As already mentioned, DeFi is wide. There are different types of gambling in it, ranging from crypto casinos, sports betting and poker to new and unique gambling products like yield farms.
DeFi Sports Betting
DeFi sports betting is facilitated by blockchain technology. It employs intelligent contracts to eliminate third-party bookmakers. Bettors lock in their wagers, and the intelligent contracts automatically validate results and pay the winner. Players connect a Web3 wallet to the betting platform to fund their accounts before placing bets. Winnings are automatically sent back to the gambler’s Web3 wallet. Dexsport.io and LunaFi.io are perfect examples of gambling platforms for DeFi sports betting. With LunaFi, anyone can become the house.
You’ll never go back to classic poker once you interact with DeFi gambling dApps. The former is always tagged with a huge house edge and unattractive return to player percentages. Decentralized poker wins because it takes away power from the house by distributing profits fairly among key participants. Platforms like Coinpoker give players a 15% profit share directly and distribute additional amounts through bonuses and promos. There is also increased transparency and privacy with this kind of gambling.
DeFi slots allow players to participate in profit sharing of the house. Gamblers purchase NFTs representing ownership, and these grant them automatic rights to earn passive income whenever the casino distributes profits. Players can re-invest these profits, stake them or channel the funds towards liquidity pools to make more profits.
Yield farming is a method of maximizing crypto gains in DeFi. There’s stable and degen yield farming. Stable yield farming is more of an investment with calculated risks and low returns. Degen yield farming, on the other hand, is pure gambling, a zero-sum game where you either win big or nuke your funds. They start as hyped-up projects paying investors as high as 3% per hour and end up attracting massive funds. Normally investors put their money in the platform’s native token, whose prices rapidly rise. Early investors can rake in 100x within days to weeks and start selling their tokens to cash in profits. This causes prices to stop moving up. A panic wave hits the later investors, causing them to sell all their tokens\ and eventually, the price goes to almost zero. The word “degen” comes from degenerates, and that’s because these products are like a rising hot air balloon. They must burst at a high altitude. Degen products hardly have a real project backing them. They thrive on hype and operate as pump and dump. This is the riskiest form of DeFi crypto gambling.
How DeFi will Change Gambling
The introduction of blockchain into gambling is a sure bet for transparency. This is a step ahead in creating a safe and trustless betting industry. Decentralization dethrones greedy operators by introducing fair profit sharing for all. But the biggest impact of DeFi to gambling will be improved user experience and new innovations. DeFi is constantly evolving, and programmers are finding new methods to incorporate additional benefits for players to maximize their returns. For example, BetDemand gives out rewards to winning sports bettors without anyone losing. Gamblers whose bets turned out wrongly get a refund of their money with staking interest. So, in the end, everyone is a winner.
Chipz, an Ethereum-based platform, is another innovative DeFi product riding on blockchain technology to give bettors a unique gambling experience. It offers them a one-stop platform to bet on any random occurrence, including sports, politics, and entertainment. Users can also become bookmakers by creating their own sport and allowing bettors to participate and earn staking fees. All of these are possible through the power of smart contracts, and there are no third parties or regulatory authorities involved.
DeFi gambling is set to keep growing. The crypto community seems to be backing it strongly due to the numerous benefits. Risk-free gambling with zero losers, lower betting fees, staking, and yield farming are just a few benefits of DeFi gambling. The flip side is that the lack of regulation leaves room for uncontrolled hype. This has led to the rise of risky investments such as degen farms. It’s undeniable that DeFi is exciting. Like traditional gambling, a rule of the thumb is to only direct a portion of your risk capital towards DeFi gambling.