The time has finally arrived, all our hard work has been leading to this point and we are extremely excited to have recently launched Azuro on Gnosis Chain!
Moreover — The first front-end has connected to Azuro Protocol: bookmaker.XYZ
bookmaker.XYZ— The First Independent Frontend Connected To Azuro Is Live!
We recently announced the technical launch of the Azuro protocol on Gnosis Chain. This meant the deployment of…
As with all truly new projects in web3 it has not been straightforward and we have had to overcome many obstacles to get us to this point. We ended up making use of 3 of the OG crypto primitives: Prediction Markets, NFTs, and DAOs, and designed a completely new Liquidity Pool.
It all got us to where Azuro is today — the base layer for decentralized betting, where markets can be priced, created, and made liquid.
It also helped us lay out the 2-pronged vision for Azuro:
- disrupting traditional online betting with a fairer, more transparent, and more fun decentralized alternative
- delivering a betting overlay for the Metaverse
Blockchain Prediction Markets’ History
Almost 7 years ago in August 2015, Augur conducted Ethereum’s 1st ever initial coin offering (ICO) selling 8.8 million REP coins, raising $5.5 million. This was an incredible milestone for the crypto space which all centred around a decentralized prediction market, but over time the project failed to gain traction. After a clunky and poor UX being reported by users meant that Augur had to quickly get to work on improvements. 5 years later Augur v2 arrived, boasting a host of new additions including Uniswap’s v2 oracle network. However, even with a much-improved UX, Augur failed to become the decentralized betting solution users needed. Augur had sparked an interest in decentralized prediction markets and betting from the industry which inevitably spawned competition. Polymarket entered the industry with a slightly different approach to prediction markets by leaning more towards less conventional sports betting markets and offering politics or crypto-related outcomes. Polymarket is still operating today and is far more active than the near dormant Augur but it has still clearly failed to scale with under 100 markets available usually.
Another prominent name in the early days of prediction markets was Gnosis. Gnosis (now one of the most respected names within web3) also tried their hand but failed to gain a large enough userbase to make the project a success. In Stefan George’s (co-founder of Gnosis who are now prominent backers and partners for Azuro) own words — early projects like Augur, Gnosis itself, and Polymarket lacked a critical understanding of sportsbetting, which is still the biggest market for applying the solutions that these teams were building.
Then, fast-forward to 2021 — the Azuro team assembled around the idea that sportsbetting is solvable on-chain via smart contracts. The team brought immense expertise from sportsbetting in web2 by way of many years in the industry including professional betting, sports media and affiliation, and gambling industry payments.
The issues with existing prediction market solutions were apparent: severe problems with liquidity and a UX that doesn’t work for casual bettors.
Therefore the goal before Azuro was clear: to bring a decentralized betting solution that works at scale, and delivers a clean, yet rich UX on blockchain rails. The core focus was sportsbetting — by far the biggest application area for prediction markets there is.
Moving Prediction Markets from Peer-2-Peer towards Peer-2-Pool
Prediction markets offer peer-to-peer matching of Market Makers (create market, price market, and seed initial liquidity behind the market) and Bettors (trade on the market). This however is dramatically inefficient for providing and allocating liquidity, resulting in nearly no markets created and extremely scarce liquidity.
The solution chosen was to change up the model to peer-to-pool which can scale easily and allow for virtually an unlimited amount of liquid betting markets at any point in time. It also meant breaking up the role of the Market Maker into 2 separate roles: Market Creators (a combination of Odds Feed Providers and Oracles: create markets & price markets) & Liquidity Providers (seed initial liquidity behind the markets).
Existing Liquidity Pool designs couldn’t meet our requirements which led to the creation of a completely novel liquidity pool design we have called The Liquidity Tree. The Liquidity Tree uses the well-known (in computer science) “segment tree” data structure. It is not a modification of a previous LP design, it is a new piece of open-source code.
We hope that the design can be the so long-awaited 0 to 1 moment for prediction markets, similar to how the AMM innovation made DEXs what they are today.
Introducing Azuro’s Liquidity Tree: A New Liquidity Pool Design for Specialized Prediction Markets
New Life for Specialized Prediction Markets: The Liquidity Tree
Utilizing NFT technology
Beyond issues with liquidity, Prediction Markets suffered in their betting feature set and UX.
One great example is accumulator (a.k.a. Parlay) bets. In those bets — the player stacks several bets into the same betting slip, thus maximizing potential gain. These are the most popular bets amongst recreational sportsbettors in the world. Prediction markets couldn’t support them. Other similar examples abound.
Prediction markets offered a trading user experience instead of a betting one. Unique fungible tokens (representing event outcomes) had to be traded in order to participate in each different betting market. No odds, but token prices, and a less-straightforward representation of potential gains.
Hence, Azuro’s goal to offer a full-feature set and clean, betting UX was achieved through the combination of the Liquidity Tree pool and NFTs. Bets on Azuro are non-fungible which allows for an experience that matches sportsbettors’ expectations, and supports critical features like accumulator/parlay bets, multiple outcome bets, and bet cashouts. Moreover, NFTs allow for crazy gamification on-chain and use-cases never possible before like Bets as Collectables…
All of that with a clean UX where bets are placed in 1 currency, odds represented clearly and potential payout fixed.
NFTs and Their Role in Decentralized Betting
NFTs have never failed to amaze us with their imaginative utilities, record-breaking prices and celebrity following. In…
The importance of DAO governance
The Players’ Story
The incumbent online betting industry gets a lot of bad rap, and much of it is for a good reason. The problem is incentive misalignment. Profits are zero-sum so most betting companies go to great lengths to create unfair & opaque environments for the players. The bettors’ loss is the bookmaker/sportsbooks’ gain. Betting is 100% custodial, plagued by lack of transparency and in most cases, players are at their adversary’s (the betting company’s) mercy. It results in abuse of power in many ways like delayed or declined payouts, extensive due diligence, closure of smart players’ accounts, and so on.
The Industry Story
On the other hand, the industry itself is very entrenched. The barriers to entry are high both in terms of money and specific know-how, so the beneficiaries are a small group of big companies.
For players, the decentralization of betting has immediate positive consequences. Azuro is on-chain — transparent & non-custodial. Players’ money and bets remain theirs at all times. This has immediate positive implications for transparency and fairness.
Furthermore, Azuro’s ecosystem consists of not only players/bettors but also: Odds Feed Providers, Liquidity Providers, Oracles, and Frontends. This fragmentation means dramatically reduced barriers to entry for multiple participants. Before Azuro the 2 realistic ways to participate in betting were: betting or buying betting company stock (the latter not possible for many people). After Azuro the array of ways to contribute to and benefit from betting widens dramatically.
The easiest ways (lowest barrier if any) are:
- liquidity provision (no minimum requirements or know-how needed)
- governance (through token ownership)
More sophisticated, but still orders of magnitude easier (than running a betting company) are the Frontend, Oracles, and Odds Feed Provider roles.
The desired result is the democratization of betting as a whole. We could in no way predict with certainty what the end result will be. But with key decisions like what margin is added to the odds (i.e. how the Azuro ecosystem profits and sustains itself), how the budget of the treasury is spent (e.g. how much money is contributed to combatting addictions, supporting education, sports for children, etc.), how problematic markets are resolved (e.g. alleged fixed games or other) — all in the hands of the community, we can only hope that the end result is betting that is more fair and more fun.
One huge reason we believe in it is the transparency that is ensured on-chain.
What happens next?
The work doesn’t stop. This is just the beginning. Some of the next important developments expected are:
A Richer Betting Experience On-Chain
Updates that are going to have a great impact on the experience for bettors are Accumulator/Parlay Bets, an NFT bets marketplace, Additional Events & Markets, and Live/In-Play Betting. All of these are critical in bridging the UX & product feature gaps between on-chain betting and the incumbent industry.
Tote Betting (Pool Betting) and Blockchain Games/Guild Partnerships
Azuro can be a money lego for GameFi. Azuro applications can sit on top of games and significantly expand the financial toolbox available to gamers. Plus, betting is a key piece for games’ economies as the need to find sinks for native tokens and create fanbase engagement is as obvious as ever.
The Liquidity pools are planned to open up for LPs to lock in money and become “the house” to earn impressive yield generated from the revenues of the pools (and thus completely uncorrelated to the broader crypto or financial markets).
Azuro was always designed to be a multi-chain solution for EVM-based networks. Pending the success of deploying on Gnosis Chain, the sights are set on launching on Ethereum layer 2 scaling solution, Polygon.
SDK for Front-Ends
An SDK to make building on Azuro as simple as possible for frontends, so the ecosystem can grow to fulfill its mission as the base layer for decentralized betting.
Azuro is a DAO, a pure-token initiative. It is impossible to progress and deliver decentralized betting at scale, and aim at making betting fairer, without democratizing the industry itself through open community ownership and governance and therefore actual, sufficient decentralization.