Decoding GambleFi: Will It Thrive Again Thanks to Layer2?
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Decoding GambleFi: Will It Thrive Again Thanks to Layer2?
When Ethereum is no longer held back by performance and efficiency constraints, which areas are most likely to experience explosive growth?
Navigating Web3 tides with focused insights
Produced by: TechFlow Research Institute
Author: Yu Zhong Kuangshui
*Note: GambleFi is subject to varying legal restrictions across different countries and regions. Please strictly comply with local laws. This article is for informational purposes only and does not constitute any investment advice.
When Ethereum is no longer held back by performance and efficiency issues, which sectors are most likely to explode?
GambleFi (decentralized casinos) might be a relatively niche yet narratively expansive answer.
The main driver behind GambleFi's development is the widespread concern in the traditional world about casinos—specifically, opaque operations or cheating. Gamblers often worry that their opponents or the casino itself may use unfair tactics to gain improper advantages. Deploying on blockchain can effectively address this issue.
Powered by blockchain technology, GambleFi offers transparency, verifiability, and permissionless access, making it a more attractive form of online gambling infrastructure while ensuring fairness and privacy in gambling activities.
I still have vivid memories of the flourishing gambling ecosystem on EOS. However, the gambling DApps on EOS were fundamentally different from today’s GambleFi narrative:
Growth Potential: Although these gambling DApps were built on EOS and benefited from low fees, the overall user experience on EOS was poor and cumbersome. History has already given us the verdict—as EOS declined, its applications gradually disappeared into the annals of blockchain history. In contrast, Ethereum Layer2 provides richer and more fertile ground, with a larger user base and superior interaction experiences.
Real Yield: Another notable aspect of GambleFi is how well it aligns with the real yield trend. This attracts a new segment of users—investors. Beyond just gamblers participating in the protocol, investors who believe in GambleFi can also earn dividends by purchasing and staking the protocol’s tokens. The enhanced tokenomics offer something far beyond what EOS-based gambling DApps could provide.
Next, let's briefly introduce some GambleFi protocols built on Arbitrum, an Ethereum Layer2 solution.
Arcadeum $ARC
Arcadeum is a GambleFi platform deployed on Arbitrum, offering gamblers seven traditional casino games including roulette, dice, and rock-paper-scissors. Final outcomes are determined using Quantum Random Number Generation (QRNG). Before placing bets, users can clearly see the odds. The fairness of Arcadeum’s gambling system is supported by quantum random number generation (QRNG).
Liquidity on Arcadeum comes from user deposits of USDT. While similar to the GLP model, Arcadeum’s ALP carries zero volatility (with a 1% deposit/withdrawal fee). When gamblers play, winners profit at the expense of ALP; losers lose, and ALP gains.
$ARC is Arcadeum’s native token. Based on $ARC, Arcadeum has introduced three additional token types:
$sARC: Staked ARC. Users can stake ARC to capture 15% of betting fees and ALP deposit/withdrawal fees;
$xARC: Burnt ARC. Users can directly exchange ARC 1:1 for xARC, permanently burning the underlying ARC tokens. Staking xARC entitles users to 70% of betting fees and ALP deposit/withdrawal fees.
$esARC: Escrowed ARC. ARC stakers receive esARC, and staking esARC yields 15% of betting fees and ALP deposit/withdrawal fees;
JustBet $WINR
Developed by WINR Labs, JustBet is a GambleFi platform deployed on Arbitrum, offering users fast and tamper-proof betting experiences. Similar to Arcadeum in service, JustBet provides a broader range of games. In the future, WINR Labs plans to release an SDK for gambling-related products, providing tools and liquidity support for any gaming protocols looking to build casino offerings. JustBet’s fairness is ensured through Verifiable Random Functions (VRF) and the oracle service SupraOracles.
Liquidity on JustBet is provided by users depositing WTBC (15%), WETH (35%), and DAI (50%). Both market volatility and gambler wins result in losses for WLP. Buying or selling WLP incurs a 0.15%-0.75% swap fee. WLP profits come from gambler losses, emissions of $vWINR, 25% of betting fees (gamblers pay 0.02%-0.1% per bet), and 25% of swap fee revenue.
$WINR is JustBet’s native token. Users can stake $WINR to earn a share of protocol revenue. Alternatively, users can convert $WINR into $vWINR. Both stakers earn shares of fee revenue and swap fees, but $vWINR has twice the weight of $WINR. Rewards are distributed in WLP form. Similar to Camelot’s native token GRAIL and xGRAIL, converting vWINR back to WINR has a vesting period ranging from a minimum of 15 days (1:0.5) to a maximum of 6 months (1:1). Additionally, part of the protocol’s revenue will be used to buy back and burn $WINR in the open market.
ArbiRoul $ROUL
ArbiRoul is another GambleFi platform deployed on Arbitrum. Its key distinction from the previous two platforms lies in its diverse range of services—including traditional gambling, sports betting, casual games, and customizable games—making it accessible and appealing to gamblers of all levels, significantly expanding its user base.
Unlike the earlier two protocols, ArbiRoul sources its liquidity from SushiSwap’s ROUL/ETH pool. After adding liquidity, users receive RLP (subject to a 2% fee). In addition to earning DEX trading fees, users can stake RLP within the casino to provide liquidity and earn a share of revenues. This approach benefits ROUL/ETH LPs by offering additional yield opportunities while simultaneously increasing $ROUL’s on-chain liquidity. $ROUL also serves as the primary betting medium on ArbiRoul.
Another noteworthy innovation is ArbiRoul’s launch of an NFT collection called High Rouler NFT. Holders of High Rouler NFTs gain special privileges such as staking advantages, 11% of platform revenue distribution, and DAO governance rights.
Conclusion
We can observe that the evolution of casino protocols based on blockchain technology primarily focuses on two key directions:
Casino Services: The competitiveness of GambleFi lies in the variety and quality of services offered. Different platforms focus on different areas—one may emphasize esports betting, another traditional casino games. To attract more users, GambleFi platforms will continue expanding their product offerings to meet diverse user demands;
User Loyalty: Richer and more sophisticated tokenomics help GambleFi attract new users, encourage token staking, and allow participants to share in protocol revenues. Higher loyalty users typically receive greater reward weights;
Taking the three protocols mentioned above as examples, although each emphasizes different aspects of tokenomics, they generally follow a similar pattern: using rewards to attract liquidity, distributing earnings to token/NFT stakers, granting higher reward weights to locked stakers, thereby drawing in more investors into the GambleFi ecosystem. Protocol revenues are used to repurchase and burn tokens, reducing supply to drive price appreciation, which in turn attracts even more users.
This creates a potential flywheel effect.
So, assuming the protocol logic holds, will GambleFi thrive again thanks to the rise of Layer2?
From today’s perspective, the emergence of Layer2 essentially provides GambleFi with an ideal environment for growth. Furthermore, the innovations in DeFi protocols and reforms in tokenomics triggered by Layer2 offer valuable blueprints for building robust economic models within GambleFi. When on-chain activity flourishes, GambleFi may very well seize a new wave of developmental opportunity.
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