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The House Always Wins: A Rollbit Research Report

10/21/2023

Overview

Rollbit operates as a gaming and gambling platform featuring three distinct product lines: a casino, a sportsbook, and a futures trading platform.

Rollbit’s Casino offers a diverse range of games, each characterised by distinct betting mechanics, risk levels, and potential rewards. Additionally, Rollbit incorporates a fairness verification link beneath every Rollbit original game.

Our analysis of Rollbit’s Casino data over the preceding 47 days reveals a daily average revenue of $912,166. When annualised, this figure translates to a yearly revenue total of $333,168,706. Rollbit dedicates 10% of its Casino Revenue to the burning of RLB tokens, resulting in a daily burn of $91,216.6 and an annual sum of $33.29 million.

Rollbit’s sportsbook product allows betting on both traditional sports and esports. Presently, their sportsbook services are facilitated by a third-party provider named Betby. Our examination of Rollbit’s sportsbook data during the same 47-day period shows a daily average revenue of $174,812, which equates to an annual revenue total of $63,850,189. Rollbit allocates 20% of its sportsbook revenue to the burning of RLB tokens, leading to a daily burn of $34,962.4 and an annual amount of $12.7 million.

Lastly, Rollbit Futures offers 1000x leverage trading on 13 assets. The futures trading platform, distinct in its absence of a Central Limit Order Book and hosted liquidity, allows traders to deal directly with the site. Asset prices are aggregated from various exchanges, considering factors like liquidity and priority. Rollbit offers transparent formulas for user clarity. Traders can choose to pay fees either only on profitable trades or consistently upon both entry and exit, irrespective of results. Rollbit has on average made $280,720 daily over the past month and a half on through their futures trading product.

On November 10, 2021, the Rollbit team launched the RLB token on Solana with an initial supply of 5 billion RLB tokens. RLB was introduced as a fair launch, fully diluted coin, ensuring there is no overhang from unlocking investors or highly inflationary emissions. It is noteworthy that prior to the launch of the token, the project was officially launched in February 2020, highlighting the team’s commitment to ensuring product market fit.

Rollbit has implemented a token burning mechanism since the inception of RLB. The most recent burning approach, surpassing the Rollbit lottery burn, involves a buyback and burn mechanism based on protocol revenues. Consequently, RLB has become one of the most deflationary tokens, with the buyback providing a constant bid for the token.

However, as a result of numerous substantial token burns from both the Rollbit lottery and the new buyback and burn mechanism, the current circulating RLB supply stands at 3,122,154,104 tokens, reflecting approximately 37.55% of the initial supply that has been eliminated since launch.

Rollbit Casino

Rollbit Casino is a comprehensive online gambling platform that offers a wide variety of games with various betting mechanics, risk levels, and rewards. Below is a comprehensive list of the various games provided by the casino section within Rollbit:

Games

  1. Plinko

Plinko originated on “The Price is Right ” TV show in 1983 and involves participants releasing a puck onto a peg-filled board, observing it ricochet towards a designated prize area at the bottom. Rollbit’s modernised version is a customizable gambling game where players can win up to 10,000 times their bet. The game offers 30 board setups and allows players to adjust risk levels, the number of rows, and the number of balls dropped.

Max Bet: $1,000

RTP (return to player): 96.4%

House Edge: 0.4%

  1. X Flip

Rollbit X Flip is a traditional coin flip betting game with functionality such as auto bet and presets that determine the amount of coins being flipped, maxing out at 10 coins being flipped at a time.

Max Bet: Depends on the amount of coins flipped at once. Max win can’t exceed $50000

RTP: 99.2%

House Edge: 0.8%

  1. Rollbit Bonanza

This is a slot game that lets players choose their odds and volatility. Wins are determined by the number of special Rollbots that appear on its six reels.

Max Bet: $1,500

RTP: 96%

House Edge: 4%

  1. X-Roulette

Players choose multipliers from 1.01 to 1,000,000. The X-Roulette wheel spins each round. If the wheel stops on a number lower than your chosen multiplier, you lose your bet. If it stops on a number equal to or greater than your multiplier, you win your bet multiplied by your chosen multiplier.

Max Bet: $1,000

RTP: 95%

House Edge: 5%

  1. X-Crash

Players select the sum they’d like to wager. They have the option to designate an auto-cashout multiplier; their wager will automatically be secured if this level is attained. The Dragon is unpredictable and could crash without warning. Should it crash before the player secures their wager, they will forfeit their initial bet. If they successfully secure their wager before the Dragon’s crash, their initial bet gets amplified by the multiplier they opted for at cashout.

Max Bet: $100,000 (Maximum Payout)

RTP: 95%

House Edge: 5%

  1. RollerCoaster

This game is unique to Rollbit and simulates highly volatile trading where players bet on whether a generated price will go up or down. Each round lasts 24 hours.

Max Bet: $100,000 

RTP: 98.5%

House Edge: 2.5%

  1. Sidebets

Allows users to place additional wagers on the outcome of slot spins. Bet sizes may have restrictions.

Max Bet: Varies

RTP: 98%

House Edge: 2%

  1. NFT Lootboxes

Players win NFTs, cash prizes, or $RLB tokens, with each prize having a pre-set win probability.

Max Bet: N/A

RTP: 98%

House Edge: 2%

  1. NFT Jackpot

Players can bet NFTs or cash against others for a shot at winning the entire prize pool. New rounds start every 50 Ethereum blocks, and their odds of winning increase with the value of their bet. If they win, they get their initial bet back plus any additional winnings. Based on the amount they win, Rollbit may charge a commission of as much as 5%. However, this fee won’t affect the initial amount thy wagered if they win

Max Bet: Unlimited

RTP: 99.8%

House Edge: 0.2%

  1. NFT Market Place

Allows users to buy, sell, and stake NFTs, avoiding Ethereum gas fees. Users can stake Rollbots to earn a share of marketplace profits.

Max Bet: N/A

RTP: 99%

House Edge: 1%

**
Bonus Battles**

Rollbit has introduced a new PvP game mode called Bonus Battles. Participants must buy a Bonus within 1 minute and 30 seconds of the game starting. The player with the biggest win at the end takes everyone else’s balance. In case of a tie, a random winner is chosen. Misconduct can lead to penalties including forfeiture of balance.

Slots

Rollbit offers over 1000 slot games made by various game providers. 

Max Bet: Varies by game

RTP: Varies by game

House Edge: Varies by game

Game Shows

Rollbit hosts 33 live game shows, ranging from classics like Mega Wheel and Monopoly to modern games such as penalty series and old west. 

Max Bet: Varies by game

Median RTP: 98.51%

Median House Edge: 1.51%

Live Casino

Rollbit offers 31 live casino games including blackjack, baccarat, minesweeper, three-card poker and more.

Max Bet: Varies by game

Median RTP: 99.47%

Median House Edge: 0.53%

Roulette

Rollbit offers 22 variations of Roulette

Max Bet: Varies by game

Median RTP: 98.92%

Median House Edge: 1.08%

Rollbit Sidebets

Rollbit’s Sidebets feature allows users to place additional wagers on slot spins, predicting whether the spin will pay above or below specific multipliers.To win, the spin result must either be lower or higher than the multiplier you chose, depending on your bet. For instance, if you place a Sidebet for ‘Above 10x,’ you’ll only win if the outcome exceeds 10x. There are 30 games within this category

Max Bet: Bet sizes for Sidebets may be limited or restricted depending on the game or the size of the main bet.

RTP: Varies by game

**Challenges
**Rollbit’s Challenges offer prize opportunities in specific or all games. To win, meet the given criteria based on your real bets and outcomes. Multiple bets in X-Roulette count as one, and only concluded bonus rounds qualify. Some games like Rollercoaster are excluded. No fees are involved.Max Bet: Varies per game

**Clans
**Rollbit incorporates a Clans feature, where players can pool their funds for collective betting in casino games. A clan owner or designated admin controls which game is played and the bets made. Members can withdraw their share of the balance at any time, although pending rounds may temporarily affect balance accuracy. Standard rewards and referral programs apply based on individual stakes. House games and Challenges are currently not compatible with the Clans feature. Multiple clans can be created by a single player only if they link a Rollbot.

Casino Revenues

Before delving into the specifics regarding Rollbit’s revenue, it’s important to understand the concept of Law of Large Numbers, house edge and return to player (RTP). 

Law Of Large Numbers
According to the law of large numbers, a player’s losses will gradually converge to the house edge over an extended period of play. Consider a fair coin with a 50% chance of landing heads and a 50% chance of landing tails. The expected value of flipping the coin once is 0.5 heads + 0.5 tails. If you flip the coin only a few times you may get outcomes that deviate significantly from the expected 50-50 split. However, if you flip the coin 1000 times, the ratio of heads to tails is likely to be much closer to 50-50. This is the Law of Large Numbers in action: the average result converges to the expected value as the number of trials increases.

The Law of Large Numbers is crucial for both the casino and the players. For the casino, it guarantees that they will make a profit in the long run due to the house edge. For the players, understanding this law can help them make more informed choices and set realistic expectations when gambling.

House Edge & RTP

The house edge is the casino’s built-in mathematical advantage over players and can be calculated with the following formula: House Edge = 100% - RTP.

RTP is the percentage of the total money staked that gets returned to players in the long run.

It’s important to note that different games come with varying house edges and RTPs, offering players the opportunity to strategically select where to place their bets. As part of this report we will discuss a simulated game of Plinko, playing 200,000 games to look into the high variability nature of casino games and to verify the provable fairness of the game and the accuracy of purported RTP.

Provably Fair Case Study

Under every Rollbit original game, there is a link to which users can verify the fairness of the game. For the purposes of this report, we took a closer look at Plinko.

The credibility of each Plinko game is maintained by a randomly-generated “secret seed,” along with an optional seed from the player. Displaying the hash of the secret seed prior to taking bets verifies that it’s set in stone. Incorporating a player’s seed negates the chance of manipulative practices by Rollbit.

Algorithm:

In each Plinko game, an unused 32-byte seed is picked. Its hash, computed using the BLAKE2b method, is made public before any bets are taken. The ball’s course as it navigates through rows is decided by a complex hash. This hash is based on the secret and user seeds, as well as the number assigned to both the ball and the row. A number >0.5 dictates that the ball will move right whilst the inverse means it will drop left.

After revealing the secret seed, the game’s results are open for scrutiny by anyone. We can derive key metrics such as the hash of that round, anticipated RTP, the fate of individual balls, and the cumulative winnings. The course of each ball is symbolised by a string where ”+” denotes a rightward move and ”-” indicates a leftward move.

We can simulate 200,000 games being played in an attempt to verify that the displayed RTP was accurate:

Through our analysis of 200,000 games, we can verify the games’ fairness. The high variance inherent to gambling games is evident in the discrepancy between the mode and mean RTP. We are also able to verify that the displayed RTP on the game is accurate. 

Casino Revenue

We analysed the prior 47 days of Rollbit’s Casino and found that their daily average revenue is $912,166. If we annualise this figure we get a yearly revenue total of $333,168,706 

Rollbit commits 10% of the Casino Revenue to buyback RLB. Using the prior daily average figure this equates to $91,216.6 bought per day and $33.3m per year.

Sports Betting

Rollbit provides a plethora of events that users can bet on, ranging from traditional sports to esports.

At present their sportsbook services are provided by a third party called Betby.

Betby:

Betby is a sportsbook service provider. It offers a broad spectrum of betting options, spanning traditional sports to virtual and esports. The platform manages data for 150,000 live events each month, covering more than 125 different sports and offering more than 3,000 betting markets. As a third party, they handle all the backend operations of the sportsbook.

Future speculation regarding in-house sports book:

By outsourcing such functionalities, Rollbit is reliant on their services remaining online which historically has caused a couple of instances of sportsbook outages in the past. To combat such events from taking place, it has been speculated on and hinted at by team members that Rollbit has intentions to create their own in-house sportsbook. This would reduce counterparty outage risk and improve lines and spread.

Below is a table showing the 51 events that users can bet on:

Sportsbook Revenues

We analysed the prior 47 days of Rollbit’s sportsbook and found that their daily average revenue is $174,812. If we annualise this figure we get a yearly revenue total of $63,850,189.

Rollbit commits 20% of the Sportsbook Revenue to buyback RLB. Using the prior daily average figure this equates to $34,962.4 bought per day and $12.7m per year.

Crypto Futures

Rollbit also offers a futures trading platform, where users can trade 13 assets with up to 1000x leverage. This futures trading platform operates uniquely, devoid of a Central Limit Order Book and hosted liquidity, meaning traders transact directly with the site instead of through a centralised order book. The asset prices, rather than being determined by this platform alone, are aggregated from multiple exchanges, providing a more stable and accurate valuation. This aggregation takes into account factors like liquidity and priority, which might suggest the weightage given to prices from certain exchanges. Rollbit has provided formulas to further enhance the users understanding of various mechanisms involved in their futures trading platform. 

Users can select a cryptocurrency to trade and bet on the price either rising or falling. They can adjust the leverage multiplier up to 1000x. If users keep their bet open for more than 8 hours, they can incur or receive hourly funding payments.

Fees

Rollbit employs two primary fee structures for its cryptocurrency futures trading services:

Percentage of Profit: Rather than charging fees for opening or closing a trade, Rollbit earns revenue by taking a percentage of the trader’s profit. This percentage is flexible and depends on several variables such as the size of the trade, its duration, and the leverage used. Rollbit will only take fees on profitable trades in this instance.

Flat Fee Structure: Alternatively, traders can opt for a flat fee upon executing a trade. Under a flat fee model, all earnings are kept by users, but they’re charged an upfront, fixed fee that accounts for their entry, exit, and any slippage, similar to standard exchanges. The flat fee is determined as a percentage of their total position, which is their wager multiplied by the chosen multiplier. This one-time charge encompasses both the opening and closing of the trade as well as any price slippage. In this model, Rollbit’s earnings are secured upfront, regardless of how the trade performs.

Funding Fee

Should a user’s bet remain active for over eight hours, they’ll begin incurring funding fees. These fees vary based on the magnitude and orientation of the traders bet. Rollbit provides a ROI calculator that allows users to see their returns based on specific and customised outcomes. Below we will cross compare the Percentage of Profit and Flat Fee structure

Futures Pricing

Rollbit calculates a composite price by indexing several centralised exchanges and their corresponding spot and futures prices on assets in order to formulate a single index price which is then relayed to users and updated every 500 milliseconds.

Rollbit also combines all resting limit orders from each price feed into one composite order book. By taking the weighted average of the marginal mid-prices at each size, Rollbit can then consolidate the data into a marginal price that is representative of the potential price impact of a users’ order through Rollbit’s self-hosted liquidity. 

Additionally, the price offered to Rollbit users needs at least 6 valid price feeds in order to be updated. The given “static” price tends to lean closer towards the top-of-book which allows Rollbit users to speculate on short-term price moves for which a bid-offer spread would otherwise be relatively expensive.

Example 10,000 x 10 Percentage of Profit:

Example using $10,000 X 10 Flat fee:

Looking at the cross comparison we can see a few things:

Similar Risk Profiles:

Both the Flat Fees and Profit-Based Fees models have similar risk profiles. The minimum ROI and P&L are the same, indicating an identical risk of total loss.

Slightly Lower Earnings with Profit-Based Fees: For profitable trades, the Profit-Based Fees model consistently shows a slightly lower ROI and P&L compared to the Flat Fees model. 

Trading Revenues

We analysed the prior 47 days of Rollbit’s Futures and found that their daily average revenue is $280,720. If we annualise this figure we get a yearly revenue total of $102,532,876.

Rollbit commits 30% of the Futures revenue to buyback and burn RLB. Using the prior daily average figure this equates to $84,216 bought per day and $30,759,894 per year.

Tokenomics

History

The Rollbit team launched the RLB token on Solana, on the 10th of November 2021. The initial supply was 5 billion RLB tokens.

The entire 5 billion RLB tokens was airdropped to Rollbot NFT stakers, Rollbit accounts and via giveaways in the following proportions:

Approximately 3.85 billion tokens (77.14% of the initial supply) was distributed to Rollbot NFT stakers depending on the rarity of their Rollbot’s eye trait. 

This airdrop was distributed in the following quantities to Rollbots, with rarer traits getting more RLB per Rollbot NFT: 

Token Utility

Initially, the RLB token’s utility was closely linked to its use in the Rollbit Lottery, which launched 15 days after the RLB token on the 25th of November 2022. Participants staked RLB for a chance to win from prize pools each round. At the time, 20% of Casino profits accumulated into the lottery. 

As Rollbit has progressed, the RLB token has become an integral part in the platform and has derived its utility in multiple ways:

Buy and Burn

Rollbit has implemented a burn of tokens since RLB’s inception. The most recent burning mechanism, superseding the Rollbit lottery burn, has been a buyback and burn based on protocol revenues. RLB has become one of the most deflationary tokens through this burn and the buyback provides constant bid for the token.

Rakeback

As part of Rollbits reward program, they offer a competitive rakeback enabling players to get  back a percentage of the rake that they have paid to the house. As users hold more RLB, they get a higher rakeback. Users can get up to 10% rakeback by holding RLB. 

The rakeback percentages are as follows:

Reduced Trading Fees

On top of increased rakeback for the casino, holding RLB enables users to get trading fee discounts, similar to popular crypto exchanges such as Binance and Huobi. The standard trading fee on the crypto trading is 40 bps of the notional position. Holders of RLB are able to get a trading reduction of up to 60% by holding $2.5M worth of RLB. 

This mechanic creates structural demand for RLB from large traders on the Rollbit platform, although we think the demand is relatively muted in comparison to other sources of demand since most large traders will be trading on more established and professional centralised exchanges. 

Token Supply

As discussed, the initial circulating supply was 5 billion RLB. However, after multiple large token burns from the Rollbit lottery and from the new buyback and burn mechanic, the current circulating RLB supply is 3,296,951,621, reflecting approximately 34.06% of the initial supply that has been burned since launch.

Emissions

RLB was a fair launched, fully diluted coin. Therefore, on the supply side, RLB has no overhang from unlocking investors or highly inflationary emissions. 

Token Demand

Demand for the RLB token comes from multiple sources; speculation, the buyback and burn and from the utility it provides within the Rollbit platform. As discussed the buyback and burn comes from protocol revenues; 10% of revenues from the Casino, 30% of the revenues from the trading venue and 20% of the revenue from the sportsbook are used to buyback the RLB token, before sending this 90% of this RLB to the burn address.

Taking an average for the revenue of each component in the buyback and burn, we can work out the total daily burn based. We have averaged the Casino, Trading & Sportsbook daily revenue from the 23rd of August - 8th of October, giving us an average RLB burn of $210,396 per day. 

Rollbit’s Buyback & Burn

Diving into RLB’s deflationary properties, we first need a short history of the burn of RLB. While Rollbit was exclusively on Solana, the Rollbit lottery was the main driver of RLB’s deflationary properties. There was a 0.2% fee to stake RLB & enter the Lottery. 0.1% of the fee was paid back to staked Rollbot NFT holders, with the remaining 0.1% was burned. The Rollbit Lottery burned 35.5% of total supply across 4 burns.

3 days after the last lottery burn, Rollbit migrated to Ethereum, which paved the way for the current buyback and burn model. 

The Rollbit Lottery burn so far accounts for 95.16% of all the RLB burned, with the currency buy back and burn model coming into action on the 10th of August. As you can see, a cumulative 1,864,619,949 RLB has been burned, which accounts for 37.29% of the initial 5 bilion RLB supply. This makes RLB one of the most deflationary assets across crypto. 

The current buy back and burn model, works as follows: 

  1. Rollbit earns revenue from their 3 main products; the Casino, the Sportsbook and their crypto trading venue. 

  2. They use a portion of these revenues to buy back the RLB token: 10% of Casino revenue, 20% of the Sportsbook and 30% of the trading venue revenues. 

  3. These revenues are calculated on an hourly basis and the combined revenue is used to purchase RLB tokens. Previously this was occurring on the Degen X exchange but as on the 3rd of October 2023, Rollbit started executing these buys on-chain. We reported that here.

  4. 10% of the bought  RLB is redistributed to Rollbot V1 stakers.

  5. Previously the Rollbit Hot Wallet address was sending this RLB to the dead/ burn address. However, as the 10th of October we have started to see Rollbot.eth send this RLB to the burn address hourly.

RLB Supply Projections

Based upon some assumptions we can start to model out the decrease in RLB supply from this buyback and burn. 

Supply Scenario 1

In scenario 1 we have taken the current average total revenue generated by Rollbit (data from 23rd of August - 8th of October via scraping their frontend) & we have assumed the RLB price remains constant for the next year.

Since the Rollbit revenues are USD denominated, but the price of RLB is volatile, the same dollar amount of buy back each day will purchase a different amount of RLB. We have assumed a constant RLB price of $0.136 for this analysis, however, if RLB doubled tomorrow, the same amount of revenues will only buy half as much RLB before burning it. 

In Scenario 1 we are taking the total daily revenues to buyback RLB as $210,395, which at $0.136 per RLB translates to 1,547,022 RLB bought per day. 10% of this buyback is distributed to Rollbot v1 stakers, meaning 56.5M RLB will be distributed to them over the year. 90% of the RLB buyback would be burned, resulting in the burning of 508 million RLB tokens, decreasing the circulating RLB supply by 15.42% from current supply. If this scenario played out, in 1 years time 44.23% of the initial 5 billion tokens would be circulating.

Supply Scenario 2

Scenario 2 assumes:

This results in the RLB supply contracting by 23.14% from here, meaning just over half of the initial 5 Billion RLB tokens would still be circulating. 

Supply Scenario 3

Scenario 3 assumes:

This results in the RLB supply contracting by 30.85% from here, meaning 54.40% of the initial 5 billion tokens will have been burned, leaving just 2.16B RLB circulating.

Bringing it all together, we can see these 3 supply scenarios plotted on a chart. The price of RLB is the main variable that will cause these projections to be inaccurate due to its high variance, absent any exogenous / unexpected shocks to the Rollbit platform and its revenues.

This supply modelling analysis assumes a constant average RLB price for the year in order to determine the number of RLB bought back and burned. The most sensitive variable in the supply modelling is therefore likely to be the price of RLB since it is typically quite volatile and the average price could be much higher, or much lower than the constant price we assumed. 

Taking the analysis one step further therefore, we can generalise the supply decrease over the next year by sensitising the RLB price and the daily RLB bought back (which is of course entirely dependent on the revenues earned by the various Rollbit products). 

Here we have taken a range of RLB prices from $0.05 to $0.45 and a range of daily RLB buybacks from $150,000 to $400,000 (current average is $210,000). The resultant table shows the % decrease in RLB supply in one year’s time. We anticipate the RLB supply decrease will fall somewhere in the coloured section, so anywhere from a 5.3% decrease in supply to a 24.6% decrease in supply from the current supply of 3,122,154,104 RLB.

This would translate to between 40.8% - 52.9% of the total initial 5 billion tokens being burned.

Deposits and User Count 

This chart depicts the cumulative net deposits onto Rollbit from the respective Solana and Ethereum Networks. It further reiterates the sustained and impressive growth of Rollbit since January 1st 2023 with net deposits peaking at over ~75m for Solana and ~25m for Ethereum.

The above chart details the cumulative deposit and withdrawal volume for both the Ethereum and Solana networks since January 1st 2023.

Cumulative Net Deposits during this period: $79,682,903

The above chart illustrates the new users from each respective chain since the beginning of the year 2023.

Cumulative new users: 7.8M since Jan 1st 2023

Site Visits

Rollbit compares relatively low in terms visits and views, it ranks 6th in terms of page views and monthly visits and 8th in terms of monthly unique visitors.

Despite this, we can see that Rollbit has a comparatively high average visit duration, at 11:07 minutes, which ranks it 3rd amongst competitors.

The main purpose of this examination was to see if Rollbit’s reported revenues are realistic and reasonable. We found that when compared to competitors, Rollbit’s reported revenues are in fact sensible.

Valuation

The RLB token generates cash flows which allow for discounted cash flow analysis of Rollbit. Rollbit revenues are assumed to grow at an approximate rate of 15% to 17% CAGR, slightly above the growth expected of the gambling industry in general. This may seem slightly optimistic (the broader gambling industry is projected to grow at a rate of 11.7%). However, this growth projection takes into account potential catalysts, including new product launches, the introduction of a mobile app, and increased marketing expenditures.

Due to the absence of precise expense figures for the company, we’ve had to rely on relative data compared to public companies. Therefore, the expenses for Rollbit are based on traditional, public gambling companies. This was done to be prudent, and likely lead to a more conservative valuation, since public companies often have higher overhead and operational costs, and therefore are likely have higher expense ratios comparatively.

Additionally, a higher discount rate compared to traditional finance models at 30% is used. This decision was made to account for the increased risk with cryptocurrencies, as well as the potential legal, licensing and regulatory challenges that Rollbit may encounter (and have already encountered previously).

As outlined in the model, we found that at current RLB supply, the projected value of RLB is $0.247, a 52% increase from current prices.

Notably, the above model considers that the RLB supply will stay constant. The below chart considers the RLB supply decrease by using the scenarios discussed under the tokenomics section and reflects the RLB token price changes per scenario:

Whilst the DCF analysis is useful as a sense check on the business of Rollbit, we understand it provides very little insight into the demand and supply of RLB and thus how it’ll trade.

P/S Multiple

The Price-to-Sales ratio is the ratio of the market price per share to the revenue per share. The P/S ratio for Rollbit in 2023 is 0.98, which is 64% lower than the P/S of Flutter and 82% lower than the P/S of DraftKings, implying that it’s relatively undervalued.

Catalysts and Risks

Catalysts

New Products and More Futures Markets Added:

Rollbit can drive growth and attract new users by continuously expanding its product offerings (E.g. The Sand Casino / Dual Arena). This includes introducing new types of gambling games or adding more futures markets for users interested in trading cryptocurrencies.

The addition of new products and markets can enhance user engagement and retention (for example adding high volume / highly demanded coins to the futures trading), as it provides more options and opportunities for users to participate.

Another new product Rollbit are looking to launch by “the end of the month if all goes well” is the Sand Casino / Dual Arena. This is Rollbit’s 0% house edge Runescrape -esque MMPORG. This MMPORG could increase Rollbit revenue via allowing micro-transaction in game. More info can be found here.

Marketing/Sponsorships:

Effective marketing strategies and sponsorships can significantly boost Rollbit’s visibility and user acquisition efforts. For example:

Mobile App (PWA - Progressive Web App):

Developing a mobile app, especially a Progressive Web App (PWA), can enhance Rollbit’s accessibility and user experience. As per the National Strategic assessment in 2020, 50% of online gambling now takes place on Mobiles. The opportunity for the first crypto-rails mobile gambling app is enormous and could enable the revenue generated from the Rollbit products to go parabolic.

We have established that a well-designed and user-friendly mobile app can attract a wider audience, but what is the optimal way for Rollbit create an application for mobile users?

According to the Gambling Commission of the UK’s survey, the percentage of online gamblers using their mobile devices has increased from 22% in 2016 to 50% in 2020.

Token Burns (Marketing):

Token burns can be strategically used for marketing purposes to increase demand and create a sense of scarcity around Rollbit’s native tokens. Token burns involve destroying a portion of the existing tokens, reducing the overall supply. This can potentially drive up token prices as supply decreases and demand remains constant or increases.

Rollbit should continue to communicate token burns transparently (and fully on-chain) to its user base, highlighting the benefits in terms of potential token value appreciation and long-term sustainability.

Risks

Regulatory Risk:

Casino

Changing and evolving gambling regulations can pose significant legal challenges. Rollbit currently has a Master License of Gaming Services Provider, which is a gambling license issued by the Government of Curaçao, a Caribbean island that is a constituent country of the Kingdom of the Netherlands. This license allows online gambling operators to legally offer their services to players in various regions, subject to the regulations and restrictions of those regions.

Despite this, non-compliance with local, state, or national laws could result in fines, penalties, or even shutdowns of Rollbit’s casino. Rollbit currently employs geo-blocking of IP’s in banned countries to combat un-lawful use of their site.

Crypto Trading

Rollbit’s crypto trading site could be considered an unregistered exchange, similar to the problems Binance and Coinbase are currently facing with the SEC. This is in part why the DegenX exchange was sunsetted. The futures trading product most likely comes under the CFTC’s mandate since it deals with futures products. Most recently we have seen the CFTC crackdown on Opyn, ZeroEx and Deridex — for offering “illegal digital asset derivatives trading.”

Unregistered Security

The RLB token could potentially be considered by regulators as an unregistered security. Material benefits flow back to RLB holders through the buyback and burn based on the actions of others (the Rollbit team).

Consumer Behavior and Economic Factors:

  1. Smart Contract Risk:

    • Like all decentralised applications, the firm faces the risk of exploitation/malfunctioning due to the nature of smart contracts.

    • This is an unavoidable reality in the DeFi space, and even well-tested projects like Curve and Balancer have experienced exploits.

    • Casinos have been targeted previously, MGM and Stake are some big name examples of this. “We’ve seen consistently over the past six to 12 months, a ramp up in these types of attacks,” Bradbury said.

  2. Market Saturation and Competition:

    • The online gambling market is highly competitive, with numerous established players and new entrants.

    • Market saturation may limit growth opportunities and lead to pricing pressures.

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