Hey folks, so continuing on the same theme as my last article about $ALTD, today I’m going to be doing a deep dive into another potential small marketcap gem that’s making new applications for blockchain technology and that also fits into crypto’s #GambleFi narrative— Fore Protocol, a decentralized market predictions protocol that aims to be “infinitely scalable,” touching everything from sports betting, politics, or simple validation required for real world events.
Centralized versus Decentralized #GambleFi
If you’ve ever been to Vegas, you’ll know from the size of the casinos, and all the luxurious extremities on top that the house always wins. Even online betting like Draft Kings has had parabolic increases in revenue from its users:
Centralized actors (which are essentially businesses) are incentivized to extract as much as it can from their users by trying to add every edge it can to the odds and/or shaving every cent it can from their profits — whether it be adding a ’00' to the roulette table or by taking a percentage of every pot that’s won on a poker table.
The Fore Solution
With Fore, there are no centralized actors, and instead, odds are determined by the open market itself. Users take positions on outcomes by adding $FORE to the position’s respective pool, thus potentially changing the odds of the pool itself. Take the following $BTC price prediction for instance:
With a total market size of 1500 $FORE, because there’s 84% staked that $BTC will not close above $44,000, organically the market odds will pay out 84:16.
The beauty behind Fore protocol, is that anyone with the $FORE token can initiate their own market, and there are no bounds as to what you bet on — whether it’s on an upcoming football match or whether or not your favorite altcoin will enter the top 100 tokens ranked in total marketcap on a specific date.
But wait, it’s easy to tell when someone wins a match, but when things get more obscure, doesn’t a centralized actor need to be present in order to make sure proposed bets and outcomes are properly validated?
Decentralized through and through
Fore employs different strong levers in order to make sure that everything is not only decentralized, but fair.
Analysts: $FORE NFT holders can manually validate each bet and not only are they incentivized to do so, but they are incentivized to do so correctly and penalized for doing so incorrectly. With a minimum lock of 1000 $FORE, Analysts through an NFT can put their weight behind each vote, going through several tiers where rewards are multiplied for more correct consecutive validations:
Conversely, if an incorrect validation is made a 50% reduction may be made to the value underlying their NFT, and a second subsequent incorrect validation will slash another 50% on what they have left. (A 3rd incorrect validation will actually lead to your NFT being burned, but I think you get the point — incorrect validating is strongly discouraged)
UMA: As another layer of decentralized protection, a few weeks ago Fore announced a new partnership with UMA protocol to help provide resolution disputes to its markets:
I’ve written about UMA’s Optimistic Oracle several times in the past and why it’s such a necessary and public good for the cryptospace, but similar to Fore Analysts, UMA stakers are also incentivized to accurately dispute resolutions. Whether its a DAO vote on whether or not to proceed with a certain protocol upgrade or whether or not $RUNE should be added as a collateral currency, each $UMA staker is able to earn up to 24% APR by making sure that each voted upon and voted upon correctly:
Due to these incentives, you routinely see voter participation on UMA at more than 5x’s that of other major DAOs such as Uniswap’s 5%, routinely showing 25% or greater in the total amount of $UMA tokens represented of circulating supply with each vote. With increased active voter participation, UMA allows for a final human check on what data is being reviewed, and whether or not that data is correct.
Smart Contracts: Whether it goes through a series of Analysts and/or UMA’s Optimistic Oracle, once a dispute has been successfully resolved, no centralized actor controls whether or not funds get paid out, or how much they get paid out — instead smart contracts do. In fact, each role through Fore’s ecosystem is bound by smart contracts in order to make sure everyone follows the rules.
$FORE Tokenomics
A unique property of the Fore Protocol is that all of these actors — analysts, market creators, gamblers — all use $FORE to facilitate each part of the ecosystem:
With a maximum supply of 1 billion $FORE, $FORE has significant burn mechanisms to help ensure that the supply is deflationary, which include:
- 1% burned from the total $FORE put up on all markets created on FORE
- 100% of however much $FORE which is used to underly and mint every Analyst NFT
Consequently, with more usage of the protocol, more $FORE gets burned, yet at the same time, the more $FORE will get bought up by people who want to participate (or validate) its markets.
Despite its burn mechanisms, arguably the main thing to be wary of is its unlock schedule. Thankfully (or perhaps unthankfully dependent on your time horizon), if we look at the token’s distribution schedule, tokens will continue to get unlocked for the next 4 years, albeit with pretty lengthy cliffs and vesting schedules:
Currently with a reported roughly 100 million tokens in circulation, that means there’s only a little over 1/10th of $FORE in total circulating supply. Therefore, it’d be wise to keep track of these different cliffs when tokens will start to become more widely available.
Conclusion
The real gamble here (as with any new protocol) is how much adoption it’s able to garner going forward. The more activity we see on Fore, the higher the burn rate and the higher the fees that are generated towards its analysts. It remains to be seen of how much gamblers will flock to protocols like Fore for the bullrun, but one thing remains certain — we’re still extremely early. To date, according to arbiscan there’s a little over 900 unique holders of $FORE, a number that’s been steadily increasing over the past month. Additionally, And as I mentioned in my last article, getting into any low marketcap coin is extremely risky, and $FORE is no different. However $FORE’s price has completely retraced its price from when it went live on November 30th, which might signal a great buying opportunity:
Have you already tried your hand at being an analyst or creating your own market? If so I’d love to hear about it in the comments below.
And as always, thanks for taking the time to read this and be sure to follow me on twitter (https://twitter.com/CryptosWith) to get all my latest updates. Also, looking for a gift for your Crypto-loving/hating friend? Give them a REKT journal to cheer them up!
Disclaimer: And as a final reminder, this is not financial advice and this is for educational and entertainment purposes only. Please as always, do your own research and find what investments are best for you. Cheers everyone!