Edgeless token economics explained
Recently, Edgeless has received a lot of questions related to the EDG token. In this blog post, the team will provide the entire Edgeless community with more clarity.
EDG token supply/demand force
Edgeless is a utility token used to access Edgeless services, such as the betting platform, Jackpots, and mutual betting.
The fundamental force increasing the demand for the EDG token is new players wanting to use Edgeless service and current players reusing Edgeless service. These 2 groups need to get EDG tokens to access the service. More people wanting to use Edgeless service leads to a larger demand for the EDG token. In simple terms, their action leads to more deposits on the Edgeless platform.
The fundamental forces decreasing demand for EDG token:
- Current players who win large amounts of EDG tokens and then stop using Edgeless service,
- Bonus hunters abusing the system. Let’s take a real example to get a better understanding of the damage that can be done by bonus hunters. 100K EDG token damage to the casino was made by one bonus hunter group during April to June.
These 2 groups were getting rid of EDG tokens. In simple terms, their actions lead to more withdrawals on the Edgeless platform.
Deposits = increase in demand for EDG
Withdrawals = decrease in demand for EDG. Yes, player withdrawals actually decrease demand for the EDG token. It’s really important to understand this, if you want to understand the entire concept.
However, the Edgeless platform is winning (charging for the service) in the long run, therefore deposits are greater than withdrawals. That means that more players is the only fundamental force that drives token demand.
Edgeless has 60 - 70 daily players (source: https://blog.edgelessgroup.io/blog/monthly-update-july-19). These people are the fundamental force creating activity around the token.
Current token activity (fundamental activity) is not stable because the current player-base is too small to stabilise the supply/demand equilibrium. Some days fundamental token demand is really high because large betting players are making large deposits for a specific event such as Edgeless monthly jackpot. Some days fundamental token demand is down because players have won a lot of tokens and they want to secure their winnings by withdrawing the token from the platform. In a casino business, there is a lot of volatility with such a small client base. You can observe winning/losing volatility from a staking chart.
To have a fundamentally stable EDG token activity - demand/supply without extreme fluctuations, the Edgeless platform needs a much larger player base.
Current Edgeless platform calibration and unique value proposition
The cryptocurrency betting market is an incredibly new niche. Edgeless is searching for the best strategy approach in this market. Actually every crypto company is in a searching mode because of the market’s immaturity. There is only one way for a start-up to approach a ‘fetal stage’ market such as cryptocurrency betting, and that is through tons of experimentation, as well as long cycles of trial, and error.
That’s why Edgeless now is usually referred to as an experimental project.
As an experimental project, Edgeless tries different ‘product calibrations’ to find the perfect spot. Edgeless is testing several hypotheses:
- Does the market need 0% house betting games?
- Does market need cryptocurrency betting games?
- Does the market need more transparent betting than a classical online casino can offer?
- Does having branded utility token add extra value to the player?
- Does betting through a branded utility token increase the loyalty of a player base by creating a ‘being in the club’ effect?
- What are the best staking conditions?
These questions are not easy to answer. Finding the answers requires experimentation. Using this method, Edgeless aims to find a USP (unique value proposition) which will put Edgeless in a strong market position against the competition.
Edgeless competition and market size
Edgeless competition is tough ( https://bitcoinplay.net ).
- Over 90% of cryptocurrency betting brands are not licensed operators. They offer a betting service without any client KYC procedure (through which clients need to submit additional documents confirming their identity). From the client’s perspective it’s a way better experience, because they value anonymity and it’s less of a hassle, especially when buying such a service as betting. Since Edgeless is a licensed operator, the KYC process becomes a major ’roadblock’ for cryptocurrency enthusiasts. Therefore Edgeless has to offer something more than the typical unlicensed operator does so that players will be less bothered by passing a KYC procedure.
- Competition from classical online operators. Through the FIAT gateway, Edgeless can compete with classical online casinos. However, their platforms are already in development for more than 10 years. Their content offering is WAY larger than Edgeless can currently offer. Take for example the http://www.bitstarz.com brand. They offer hundreds of games and run many promotion offerings. Therefore Edgeless has to find a different ‘USP’ angle to compete with the classical online operator.
- The entire cryptocurrency betting market is in a ‘fetus state’. Most people don’t know how to use/get cryptocurrencies. Only a small minority of the betting market actually use cryptocurrencies to purchase a service. Secondly the cryptocurrency infrastructure is really inconvenient as it creates a lot of UX related issues. Luckily these aspects are slowly changing. In the future, the world can expect far more people interacting with services through cryptocurrencies.
In order to get a deeper feel for the gambling market
- Try a classical whitelabel operator offering cryptocurrency betting - https://www.bitstarz.com/
- Try non-licensed operator offering user anonymity - https://primedice.com/
Betting service marketing
Betting service marketing is not easy. Regulation on betting is getting tougher every year. Advertising is restricted on every major advertising platform such as Facebook, Google, most large global display networks, etc. Most betting traffic is coming through affiliates, referrals or SEO. Edgeless can’t simply use Facebook ads to acquire millions of clicks. Betting service marketing has to be way more creative than that. It’s one of the major forces slowing down Edgeless scaling process. With current conditions, Edgeless marketing campaigns far from break-even.
Some people suggest changing staking conditions to reach stability in the token demand/supply equilibrium.
If changing staking conditions won’t lead to increased player base then token demand/supply stability won’t change. There is only one fundamental force leading to actual demand/supply stability — and that force is player activity. More players = more token activity = more stability. The current base of 60-70 players (which amounts to a bankroll surplus of somewhere around 400k EDG/month bankroll surplus, which is peanuts) a day is not a sufficient amount of time to reach token stability. These numbers have to be way larger.
After seeing the correlation between a casino player and a staking participant, Edgeless is trying to tackle marketing challenges using staking’s built-in referral program. The aim is to increase the platform’s client base. Player base is critical for Edgeless success. If you build a service which no-one needs, you have built nothing.
Once Edgeless platform finds a proper way to attract and maintain a stable client base, staking conditions will be reviewed.
EDG token price stability
EDG token price stability is an important factor for Edgeless service success. Large activity fluctuations might confuse the current platform player. For better service quality, the Edgeless token needs more stability. However, token price is heavily affected by many different external factors. The fundamental force (player base) is not outweighing external factors leading to large volatility in the token. More stability can be reached only through the fundamental demand/supply force. Otherwise, external force keeps blasting the token like a feather in the wind.
Currently Edgeless is working hard on trying to increase its player base. To reach this objective Edgeless is testing, going through trial/error cycles, and utilizing every resource possible. Even though not everyone understands how the token works and while Edgeless needs to communicate more clearly that tokens are new and relatively complicated concepts — everyone connected to Edgeless actually wants to see is growing client base. So, fundamentals are fundamentals. There is no way to short-cut them.
The bankroll staking model is created to factor in recent legal developments in the crypto sector. Similar staking mechanisms are used by other crypto projects.
The Edgeless team follows all legal developments and, if needed, in the future there will be changes made to the principles of staking so that our activities will be in line with regulations.
The EDG token is a UTILITY token. It has no profit sharing, dividends or any other features associated with securities.