Blockchain Gambling Sector Analysis
- Key takeaways
- Gambling activity trends – TRON, EOS, and Ethereum
- Gambling value trends – TRON, EOS, and Ethereum
- Gambling value trends – top wallet activity
- TRON dapps – top wallet activity
- EOS dapps – top wallet activity
- Ethereum dapps – top wallet activity
- During 2019, daily activity across all gambling dapps on TRON rose by 121% to 14,133 daily active unique wallets, but the daily token value dropped 77% to around $4 million a day.
- Daily activity across all gambling dapps on EOS dropped 64% to 1,978 daily active unique wallets and daily token value dropped 89% to $2.5 million a day.
- Daily activity across all gambling dapps on Ethereum rose 84% to 1,586 daily active unique wallets while daily token value dropped 42% to around $1 million a day.
- Nevertheless, the best gambling dapps such as 888TRON demonstrated it was possible to build a successful product – both in terms of active wallets and value – by focusing on UX and smart retention mechanics.
With annual global revenues estimated at over $450 billion, it’s clear the gambling industry is big business.
Online gambling makes up about 10% of this total, so equally it’s no surprise that dapp developers have been enthusiastic about bringing the key advantages of blockchain technology, such as provably fair gameplay, to this multi-billion dollar sector.
Thanks to their relatively simple and quick development cycles, gambling dapps are typically the first products launched on any new smart contract mainnet. Indeed, as a category, gambling dapps are the largest single group of dapps that DappRadar covers: currently we track 976 gambling dapps.
The issue, however, is because they are so simple and quick to make, it’s difficult to sustain a loyal audience within a gambling dapp for a long period of time. Gamblers are always on the lookout for a new and potentially better opportunity to make money. And this is why less than 50 gambling dapps currently attract more than 50 daily active unique wallets.
To overcome this, gambling dapp developers have adopted smart engagement techniques, notably rewarding high volume players with their own cryptocurrencies via dividends and staking mechanics.
This makes the sector a surprisingly innovative if volatile industry, something highlighted when considering how activity changed during 2019.
Gambling activity trends – TRON, EOS, and Ethereum
TRON is the most popular blockchain for gambling dapps and such dapps are also the predominant category on TRON.
Across the 12 months of 2019, daily gambling activity on TRON rose 121% to 14,133 daily active unique wallets and continued rising up 14% month-on-month during January 2020.
In contrast, gambling dapps on EOS started 2019 with around 5,500 daily active unique wallets, and experienced several spikes over 15,000, before dropping to under 1,500. This trend was particularly influenced by the network congestion caused by the EIDOS airdrop, which more than halved daily wallet activity from mid-October onwards.
Across the 12 months of 2019, daily gambling activity on EOS was down 64% to 1,978 daily active unique wallets. It continued to decline, down 37% in January 2020.
Gambling dapp activity on the Ethereum activity is small and often underestimated. During 2019 it peaked at over 2,000 daily active unique wallets, but more generally averaged around 1,200.
Across the 12 months of 2019, daily gambling activity on Ethereum rose by 84% to 1,586 daily active unique wallets. However, this activity declined by 56% in January 2020.
Gambling value trends – TRON, EOS, and Ethereum
The situation was very different, however, when considering the value of native cryptocurrency and tokens spent in gambling dapps.
Despite the growth in daily active unique wallets and some very large short-lived spikes driven by specific promotions, there was a sharp decline in the value of TRX spent in gambling dapps on TRON during 2019.
In fact, it dropped 77% from $15 million a day in January 2019 to around $4 million at the end of December. This trend continued into January 2020, with a further month-on-month decline of 10%.
(Note: For technical reasons, in this analysis, we can only track the interaction of the TRX cryptocurrency, not TRON-based tokens.)
For EOS, the decline was even more pronounced. It dropped 89% of its value during 2019, ending the year with around $2.5 million of the daily value in terms of EOS and EOS-based tokens. However, it did rebound in January, rising 58% month-on-month.
Gambling dapps on Ethereum also experienced a decline in their daily value in terms of ETH and ERC20 tokens, down 42% across the year, although up 122% in January.
Gambling value trends – top wallet activity
At the blockchain level, the strong increase experienced in daily active unique wallets for TRON and Ethereum seems counter-intuitive to the sharp decline in daily value.
To attempt to understand this better, we need to consider the performance of individual dapps.
One particularly significant metric, especially for gambling dapps, is the breakdown of how much of their value comes from their top wallets. As with offline gambling, the industry is driven much more by the activity of high net worth gamblers – the so-called ‘whales’ – than by a large number of low-value gamblers.
An overview of how this metric changed during 2019 can be seen as we track the percentage of monthly value generated by the top 10 wallets for six popular dapps. Each dot is a month, with the light/darkness of the dot representing the month; lightest being January and darkest being January 2020.
What’s remarkable about this graph is just how much this metric changes over the months. Of course, there can be many reasons for such trends.
As super-users of gambling dapps, whales are very sensitive to changes in dapp features and/or the opportunity to win large amounts. In addition, whether or not they are actively in contact with each other, they are highly likely to act in unison to react to any changes in a dapp or the launch of a new dapp they consider offers better opportunities.
In that context, successful dapps will typically generate a high percentage of value from its top wallets, hence a decline in this metric is often (but not always) a negative sign.
TRON dapps – top wallet activity
Looking specifically at three of the most popular gambling dapps on TRON, a broadly downward trend is clear.
This was particularly notable for RocketGame, which launched with a very high percentage of value generated from its top 10 wallets but saw this fall away to under 25% by January 2020; not a good trend.
The trend for 888TRON was more complex, as it grew its percentage of value generated from its top 10 wallets during the first half of 2019 only to see it crash in from November to less than 10%.
However, this was in part due to an increase in overall wallet activity, which diluted the influence of the top 10 wallets. Indeed, 888TRON also experienced strong growth in value during November and December.
The reverse was true for popular gambling dapps WINk.
Rebranded from TRONbet in July 2019, the move coincided with a doubling in the percentage of monthly value generated by its top 10 wallets.
One reason for this was the rebranding of WINk also saw the release of the WIN token, which is available for trading on multiple exchanges, including Binance. However, total value also declined significantly during this period, with the value from the top 10 wallets merely declining less quickly than the overall audience, hence the rise in the percentage of the value they generated.
EOS dapps – top wallet activity
Despite the weak overall performance of the gambling category on EOS during 2019, two of the most popular gambling dapps experienced strong growth in terms of the monthly value generated by their top wallets.
In part, however, this situation was also driven by a steady decline in overall wallet activity, especially in the second part of the year. This had the effect of increasing the relative value of the top wallets, so this trend can’t be considered purely positive.
Ethereum dapp – top wallet activity
When it comes to gambling dapps on Ethereum, dice2.win isn’t always the most popular title in terms of active wallets but it does consistently generate the most value.
Compared to dapps running on other blockchains, it is the most consistent in terms of percentage of its value generated by its top 10 wallets as well. To some degree, this is a byproduct of Ethereum’s proof of work consensus model, which restricts product design.
Another reason for dice2.win’s high level of value generated from its top 10 wallets is it attracts a relatively small (if steady) number of daily active unique wallets.
2019 was a very interesting year for the gambling dapp category. Congestion issues on the EOS blockchain towards the end of the year had a significant impact across all EOS dapps, and although this didn’t necessarily reduce the daily activity for all EOS dapps, it certainly restricted their growth potential.
More generally, however, the performance of individual gambling dapps was much more influenced by changes to those dapps and the launch of new competing dapps, especially on TRON.
The reason is gambling dapp users are prone to jump between dapps in the hope of discovering better experiences and odds. This generates a lot of volatility.
The two big trends in the category were strong growth in the number of active wallets (on TRON and Ethereum), combined with a sharp decline in the value being spent within them (TRON, Ethereum, and EOS).
At first impression, this appears counter-intuitive, but the influence of a small number of high net worth crypto whales within the gambling sector means that wallet activity and value are not coupled in an obvious manner.
In looking forward to the future of the category, what’s clear is that the easy growth of recent years based around the systematic expansion of the number of active wallets on a blockchain is now over.
Developers are going to have to spend more time and resources creating higher quality experiences that can attract and retain existing users, especially the whales, who spend the most and hence provide the majority of profits.
The best example of this during 2019 was 888TRON, which recovered and grew its audience in the second half of the year, as well as seeing strong growth in its value total across the 12 months.