This article reviews an application built on Injective Protocol which is part of the Cosmos Ecosystem. Frontrunner allows users to participate in sports betting, but with added features which are similar to the trading of derivatives and more specifically futures.
Frontrunner: Leveraging Injective
Frontrunner is the first decentralized and sports focused predictive market built on blockchain technology, and within a zero-fee environment. The advantages of eliminating the middlemen for predictive markets are many. First off, the house has no edge against the vast number of users. By creating a trustless, and non-centralized application, the profits for a winning bet go directly to frontend users.
FR decided to build on Injective Protocol for several reasons. Since Injective was built with a focus on finance, the base orderbook they have created offers advantages over many popular automated market makers (AMMs) [1]. For an introductory article on Injective, check out our article [here]. Injective also offers a zero-gas fee environment for traders at baseline. This offers a more pleasant experience for users, since gas fees depending on the network can be very frustrating to deal with.
Utilizing the developer kits that Injective provides, the Frontrunner team was able to save tremendous amounts of time while building. The team was able to focus their efforts on building the product and experience, since the network offers the option to avoid smart contracts entirely along with time saving base modules. Since Injective is build upon the Cosmos SDK, the developers will be able to easily integrate multichain features in the future.
The team was able to utilize the Injective Binary Options kit to represent sports predictive markets without writing any smart-contracts. Smart contracts are complex and require hundreds of audits and double-checks for security and errors. FR eventually plans on adding smart contracts, but after the base product is built out.
Sports Betting and Frontrunner
Sports betting has been around for hundreds of years. The average cut for sports betting book keepers is around 15% [2]. Those who are betting also have to pay fees to start and sometimes to close a bet. Betting against the house is always a challenge because the house can place limits on those who have higher win rates within the userbase. By adding blockchain technology to the already very popular sports betting market, the user experience will only be elevated.
Blockchain based Sports Betting allows users to essentially compete peer to peer. This competition is trustless and is automated. This prevents scams and assures that the winner receives their entire trade’s profits. The global sports betting market was estimated to be around 84 Billion dollars in 2022 [source]. If you have read any of our derivatives markets articles you would have realized that derivatives account for more dollar value than any other asset class by far. Bringing a derivatives and perpetuals concept to sports betting is truly unique and potentially a massive development.
FR aims to achieve this by allowing users to purchase shares of sports teams at any time during the year. These shares, much like futures contracts will go up and down in value as a team performs throughout the year. The aha moment is realizing that these users can sell their initial trade at any point in time. Imagine this past Superbowl, you bet on the Chiefs which were widely considered the underdog. You would have made a huge margin on winning the bet in just one game.
Further this by imaging placing a bet on the chiefs in the preseason. Each game the team wins would increase your derivative like share value due to the Injective Binary Options design. You would be able to sell those shares any point during the season, or you could ride them out until the final game. This unique feature allows sports betters to change their positions throughout the year based on incoming news, team performance, and more.
This adds a complex layer for skill based predictive markets. Those who have done the most research, and practice often will likely have higher hit rates than those who dot not. Similar to professional traders, it takes years of practice to become a professional. Everyone has that friend that is in love with sports and knows everything about every team and player. Those passionate souls will likely not only enjoy the platform but will also probably become the highest hit rate users.
What I personally find intriguing about the application is that it has no token, this separates the all-too-common pump and dump schemes. FR cannot wait for a token unlock and dump massive amounts of tokens on the retail users with institutionally propped up valuations. FR being built on Injective must abide by the base monetary policy of the INJ tokens. For an analysis on the INJ check out our token [review].
Utilizing Injective requires the INJ asset to build the application. Also, a minimum amount of tokens are required to maintain the mandatory insurance pool that all builders on Injective must maintain. INJ can be used for in application collateral and margin (debt). Since there is no FR token we will not be writing an analysis article. This does however make us more bullish on Injective as a financial base layer within the Cosmos. Please remember to stay safe out there, none of this is financial advice, and always do your own research.
