This blog was originally posted on Overtime.
We are all feeling it, right? The roar of the bull market closing in. So tangible. So welcomed. But, are we ready for it?
I’ve asked myself this over the last few weeks and came to a couple of realizations.
Even at a glimpse of a potential bull run, gas prices spiked across all (at least semi) decentralized blockchains, rendering organic users almost incapable of placing a few dollar trades. I had this moment of déjà vu clarity where I knew we could no longer hope that L2 gas prices would stay low and acceptable… actually, we can probably count on the opposite.
We at Thales have always been in it for the tech and we wrote our smart contract architecture focusing on decentralization. We store all possible data that we can store on chain, making integrations seamless and trustless.
Heck, to my knowledge, we are still the only protocol doing direct on-chain referral kick-back on each transaction. Such an approach came at a large L2 gas usage, but it was still immaterial till recently…
On a different, yet related problem, the other day I watched a user in Discord spend like 12 hours getting on-ramped to use Overtime for the first time. And that’s with plenty of help from team members and him being “a web3 native” (his words).
The problem here is not related to Overtime specifically, but a general problem of onboarding users to web3. I mean, the rise of Telegram bots speaks volumes of how “easy” it is to use web dApps in 2023…We recognized this hurdle early on and we finally have a good solution on the horizon.
Users will come very soon and I’ve zoomed out and understood what needs to be done to prepare for that mass adoption. But before I tell you what that is, let’s briefly recap the 2023 progress of Thales’ Sports Markets and the Overtime dApp.
An optimistic roadmap with pessimistic estimates
Around this time last year, I wrote a blog post laying out a 10-year roadmap for Overtime. We’ve established by now just how out-of-this-worldly Thales/Overtime devs are, but man, did I miss those estimates or what…
90% of the items in that blog post were smashed within a year… Not to worry though, we’ve got plenty of new things in the pipeline. Devs must not sit idle!
But anyway, the recap first.
New chains
In 2023, Thales Sports Markets architecture was deployed to Arbitrum chain, and Arbinauts were very welcoming to it, generating $10 million in notional volume to date through the Overtime dApp, with usage metrics trending up only.
Later in 2023, we jumped on the #buildOnBase hype and deployed Thales Sports Markets contracts to the Base chain. Due to Base chain using the same underlying technology as Optimism, the deployment was straightforward, and users on Base can enjoy very low fees compared to Optimism and Arbitrum.
I personally like to use it for all long-legged parlays. Base chain is generally still quite new and I feel we are yet to witness its true potential in the coming months and years.
Our “home” chain, is still the dominant one volume wise, and during 2023, Thales Sport contracts surpassed $30 million in notional volume.
Be the house you wish to see in the world!
For the first year or so, while we were battle-testing our novel AMM contracts, Thales DAO treasury was the sole liquidity provider to all user trades.
But finally, in 2023, we felt our products were ready for all willing THALES stakers to provide liquidity to both SportsAMM (collateralizes single trades) and ParlayAMM (collateralizes parlays). Liquidity providing is based on weekly rounds that conclude with liquidity providers sharing the round’s profits or losses.
Liquidity providing has generally been very profitable across the board for SportsAMM and ParlayAMM, specifically to date:
- Optimism Sports AMM +53%, $630k TVL
- Optimism Parlay AMM +16.5%, $400k TVL
- Arbitrum Sports AMM +60%, $500k TVL
- Arbitrum Parlay AMM +12.5%, $300k TVL
*Base LPing is very new with insufficient data sample size
If you are interested in liquidity providing, you can find more details here.
Besides providing liquidity to our AMM contracts, users can also leverage Overtime’s Vaults, which are automated trading contracts that trade discounted positions under certain conditions. You can find specific vaults and their strategies and past performances here.
Expanded offering
In 2023, many new sports were added and the offering types of existing sports expanded massively. In addition to our OG data provider The Rundown, we also partnered with Enetpulse and JsonOdds to be able to cover more sports.
By leveraging Enetpulse we added support for Tennis moneyline, totals and spreads markets, as well as Esports which we all love and are totally not addicted to (CSGO, CS2, DOTA 2, LOL). We also expanded our soccer and basketball offering with more leagues and tournaments.
JsonOdds specializes in Golf odds, and we’ve set up a partnership with them, which allows us to use their data to support Winner and H2H markets on the PGA tour.
All data coming from these partners is pushed to the blockchain in a permissionless way using Chainlink on-demand nodes.
Back to our OG data partner The Rundown, we have worked together throughout the year to add support for player props, and we were very pleased to roll this out in time for the NFL season. We subsequently added support for MLB, NHL and NBA props markets as well.
Player props have been hugely welcomed by our users, yielding $1 million in volume in the short time span since release.
We laid the architectural groundwork for Same Game Parlays, allowing users to combine moneyline+totals positions across the most popular sports we offer. We plan to add many more SGPs as we go.
At Thales, we love gamification, so throughout the year, we had many interesting campaigns, such as March Madness prediction NFT brackets, NBA playoff and Superbowl campaigns, Tennis grand slams campaigns, etc…
Talking about incentives, here’s a reminder about our season-long Big3 campaign, where we are rewarding 30k OP, 30k ARB and 60k THALES across 3 most popular sports (NFL, NBA and EPL) pro rata to all users wagering on those markets.
Let me offer a small hint here: if you do a parlay with 1 NFL, 1 NBA and 1 EPL game, you are eligible for all 3 buckets at the cost of one. And that parlay also makes you eligible for biweekly trading competition, so like at this point, are you really still reading this instead of parlaying it up?! Well, if you are, you deserve to move from recap to the good stuff.
The Good Stuff
Account abstraction and multiple collaterals
How cool would it be to use the same wallet on your phone and desktop, without having to export private keys/seed phrases and re-import them from one device to another and risking all sorts of attack surfaces along the way?
How about not having to worry about smart wallets, and being able to pay gas costs with whatever available crypto you have at hand?
Seems like the above is very close to being possible with EIP-4337. Overtime is en route to add support for Account Abstraction to the dApp working together with Biconomy and Particle.
Overtime users will be able to log in to the dApp with their web2 social accounts, deposit funds in their newly generated address, and simply use the platform without needing ETH for gas or manually confirming the transactions on chain.
The web3 experience is about to become much simpler. This solution is in the late stages of development and should be live by the end of the year!
We already paved the way for easy on-ramping by adding direct support for pretty much all liquid stablecoins on L2s we support, as well as tokens such as ETH, WETH, OP as ARB. Of course, tech suckers that we are, we did this atomically by leveraging Uniswap’s v3 SDK, so for the end user it’s all as smooth as Tennessee Whiskey (cheers fellow country fans).
Users can both pay with those collaterals and collect winnings into them. Using ETH as collateral is especially interesting here as it effectively removes a large on-ramping hurdle, as it’s both the gas and “value” token for those who choose to use it as main collateral.
This makes potential integrations very easy.
Overtime Mobile Experience
So far, Overtime has been predominantly used by Desktop users. This is due to the friction point of having to connect your third-party Ethereum wallet of choice to the dApp to use it and a large majority of users use their wallets exclusively on their desktop devices.
This wallet UX problem was never fully optimized for mobile devices and presents a massive growth hurdle for the entire space. Having Account Abstraction implemented on Overtime via Biconomy and Particle wombo-combo opens these exact doors for one massive growth avenue: a friction-free mobile experience!
When you allow users to generate their own Smart Accounts via Social Login (Google, Twitter, Discord etc.), fund those accounts with simple CEX-like deposit mechanics and abstract away the transaction gas costs, you finally have yourself a recipe for a Web2 Mobile App UX, a much-needed growth catalyst for all retail-facing Web3 dApps.
This way, we can finally leverage our permissionless onchain nature to the fullest and tap into the next billion users. Using Overtime on mobile would be as simple as any other Web2 application; the end user would not even know that everything is powered and settled by a complex web of permissionless Smart Contracts on the Ethereum Network.
What’s even better is that you can use your social login of choice to access your Overtime Smart Account on any device, completely removing the wallet friction out of the equation.
After the Account Abstraction is fully implemented on Overtime dApp, creating a Progressive Web App or even a full-fledged Android and iOS application should be trivial to deploy.
Integratooor season
Recently, we have observed a large positive effect of us staying true to our web3 values by having a fully onchain, open smart contract architecture. Our contracts are becoming a widely accepted market making and collateral infrastructure to a variety of third-party applications.
Projects are popping up left and right, leveraging Thales’ contracts to power their own platforms. They do not need permission to use our contracts and they do not need to worry about solving market making and liquidity on their own.
Integrators can simply connect their applications to Thales’ Sports Markets contracts via our APIs and seamlessly gain access to a cutting-edge liquidity and market making layer for their application needs.
This integration not only guarantees complete control to the user and transparent 100% collateralization at all times, it also has a direct financial benefit to the integrator. All integrators accrue a portion of Protocol Fees atomically from all transactions that their interface drives.
Thales Council has voted in a proposal that allows all integrators to apply and receive increased kickbacks up to 50% of protocol fees if they have a successful integration. This entire process is powered by a novel, Thales developed, Onchain Referral System which has a direct atomic kickback within the same transaction of a user buying a position from Thales’ smart contracts.
We couldn’t be happier with the response to this, as we have seen a number of integrations released and some to be released very soon: A shout to all the integrators that have been announced so far:
The overall feedback from all integrators was that we made the integration as easy as possible with our API and documentation, so if you are considering being an integrator yourself and swooping up those sweet risk-free referral fees, wait no more and check out this link to get started. As always, hit us up in Discord for anything we can help with.
Architectural Improvements
The ParlayAMM
Account Abstraction implementation will make using web3 products easier by a significant margin, but it will also make gas costs much more transparent. To non-web3-native users, paying $1 — $2 in gas for a $5 parlay will likely be a huge throw-off.
We can keep waiting for EIP-4844 and hoping it solves our gas issues, but I prefer being proactive.
We recognized changes we can make in our architecture which can greatly reduce gas costs. Notably, our ParlayAMM guarantees solvency by fully collateralizing all parlays by buying individual single positions from SportsAMM.
While utterly brilliant in its design — as acknowledged in a detailed Delphi Digital report — this approach is very gas-demanding. A 5-leg parlay can use up to 15m gas, or $2 — $3 per tx during high volume times on Optimism and Arbitrum.
Instead of using this approach, we can simply maintain our maxim of guaranteed solvency by directly locking the potential payout in the parlay contract.
For example, if someone puts down $5 on a 20x parlay, we lock $100 from the collateral pool in the parlay contract to guarantee his potential winnings. At first glance, this approach doesn’t seem very capital-efficient, but after giving it more consideration, I believe it’s actually more capital-efficient than our current approach.
This is due to the fact that the contract can release those funds as soon as the first game on the parlay goes against the position the user took. The current approach requires all games on the parlay to end before all individual positions can be exercised.
There are some trade-offs here that will be explained in more detail when the formal governance proposal is written, but the estimated gas savings are somewhere between 70% — 80%. For me, it’s clear that this needs to be done if we want to pave the way for mass adoption.
Save the trees
The second big hurdle we have scaling-wise is our own gas costs that come from pushing 100% of market data to the blockchain, including game metadata (teams, times, etc), all odds, and results, creating a dedicated market for each different market type and threshold (e.g. for player props, whenever a player line changes, we have to create a new market).
This architecture is inherited from ThalesAMM, and while very clean and “web3”, it’s holding us back on adding more markets due to massive ETH costs for us to maintain even the current number of markets.
Having sat on this for a while, I realized the solution for us is to introduce merkle trees to store at least some of that information in a condensed way. To those new to merkle trees, you can read more in detail here, but in short, it’s a beautiful structure that allows you to store infinite data “on the blockchain”, while not really pushing all that data to the blockchain. Instead, you push a merkle root bytes32 keyword that can be used to verify all other data in the tree.
The trade-off here is that the said data in the tree has to be served from somewhere, usually IPFS files, which does not represent a compromise on decentralization per se, but it does take away the aspect of being able to use the blockchain with no third-party tools required.
That trade-off aside, I believe this change will allow us to scale our offering 10x in terms of new sports, new markets, etc, so I find it well worth it. We’ll make this transition very smooth for all integrators by adding the new architecture for new sports and giving the integrators plenty of time to adapt before introducing it for existing sports and markets.
Live markets
This is one of the few things that were not yet released from the 10-year roadmap blog post. The base architecture has been defined as far as smart contracts + Chainlink nodes go and can be reviewed here.
A big hurdle here is how to make sure data flow is fast enough to close all potential gaps between e.g. a 70-yard touchdown being scored, and the blockchain receiving that information while ensuring the user experience is smooth.
While we are currently focused on reworking our architecture to ensure 100x scaling, I am positive we will have a full solution for Live markets in 2024.
Closing thoughts
Thales is an almost 3 years old DAO at this point. That’s like a veteran project in this space. I’ve been at it for a few years longer, having witnessed a couple of bull markets already.
I so very much hope people won’t make the same mistakes again, idolizing shit posters, trusting their crypto with the shiniest APR custody website, jumping from one ponzi with no legs to stand on, to the next one that doesn’t even have a torso.
But alas, I know it’s gonna be the same all… with some differences though.
We have a lot of infrastructure nailed down or in the pipeline at this point. Infrastructure needed for mass adoption of web3 at its core value.
Trustless. Permissionless. Fast. Yours.
As we enter this phase, remember: There are proven DAOs out there that have been and are actually in it for the users.
Your keys, your crypto, your data.
Thank you and onward towards a brilliant 2024!
- Danijel, your servant leader
