🏦Protocol Revenue
There are three primary routes for protocol revenue streams that can enhance the sustainability of SX Network without weakening the core value prop of the platform nor it’s current growth trajectory: Cross-Chain Fees, SX Casino, and Tiered Taker Fees.
Each revenue stream will generate USDC-based revenue, which could be distributed directly to SX stakers or used to automatically buyback and burn SX onchain.
The launch of this will enable SX to shift away from SX-only staking rewards, and enable SX to distribute additional USDC protocol revenue to SX stakers.
🔗 Cross-Chain Fee
SX is planning on deploying unique interfaces on a number of exciting L1 and L2 blockchains in the coming months utilizing its cross-chain betting functionality. Cross-chain bettors are expected to be relatively price-insensitive users that value convenience and promotions over liquidity. This gives SX more latitude to generate revenue through a cross-chain fee.
Total cross-chain betting volume would likely fall somewhat with the addition of a fee, although this decline would likely be tempered by SX launching on more chains. Cross-chain betting volume is Taker-only and currently constitutes ~20% of current daily betting volume.
🎰 Onchain SX Casino
SX has the largest onchain sports betting community in the world, creating a huge opportunity for SX to monetize through the launch of an SX-branded onchain casino. Casino games are some of the most highly-requested features by the SX community and this would open up SX to more types of bettors, stabilize betting volumes in the low summer months, and increase value accrual for SX. It’s extremely difficult to project protocol revenue from casino games as it requires projecting total betting volume from an entirely different product suite. Casino games typically generate a multiple of the total bets and revenue of sportsbooks. For context, centralized crypto betting platform Rollbit generates 7-10x more revenue per day from their casino than they do from their sportsbook.
We’re going to be launching the SX Casino with industry-leading return-to-player (RTP), targeting an average RTP of 99.5% across the games. This effectively means the SX Casino would expect to collect 0.5% per dollar bet on the platform. For traditional sportsbooks, the introduction of Casino products has typically led to dramatic increases in profitability and betting volume nearly overnight. Therefore, a highly conservative baseline estimate for the SX Casino is for it to generate 60% of the daily betting volume that the sports betting platform generates upon launch.
🎚️ Tiered Taker Fees
SX can also re-launch traditional commissions on SX betting volume to generate revenue. One potential route would be to take a highly targeted approach, through a tiered commission structure and focusing purely on Taker bets. This tiered taker-only approach would generate revenue without hurting SX’s core asset - its superior liquidity.
Based on current volume proportions, charging pre-game taker bets 1% of winnings, in-play taker bets 3% of winnings, and parlay taker bets 5% of winnings, would create a blended overall take rate of 0.5% on all betting volume, with likely little significant impact on overall liquidity and activity. This remains the worst of the three options though, as it hurts the core value prop of the product the most.
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