Flight of the Navigator Update v11
Stakin’ n Bakin’.
As we near our upcoming launch, I wanted to take the time to explain how some of our products function. This is meant to be informative, so I will go into some detail here, mainly as I want to start putting together this info for the gitbook and this is a great way for me to organize my thoughts. If you’re not into long reads, feel free to just ask someone in chat for the simple version.
Someone asked a great question in chat regarding our upcoming Staking Pool 2.0 that I wanted to address. As most of you know by now, our new pool will be a combination of staking APY rewards combined with game profit rewards in an auto-compounding pool. This has been a goal of mine since day one. As I’ve always said, who doesn’t want auto-compounding casino profits? That’s a beautiful thing. However like everything good, there are always caveats.
The question was, “Does the new staking pool carry any risk?” That’s a very astute question, and the simple answer is yes it does.
It’s important to note before we get into this, that the current staking pool is risk free, and at launch it will be converted into a normal risk free, manual compound staking pool. If taking on a bit of risk for increased rewards isn’t your thing, no sweat. Just leave your $CRUSH right where it is and continue to receive rewards.
Back to the dual rewards pool. So what is the risk here? The $CRUSH staked in the 2.0 pool will be there to provide a backup reserve of bankroll, in exchange for 60% of the profits. Just like APY, this 60% will be paid out based on your % of the pool. One of the biggest aspects of launching a iGaming platform is the bankroll. The size of the bankroll directly affects the size of the bets players can make, the number of players you can have, and effectively the rate at which you can scale. What that means is the larger your bankroll, the more risk you can take on to scale the platform. A system of investor funded bankroll became popular in crypto casinos a few ago, and it’s one of the amazing benefits of the space. Many people would love to be invested in traditional iGaming platforms but don’t have the opportunity as it’s just not feasible in the real world. Smart contracts are rad.
Now, before we dig into the numbers a bit, remember that odds always favor the house. Players will win, and we want them to win. Otherwise no one will want to play. That being said, odds still favor the house so statistically over time the house will profit. Additionally, there are safety nets in place so that it is statistically improbable that the entire bankroll will ever be lost. This is due to something called the Kelly Criterion, in which only a fractional amount of the total bankroll is exposed to a single win. This means that the max a player can win is less than 1% of the entire bankroll.
Unlike other gaming platforms that offer a similar investor bankroll function, the House takes on the risk first. What that means is that we have a House Bankroll that will be used first in case of loss. As mentioned players will win, and for most of the time, only the House Bankroll will be affected without ever touching the staked funds. Even so, 60% of profits will still be paid out to Stakers even if the staked funds are never touched. Only if the entire House Bankroll is depleted will we touch the staked funds, and as that loss is recouped by player losses, staked funds will be repaid first, before ever repaying the House Bankroll. The safety of the staked funds always comes first. Keep in mind that 10% of all profits go into growing the House Bankroll, therefore building an even bigger buffer and making the system even less risky for Stakers.
Let’s dig into details and what’s actually happening here.
First just a reminder of how profits are distributed in full —
It’s important to note that 3rd party game providers receive a % off the top from all player losses incurred on those games. Thats typically between 8% and 20%, and this is not included in the calculations here as it’s removed before hand. Also please note that for any Bitcrush Arcade (Dice Invaders) developed games we do not take a %, but instead share the full profits.
The profit distribution looks like this:
60% — Staking Pool 2.0 Stakers
1% — Burn
10% — House Bankroll
2% — Lottery Seeding
27% — Platform Reserve to be used for marketing, development, fees, etc.
At Launch we will be committing a bankroll of around 10% of staking pool Funds, or 300k $CRUSH, whichever is more. The Total Bankroll used to calculate max win will be the House Bankroll + Staking Pool V2 Funds. Remember only a small fraction of this total is exposed in any one bet.
Let’s start with what happens on the house side.
For these scenarios we’ll keep simple numbers so they are easy to understand.
We’ll imagine the House Bankroll is 100k $CRUSH, and the Staking Pool is also at 100k $CRUSH, for a Total Bankroll of 200,000 $CRUSH. As mentioned above this won’t be the case, but round numbers are easier to dissect.
When players win, the winnings will come from the House Bankroll. At this point the game profit is at a loss, and therefore no rewards are paid out, as there is no profit to be paid.
Let’s say a player won 100 $CRUSH.
Total Bankroll = 199,900 $CRUSH
House Bankroll = 99,900 $CRUSH
Staked Bankroll = 100,000 $CRUSH
Profit to be paid = 0 $CRUSH.
Now as players lose, the House Bankroll will be recouped until it is back at it’s break even, or 100,000. At that point any player losses are now profit and payouts will commence.
Let’s continue. Now let’s say the same player above loses 200 $CRUSH.
For this scenario, 100 $CRUSH will cover the previous losses bring us back to break even. This will leave 100 $CRUSH profit to distribute.
This will be divided according to the distribution mentioned above.
Total Bankroll = 200,010 $CRUSH (10% added to bankroll)
House Bankroll = 100,010 $CRUSH (10% added to bankroll)
Staked Bankroll = 100,000 $CRUSH
60 $CRUSH is now ready to be distributed to the staking pool. Just like all staking pools, this gets distributed to stakers according to their % of the pool, and of course APY is distributed alongside. Once auto-compound is called, Staked Bankroll will increase by 60 $CRUSH (+APY — minus fees).
This will leave a grand Total Bankroll of approx. 100,070 $CRUSH and the cycle starts all over again.
Some of you may have noticed that in this whole scenario so far, there has been no risk to the staked funds, and yet payouts were still made to stakers. You’re absolutely right. In general this is how it will be. We’ll get into the risk below.
One important thing to note here is that we’re introducing a profit buffer to the staking pool that requires a certain amount of profit before the claim function can be called. This is due to the reality that profit/loss will fluctuate rapidly and we want to be sure we’re in actual profit when we pay out since blockchain times are a bit slow. This buffer can be adjusted as needed to grow along with usage.
You’ll see different stages of staking pool depending on where we're are in the process. If we’re at a loss, you’ll see “Blastoff stalled” in red and a negative number indicating how much of a loss needs to be made up before we’re back at breakeven. If we’re above breakeven, but not above the buffer zone, you’ll see in yellow “Blastoff Pending”. And when we’re in profit above the buffer you’ll see in green, “Blastoff Ready.”
It’s also important to note that even though we may be stalled or pending and there may not be any profit to be paid out, APY profits can still be auto-compounded at any time just like normal by calling the same function.
Ok so what happens though if we hit a longer period of drawdown. Here’s where the risk comes in. As mentioned above, even though the odds are in our favor, players will still get lucky and win.
In the case that players winning streak depletes the entire House Bankroll, the Staked Bankroll is there as a reserve.
Let’s reset the scenario above, with a Total Bankroll of 200,000 $CRUSH (100k house/100k staked). Let’s also assume we go through a drawdown period of losses with players winning a total of 105,000 $CRUSH.
Here’s what happens.
First; obviously there is no profit to pay, so Blastoff is stalled.
100,000 $CRUSH from the House Bankroll has been used, and now 5,000 $CRUSH from the Staking Pool will be used to cover losses.
Total Bankroll = 95,000 $CRUSH
House Bankroll = 0 $CRUSH
Staked Bankroll = 95,000 $CRUSH
What this means is that 5k $CRUSH is frozen from being able to be withdrawn from the Staking Pool. Stakers share in this risk based on their % of the pool, in the same way they share in the rewards.
So in this scenario, let’s imagine you have 1,000 $CRUSH staked, meaning you own 1% of the pool. This means that 50 $CRUSH would be frozen, and the remaining 950 $CRUSH would be staked normally. Please note that even though 50 $CRUSH are frozen, you still earn APY on the full 1,000 $CRUSH. This means even if you decided to get out at this point and withdraw your unfrozen 950 $CRUSH, you’ll still earn APY on your frozen 50 $CRUSH.
While this is in reality a very possible scenario, remember that statistically in time we WILL recover. As players lose, the first to get recouped is the Staked Funds. This means that your frozen funds will become less and less frozen until they're fully unlocked. Only at that point, will the House Bankroll begin to get recouped. Finally once we’re back to breakeven, we will resume with payouts.
So I hope you’re starting to understand that with the high reward, dual payment system comes some risk, but we’ve designed it in a way where the house always take on the risk first, and we make sure you the Stakers are always the priority when recouping losses, and paid out quite handsomely during the good times.
I know this was a hefty read, and there’s no doubt I’ve forgotten to include some things. So I’ll try to cover anything I may have missed in the next update when I discuss the live wallet.
Guys, we’re super close. Can’t wait until we can all finally being able to
Edit: Updated November 5th, 2021
Staking Pool 2.0 — Frozen Bonus
There is an update to the Staking Pool 2.0 functionality I wanted to update everyone on. This isn’t due to testing over this week, but rather I wanted to see if our updates would change any of the functionality before I announced it since it’s pretty awesome!
One thing that we noticed is that to keep gas costs low (the transparency we add to centralized games requires a ton of syncing with the blockchain which isn’t cheap), it wasn’t feasible to lock frozen funds up for every staker individually and permanently when we are in extended periods of drawdown. This is because as players win and lose, that frozen amount will be constantly changing, meaning every few blocks would require updates, syncing, etc.
What this means is that if a staker withdraws during a frozen period, their % of the staking pool will be frozen and unavailable for withdraw. However, as they withdraw, their % of the total pool decreases, and therefore their frozen share decreases as well, and they can withdraw again effectively exiting the pool completely and pushing the frozen shares on to others. Additionally, as users enter and leave the staking pool during frozen times, their % of the pool changes and therefore so does their frozen amount.
So we needed a way to deter stakers from leaving the staking pool during these frozen periods, and reward stakers for sticking it out since we’re all in this together.
Here’s what we landed on:
- During Frozen periods withdraws are limited to once every three hours.
This allows us time to recoup funds before any FUD based exodus occurs. You still have access to your full amount (minus frozen), and don’t forget you will still be paid APY on your full staked amount (including frozen). However over time you still may exit completely.
- During Frozen periods, withdraws will incur a 15% withdraw fee.
What’s great about this is that the fee gets added directly to the stakers bankroll to recoup funds faster. Meaning that when someone does withdraw during frozen times, they are contributing to recouping funds and getting us back in profit sharing territory much quicker.
Finally and most exciting;
- During Frozen periods, APY will be boosted by 25% for stakers!
This means just for hanging in there together with everyone else, you’ll participate in the APY rewards boost, meaning your profits increase during good times and bad, just for helping out fellow Crushers!
Never forget, as long as there is a house edge, losses are temporary, and it’s a statistical certainty that they will be recouped over time.