FansUnite - The Protocol for Betting ERC-20 Tokens on Ethereum

Transcription

1 White Paper FansUnite - The Protocol for Betting ERC-20 Tokens on Ethereum Version 2.0 This document contains proprietary information. Written consent is required for distribution or duplication of any portion contained herein. All rights reserved: 2018 FansUnite Limited.

2 1.0 - Executive Summary FansUnite is paving the way for a diverse ecosystem of DApps, enabled by the free and decentralized provisioning of sports data. The FansUnite Protocol and the underlying market data offer many use cases, which are only limited by the ingenuity of participating developers and businesses. The FansUnite Ecosystem roadmap will primarily focus on the release of the FansUnite Protocol, and the first decentralized application to be released on the Protocol, the FansUnite Sportsbook. The FansUnite Protocol consists of a library of publicly available smart contracts, developer friendly tools, and a token economy that incentivizes network participation of independent Oracles to provide low-latency and accurate sports data. These three facets of the FansUnite Protocol address shortcomings in the existing sports betting landscape and represent key developments in facilitating a disintermediated betting infrastructure. The first application to be built atop this protocol will be the FansUnite Sportsbook. The FansUnite Sportsbook has been designed to incentivize widespread adoption by bettors by implementing a historically low 1% margin and providing a social platform to facilitate collaboration amongst bettors. FansUnite hopes to showcase the type of compelling applications that are possible in a distributed and developer-driven ecosystem. The FansUnite team is excited to introduce a more profitable, transparent and social betting ecosystem that delivers on FansUnite s mandate to continue improving conditions for bettors globally. For more information on the FansUnite Sportsbook DApp, please refer to the DApp White Paper. The FansUnite Protocol has been designed to fulfill the following: Enable fully decentralized applications (DApps) that are not reliant on centralized entities by sourcing event and player data from a network of independently operated and incentivized Oracles; Allow DApp developers to raise funds in and utilize their own Ethereum-based tokens on their platform while still using the FansUnite Protocol for market creation, bet submission, resolution and payout. Allowing for DApp developers to potentially conduct their own tokensales encourages adoption by a wide array of DApps and increases the potential volume of tokens bet on the protocol. Provide transparent access to all market data on the Protocol, which is currently the domain of major sportsbooks. This data is highly valuable and is currently a closed store of betting transaction data. The current practice of siloing data creates a major discrepancy in pricing power of a given market between major sportsbooks and small to midsize sportsbooks. Full access to the transparent betting data available through the Protocol changes this dynamic by providing equal access to all operators and bettors, fostering innovation, price efficiency and new market entrants. 2

3 Enable truly decentralized applications (DApps) that are not reliant on centralized entities by sourcing event and player data from a network of independently operated and incentivized Oracles; Allow DApp developers to raise funds in and utilize their own Ethereum-based tokens, while using the FansUnite Protocol for market creation, bet submission, resolution and payout. This approach allows DApp developers to potentially conduct their own token sales, encouraging adoption by a wide array of DApps and increasing the potential volume of tokens transacted on the protocol. Provide transparent access to all market data on the Protocol, which is ordinarily the intellectual property of major sportsbooks. This data is highly valuable and is currently a closed store of betting transaction data. The current practice of siloing data creates a major discrepancy in pricing power for any given market between major sportsbooks and small to midsize sportsbooks. Full access to the transparent betting data available through the Protocol changes this dynamic by providing equal access to all operators and bettors, fostering innovation, price efficiency and new market entrants. Create infrastructure that reduces the dependence on, and redistributes value from, sports data monopolies like SportRadar to a network of independent Oracles providing sports data. Eliminate unnecessary duplication of work and restore network effects by releasing an efficient and decentralized sports betting solution on Ethereum, providing a free application-agnostic protocol that any DApp can utilize. Encourage adoption by existing operators and reduce technical barriers to entering the cryptocurrency and blockchain-based sports betting market by providing a library of smart contracts, the FansUnite.js package, the provision of player and event data by a network of Oracles, and KYC (Know Your Customer) compliant services. Immediate benefits to operators and applications built upon the FansUnite Protocol includes a significant reduction in cost by using smart contracts instead of payment processors and by leveraging a decentralized network of Oracles instead of paying for costly data feeds. Streamline redundant use of Ethereum network resources by: Providing a standardized library of team and event information on IPFS with standardized identifiers on-chain for any DApp to utilize; and Utilizing an off-chain relay on-chain settlement system inspired by 0x (link). Messages are passed from the bet backer to a bet relayer who, upon checking and accepting the parameters of the bet, then posts the bet along with the original signed cryptographic hash on-chain. 3

4 Table of Contents Issues in Sports Betting Unfair Value Capture Requirement of Trust High Fees Movement of Money Integrity Competitive Landscape Centralized Asymmetric Market Information Fail to Facilitate Adoption Isolated Token Economies Non-Compliant FansUnite Protocol Disintermediated Application Agnostic Trustless Efficient Community Governed Regulatory Compliant Technical Architecture Smart Contracts InterPlanetary File System JS Library Event Listing and Oracle Network Technical Procedures Market Creation Minimizing Duplicate Events Custom Markets Bet Submission Messaging System Token Escrow Calculation Partial Matching KYC / AML Implementation Event Resolution Oracle Staking & Reward Oracle Consensus Oracle Reputation Bet Grading Bet Resolution Library 4

5 Technical Procedures (ctd.) Incorrectly Graded Wagers Dispute Process Withdrawal Allowance Contingency Reserve Fund FansUnite Token Governance Betting Exchange Fees Resolution Dispute Staking Contingency Reserve Fund Oracle Staking FansUnite Roadmap Business Plan Market Factors Corporate Structure Token Supply & Distribution Use of Proceeds Team Summary Appendices

6 1.0 - Issues in Sports Betting The sports betting industry is founded upon intermediaries charging fees for facilitating liquidity amongst bettors. The FansUnite Protocol and its use of the Ethereum blockchain holds the key to disrupting this long-standing equilibrium. One of the primary concerns of bettors is the assurance that their transactions are safely processed and honoured. As such, bettors favour established operators with a good track record of paying out wagers and governed by gaming authorities. This is a natural and necessary tendency in a system where trust is required to conduct transactions between two parties. Unfortunately, this pull towards established sportsbooks has resulted in the gradual consolidation of disproportionate amounts of market data amongst the dominant operators in the space. The resulting oligopolistic sports betting landscape has allowed these entities to sequester value away from other market participants. Mergers between industry leaders like Ladbrokes and Gala Coral (subsequently, in March 2018, Ladbrokes Coral Group PLC was acquired by GVC Holdings PLC), or Betfair Group PLC and Paddy Power PLC, only expedites the consolidation of market data and further reinforces the need for a change to encourage competition and innovation. This consolidation of market data causes several problems for the sports betting industry which we outline below. / 1 Unfair Value Capture The siloed data structure in the existing sports betting market results in large data oligopolies (i.e. major sportsbooks) having the ability to out-price competitors due to their volume of available market information. These major sportsbooks are able to more efficiently price markets than smaller competitors. This competitive advantage allows the major sportsbooks to indirectly force smaller competitors to adjust to their lines or be arbitraged into illiquidity, stifling competition and discouraging new market entrants. The utilization of a public blockchain to transparently store betting transaction data provides a solution to the data disparity by providing all network participants, bettors and operators alike, with equal access to market data. These entities are able to more efficiently price markets than small competitors... stifling competition and discouraging new market entrants. 6

7 / 2 / 4 Requirement of trust The existing betting market sees bettors entrusting operators with their personal information and funds, with the hope that prior good behaviour implies that bets will be honoured, funds paid out and personal information protected. The utilization of blockchain and smart contracts on Ethereum allows for bettors to hold funds in their own wallets, maintain control of their personal information, and place their trust in a codegoverned environment rather than a centralized entity who is a party to the betting transaction. / 3 High fees As stated above, the disparity in market information results in few operators possessing the necessary data to efficiently price markets. As these smaller operators do not have the data required to efficiently price markets, their only alternative is to offer higher margins so as to not have poorly set lines that will be taken advantage of. By offering transparent and readily accessible market information on the blockchain, and incorporating tools as part of the FansUnite.js developer library, the FansUnite Protocol will make this information readily accessible. Further, the FansUnite Protocol will level the playing field for operators and allow more efficient price discovery, encouraging further competition on price. Clearly, such a result would benefit the existing betting market which has seen massive mergers create insurmountable obstacles for new market entrants, ultimately depriving bettors of choice and price. Movement of Money The FansUnite Protocol can also solve another contentious issue for bettors - lack of control over funds and delays with transacting their own assets Bettors would prefer to have control of their assets at all times and be able to transact said assets quickly. Deposits and withdrawals instead often take days, with many bettors still relying on electronic fund transfers (EFTs) and wire transfers. By leveraging a cryptocurrency, bettors are able to instantly deposit and withdraw assets. / 5 Integrity Another unfortunate byproduct of this system of siloed transactional data is that it is impossible to capture a holistic view of any given betting market. Recent events such as the Wimbledon match fixing scandal 1 have highlighted that match fixing concerns are valid at even the highest levels of competition. The legalization of sports betting in the United States has resulted in a standoff between sportsbook operators and professional leagues who feel entitled to compensation for the increased pressure and cost to police the integrity of the games played in their respective sports. By providing a global and transparent liquidity pool, the FansUnite protocol provides a ready made solution to all stakeholders in the integrity debate. Suspicious betting activity is markedly easier to spot in a system where global market data is available to regulators, no longer able to be hidden amongst activity spread across numerous operators. 1 Wimbledon first-round men s doubles tennis clash reported over... - ABC. 11 Jul. 2018, Accessed 20 Jul

8 2.0 - Competitive Analysis The sports betting industry is widely considered to be an industry ripe for disruption by blockchain technology. Blockchain facilitates trust in financial transactions between arm s length parties. The advent of smart contracts on Ethereum made it simple to programmatically disburse funds based on a given outcome, an obvious parallel to betting. As such, it is not surprising that we have seen an abundance of decentralized applications attempt to create sports betting solutions on the Ethereum blockchain. Unfortunately, these projects seem to misunderstand why a decentralized and disintermediated sports betting future is both beneficial and inevitable. Consequently, these proposed platforms miss key value propositions that we feel are integral to a long-term solution for sports betting on the blockchain. We outline some of these shortcomings and and summarize their approaches below. Centralized Numerous projects continue to purport that they are facilitating decentralized betting simply by utilizing smart contracts to resolve wagers. Smart contracts actually operate like walled gardens - closed ecosystems in which all operations are controlled by the ecosystem operator, with no easy access to external data. This represents a challenge to sports betting DApps who need to port event data from the real world on-chain. Outlined below are the various proposed solutions by competitors: Bethereum and Decent.bet each propose systems that rely on trusted Oracles for external sports data, centralized data feeds no different than those used by existing sportsbooks. By still utilizing these data providers for event creation and bet resolution these platforms fail to eliminate central points of failure and mitigate their own overarching ability to dictate results. Betrium propose that event organizers should create and resolve their own events. This approach exposes bettors to risks associated with bad actors and negligence by these third parties. Betrium also states that bets are only placed on-chain at the conclusion of an event, which defeats the entire purpose of utilizing a blockchain betting solution. Better Betting proposes that sportsbooks either resolve their own bets or rely on some form of consensus, but then provide no implementation details and allude to outsourcing resolution and arbitration to a third party. MeVu does outline a decentralized solution, though their proposed solution oversimplifies the complicated issue of a network reaching consensus on an outcome. They focus on operating a purely peer to peer model and propose that bets initially be resolved by the parties involved. In the case of a dispute, events are then queued to be resolved by a consensus of mvu token holders who manually vote on the correct outcome over a period of 8 to 16 hours. This solution is likely to prove slow, ineffective and contrary to a bettor s desire to see winning funds returned quickly. Additionally, MeVu s outlined proposal offers no contingency in the case of a lack of respondents or an otherwise unsatisfactory quorum being reached by the dispute process. 8

9 Wagerr proposes a decentralized Oracle network on a fork of the PIVX blockchain. Their approach, while not fully detailed in terms of technical implementation, is theoretically suitable for the provisioning of peer-to-peer betting. Unfortunately, since conducting their token generation event in June 2017 they have failed to deliver on any milestones in their roadmap, delivering only a forked copy of the PIVX wallet. The team has since ceased giving updates on development progress. Asymmetric Market Information None of these platforms attempt to create a sports betting solution for any DApp on Ethereum to utilize. Without the participation of a significant number of DApps on Ethereum, there will be no democratization of market data for the shared benefit of the network. This ultimately means that these platforms will fail to encourage new market entrants and foster innovation. In addition, the implementations proposed do not allow for the easy aggregation of betting data. Better Betting utilizes separate bet smart contracts for every event between two parties. This is inefficient as an operator who wanted to aggregate market information on a particular league would have to obtain the individual bet contract addresses for every wager on every event within that league. Bethereum states that every bet will be recorded on its own smart contract, which is highly inefficient from both a network perspective and an organizational perspective for future queries or aggregation. Betrium only places market information onchain after the conclusion of an event, which means that this market information would not be transparently available to operators to use for the shaping of efficient market prices. MeVu utilizes a slightly more efficient approach, placing all wagers into a wagers smart contract, though this is still difficult to aggregate any meaningful segmented market information from. Fail to Cater to Traditional Operators The betting exchange or sportsbook approach of the proposed platforms will not appeal to traditional operators as a potential partner. The proposed approaches simply will not work without achieving sufficient liquidity across a wide array of markets. Without liquidity, bettors are unable to see their bets matched and their wagers accepted. Ultimately, obtaining the required liquidity for users of the proposed platforms to have their desired bets accepted under a pure betting exchange approach seems unlikely as we struggle through the adoption phase of cryptocurrency. These proposed platforms create a closed ecosystem of misaligned incentives, rather than the inclusive approach of the FansUnite Protocol. Potential partnership incentives are misaligned between traditional operators and the proposed platforms, as the majority of net benefit would be to the platforms who would likely require the use of their token. Any other approach would simply devalue the tokens of the proposed platforms significantly. Moreover, these traditional operators would depreciate their brand through the use of another operator s token. Importantly, the proposed approaches do not allow traditional operators to create or utilize their own native tokens. As such, traditional operators will not be able to maintain or enhance their brand and reach. 9

10 However, the FansUnite Protocol encourages adoption by incentivizing traditional operators to become partners free to utilize and/or conduct a token sale for their own native token while enhancing their brand, or adopt an existing token. FansUnite believes that these significant differences will dampen the appeal of the proposed solutions to traditional operators, while encouraging mainstream adoption of the FansUnite Protocol. Isolated Token Economies These platforms claim to be building infrastructure that will be used by partners and other operators who will port to or whitelabel their platforms. Unfortunately, none of their economies allow for an alternative token - like that of a potential partner - to be used as currency. The lack of support for alternative tokens significantly undermines these platforms appeal as a protocol for other DApps to build atop of, and consequently hurts their chances of establishing themselves as a universal solution. The proposed platforms result in the creation of isolated but similarly functioning betting ecosystems, all with similar data structures, event information and smart contracts being separately and inefficiently stored on the Ethereum blockchain. Lack of Regard for Regulatory Compliance These platforms universally disregard the importance of providing a regulatory compliant offering, both with regards to financial regulatory bodies such as the requisite security commissions, gaming authorities and gaming legislation such as Know Your Customer (KYC), Anti-Money Laundering (AML), or obtaining appropriate gaming licences. The likelihood of mainstream adoption is significantly reduced by the failing to comply with necessary legislation. Further, the failure of these proposed platforms to comply with applicable legislation renders it impossible for traditional sportsbooks to condone or utilize these platforms to gain exposure to a new market of cryptocurrencybased bettors. Furthermore, KYC/AML regulations and gaming licensors exist to defend the public interest by ensuring bettors are of age, the origin of funds are known and that operators are of necessary standard. These are all principles that FansUnite supports. Bethereum Better Betting Decent.bet Betrium Wagerr MeVu FansUnite Decentralized No No No No Yes Yes Yes Accept any ERC20 Token Facilitate Traditional Operators Solidity Proof of Concept Regulatory Compliant Approach No No No No No No Yes No Yes No No No No Yes No No Yes No No Yes Yes No No No Yes No No Yes Further, it is one of our mandates to ensure that FansUnite meets or exceeds disclosure 10

11 3.0 - FansUnite Protocol FansUnite wants to address the concerns cited above and address the issues currently plaguing the sports betting industry. The Protocol achieves this goal by creating a fully disintermediated system for sports related DApps to build atop of. The FansUnite ecosystem will allow applications to raise funds in and utilize their own application-specific tokens for betting, while leveraging the FansUnite Protocol s smart contracts, blockchain recording, and decentralized approach to sourcing sports data. The Protocol achieves the following: Lowers the technical threshold of developing decentralized sports betting and sports data applications by providing core smart contract infrastructure and developer tools; Facilitates adoption by traditional operators by solving obstacles like Know Your Customer (KYC) / Anti-Money Laundering (AML) compliance that otherwise preclude them from taking bets in cryptocurrency; Make more efficient use of Ethereum network resources by: Reducing duplicate information being stored on-chain by standardizing event, league and team information; Vastly reducing network traffic by utilizing an off-chain relay on-chain settlement strategy similar to 0x s approach for decentralized exchanges; Remove central points of failure from the Protocol so it can function autonomously and be community-governed; Provides transparent market information to all network participants by architecting the Protocol to allow for easy aggregation of all market data run through our Protocol; and Produce a free and open protocol geared towards enabling an ecosystem of sports betting and sports data DApps on the Ethereum blockchain. 11 Copyright FansUnite Limited. All Rights Reserved.

12 Efficient Use of Network 12 Copyright 2017 FansUnite Limited. All Rights Reserved.

13 Core Aspects Disintermediated. Long-term blockchain betting and data solutions must embrace decentralization and embed it into all facets of their offering. The result is a robust system that is able to function autonomously, independent of a controlling entity or any centralized data providers. It is only by implementing a fully disintermediated architecture that we are able to redistribute value away from data monopolies and to network participants. FansUnite decentralizes the provisioning of sports data by building a protocol that distributes responsibility over data provision, bet resolution and dispute resolution to a network of independently operated Oracles. Token Agnostic. The FansUnite Protocol is intended to serve as an unbiased and agnostic building block for sport-data reliant DApps. Developers are encouraged to not only build atop of but also improve the underlying protocol itself. A portion of the reserve pool will be allocated towards community developer incentives that will be tied to contributions to the code base. History has proven that community-backed opensource projects triumph over enterprise-driven counterparts because the capacity of any one central entity is finite. By allowing any Ethereumbased token to be transacted on our protocol, we increase our appeal to both developers and operators who are still able to fundraise via a token sale and continue to leverage their existing brands. Such an approach provides maximum flexibility and choice to potential future users of the protocol. Trustless. Smart contracts are uniquely suited to serving as trusted arbiters for transactions, as the contracts can hold tokens in escrow and automatically transfer payouts based on a given input. Unfortunately, the utilization of smart contracts to execute wagers does not equate to a fully trustless system as the parties are still reliant on, and have to trust in, the source of the data that is used to arbitrate the bet. In the case that this data is sourced from a centralized data feed paid for or provided by the controlling entity, this represents no real departure from the centralized system of sports betting today. FansUnite solves this by incentivizing an independent network of Oracles to provide the data that is used to resolve bets. As such, the FansUnite Protocol will be able to provide truly trustless betting by distributing the responsibility for arbitrating bets out to a network rather than a source chosen by the controlling entity. Efficient. The FansUnite Protocol significantly reduces the recording of duplicate data on the blockchain and mitigates the need for individual operators to each upload their own event data for identical events. FansUnite achieves this by creating consistent shared processes for all Protocol participants dictating the efficient and organized storage of league, team, and event data. These unique structures identifiers will be stored on-chain with tertiary details stored on IPFS. For implementation specifics surrounding these standardized structures and the uniform 13

14 nomenclature that will be used to catalogue and access this data, please refer to section 5. FansUnite will also implement an off-chain relayer on-chain settlement model similar to 0x to decrease the number of transactions and eliminate the need for books to store and update rapidly fluctuating information like line movements on-chain. Community Governed. Any long-term blockchain betting and data solution should implement tools that encourage beneficial behaviours and which allow for self-governance. On-chain decentralized governance is still a heavily researched subject and is an important component of the FansUnite Protocol. Governance will be implemented using an existing solution l such as Aragon or Harbour. All necessary steps will be taken to ensure the community is able to determine the Protocol direction and roadmap. Our token economy has been devised around the premise that Oracles must be properly incentivized to act in the best interests of the Protocol. In spite of this, the network will still need to be able to exercise discretion in defining acceptable Oracle standards, adapting to remove malicious actors on the network, and determining the future roadmap for the Protocol. Regulatory Compliant. Regulation is an important foundational requirement in the sports betting industry and any successful protocol must respect applicable legislation in order to obtain widespread adoption. Although we feel strongly about facilitating decentralization, we also believe there is a social responsibility to prevent underage gambling, money laundering, gambling addictions and adhere to gambling laws in each jurisdiction. With this in mind, Know Your Customer (KYC) and Anti- Money Laundering (AML) solutions must be implemented into the protocol. There are many identity protocols that are under development, such as uport or Civic, and depending on the maturity of their technology at the time of implementation, we will partner with a solution that makes sense. Properly validated addresses will have to be whitelisted with the applicable betting contract in order for it to accept any transactions from such address. We attempt to find a middle ground between bettor anonymity and compliance by utilizing a third party product to perform KYC and AML checks. Regulatory authorities would have the ability audit samples of users from these third parties, while operators would only be privy to whether users were whitelisted in their jurisdictions or not. 14

15 4.0 - Technical Architecture The FansUnite Protocol is comprised of the following: Solidity Smart Contracts InterPlanetary File System (IPFS) Developer Tools - FansUnite.js Javascript Library Event Listing and Oracle management DApp Smarts Contracts The primary feature of the FansUnite Protocol is the use of the blockchain to facilitate decentralized betting between two parties that is secure, transparent and fair. The Ethereum blockchain is used as a distributed database to store the required information necessary to settle a bet. Smart contracts are also used to escrow tokens to cover each party s risk, guaranteeing sufficient tokens for all winning parties can be paid out. Further, if blockchain-based betting is to be fully decentralized, a single point of truth cannot be used to provide the outcome of an event. The FansUnite Protocol will utilize a network of independently operated oracles to provide the data that will ultimately grade a bet. These oracles will be incentivised and rewarded for providing fast and accurate data, with the reward based on the betting volume of that specific event. These oracles will, through smart contracts, stake FAN tokens, earning or losing reputation dependent on whether their data is ultimately correct or not. A dispute system will also be developed using smart contracts. This will allow bettors to challenge the result provided by the oracle network if they believe an event was resolved incorrectly. FAN Tokens are required to be staked to initiate a dispute. For more information see Section InterPlanetary File System (IPFS) InterPlanetary File System (IPFS) is a peer-to-peer distributed file system. Storage on IPFS is significantly cheaper than storing on the the Ethereum blockchain and allows the Protocol to record metadata about participants, events and leagues that are not critical to grading a bet. Data on IPFS is referenced by a unique cryptographic hash that will be stored on the blockchain. The additional metadata will be a resource for developers to create content rich DApps. 15

16 4.3 - Developer Tools - FansUnite.js Javascript Library A JavaScript library (FansUnite.js) is being created which is an abstraction layer to easily interact with the underlying smart contracts. The JavaScript library will aid in fostering and accelerating adoption of the protocol. 4.4 Event Listing and Oracle Network DApp The large diverse oracle network will allow for a fully decentralized system. To facilitate initial adoption, a DApp is being released that will let anyone easily create an oracle, manually stake, provide data and earn a percentage of Ethereum-based tokens that is wagered through the Protocol. Additionally, this DApp will list all the created events/markets and allow for operators to create new events/markets. 16

17 5.0 - Technical Procedures Event and Custom Market Creation Every bet must reference one or more events (or a custom market) as the outcome of events is used for grading the bets. The event schema has been designed to accommodate all sporting events and is defined in Table 1. Critical parameters required to grade all the various bet types are recorded on the smart contract. Additional parameters that help describe the event are stored using IPFS and cryptographically linked to the event on the smart contract. Events can be created by sending transactions directly to the smart contract. However, to drive initial adoption and reduce friction for operators and non-technical users, a DApp will be released utilizing our abstraction layer (FansUnite.js), that will allow for easy interaction with the smart contracts Minimizing Duplicate Events Operators are encouraged to use events that have already been created, thus reducing their cost while simultaneously minimizing strain on the Ethereum network. The event listing DApp will display all events already created, helping operators minimize the likelihood of creating duplicate events. The long term goal is for all parties on the Protocol (bettors, operators & oracles) to always agree on the exact same event. Additional functionality will be built into the event smart contracts to reduce the likelihood of duplicate events. This additional functionality will be achieved by creating a unique ID hashing specific parameters such as participant IDs and event start time and preventing a duplication of that ID from being stored Custom Markets In order to satisfy all markets that a traditional bookmaker offers, the Protocol will allow for custom markets to be created. Custom markets traditionally will fall into one of the following categories: Binary outcome - Wether a given outcome does or does not occur; and Multiple outcomes - Which outcome out of a list of outcomes occurs. Custom markets can be associated with sporting events, but it is not necessary. The creator of the custom market will also have to provide the possible outcomes. 17

18 Table 1: Event Schema Definition Parameter Data Type Constraint Description participantids bytes32 (array) required List of all participants IDs competing in the event minperiods uint required The minimum number of periods of an event maxperiods uint required The maximum number of periods of an event starttime uint required Time and date of when the event begins extraperiodsbeginat uint optional The period at which extra time / overtime begins shootout boolean required An indicator for whether the event can potentially end in a shootout if the score is equal after the maxperiods draw boolean required An indicator for whether an event can potentially end in a draw homeparticipant bytes32 optional The participant id of the home team leagueid bytes32 optional The ID of the league of which the event is part of sportid bytes32 optional The ID of the sport of which the event is part of Bet Submission Decentralized bookmaking shares many characteristics with decentralized trading. As such, components of the FansUnite Protocol are inspired by the 0x project. Bookmakers offer betting odds on a plethora of markets and events, with odds that constantly change depending on the amount that is wagered on each side. With the current state of Ethereum, storing these changing odds on the blockchain is costly and inefficient. Inspired by 0x, a messaging system using off-chain relaying and on-chain submission/settlement will be implemented that will allow for bookmakers to offer traditional markets and their associated dynamic odds and betting exchanges to display all offers prior to submitting them to the blockchain. All bets are ultimately submitted to the betting smart contract and tokens are automatically escrowed. 18

19 Messaging System The messaging format outlined in Table 2 allows for any Ethereum-based token to be wagered and is applicable for both traditional bookmaking (such as Bet365) and betting exchanges (such as BetFair). For any bet to occur, it requires a Backer and a Layer. In traditional bookmaking the customer is the Backer (bets that an outcome will occur) and the bookmaker is the Layer (bets that the outcome will not occur). Betting exchanges allow for anyone to be the Layer or Backer. The ability to service both use cases is important for the long term success and adoption of trustless decentralized sports betting. Traditional Bookmaking The process for a bookmaker to accept a bet is outlined below: Backer (bettor) and Layer (bookmaker) approves the betting contract to access their balance of the token they want to wager; Backer creates a message (message format shown in Table 2) and signs the order with their private key; Backer broadcasts the message to the Layer; Layer receives the message and confirms that the parameters are consistent with their offerings; and If the parameters match, then the Layer submits the message to the betting contract. This approach allows bookmakers to offer a traditional experience with each bet ultimately being submitted and settled on the blockchain. Gas fees will be incurred by the bookmaker, thus not requiring the customer to pay additional gas fees and hold Ether (ETH). Betting Exchanges The process for a betting exchange to facilitate a bet is outlined below: The Betting Exchange cites a fee schedule and the address they will use to collect transaction fees; Backer creates a bet, sets the backerfee and layerfee to values that satisfy the Betting Exchange s fee schedule, sets the feerecipient to the Betting Exchanges desired receiving address and signs the bet with their private key; Backer transmits the signed bet to the Betting Exchange; The Betting Exchange receives the bet, checks that the bet is valid and that it provides the required fees. If the bet is invalid and does not meet the Betting Exchange s requirements, the bet is rejected. If it is satisfactory, the Betting Exchange posts the bet for layers to accept; If the parameters match, then the Layer submits the message to the betting contract; Layers receive an updated version of all available bets; and Layer matches the Backer s bet by submitting it to the betting smart contract. 19

20 Table 2: Bet Messaging Format Parameter Data Type Constraint Description backer address required Ethereum address of backer layer address required Ethereum address of layer backertoken address required Ethereum address of the ERC20 token that the backer is staking layertoken address required Ethereum address of the ERC20 token that the layer is staking feerecipient address optional Ethereum address of Betting Exchange that is charging the transaction fee betcontractaddress address required The betting smart contract address backerfee uint optional How many FAN tokens the backer will pay the feerecipient (betting exchange) layerfee uint optional How many FAN tokens the layer will pay the feerecipient (betting exchange) backertokenstake uint required How many ERC20 tokens the backer is staking layertokenstake uint required How many ERC20 tokens the layer is staking period uint required The period at which the bet ends at, such as 1st period, 1st half, or full game. eventid bytes32 required Event ID hash bettype uint required Type of bet, such as moneyline, spread, total points or team total points. participantid uint optional Participant ID (required for moneyline, spread and team total bet types) points uint optional Required for total points and team total point bet types overunder uint optional 1 = over, 0 = under expiration uint required Time at which the offer expires resultifdraw uint required Identifies whether a draw results in a win, loss, or push V R S uint bytes32 bytes32 required Elliptic Curve Digital Signature Algorithm (ECDSA) signature of the above arguments 20

21 Token Escrow Calculation The number of tokens that is required to be escrowed into the smart contract when a bet is made is equivalent to the exposure that that address is subject to. For a sports book operator who often lays both sides of a bet, it is not necessary to escrow tokens to match every wager. As long as they have escrowed enough tokens to cover their exposure, all parties are guaranteed to be paid out. A running total of each party s exposure will be calculated and recorded on the smart contracts. If a party is attempting to lay a bet and the total tokens escrowed into the betting contract is below their total exposure, the additional tokens needed will automatically be escrowed from their wallet. If their wallet does not have the required tokens or allowance, then the bet will not be accepted and any actions associated with that account is halted. Please see Appendix 1 for Token Exposure calculation Partial Matching With betting exchanges, bettors may not always want to lay/back the entire offer which would result in offers being partially matched. The ability to allow for partial matching is a critical function for betting exchanges. The FansUnite Protocol allows for partial matching by requiring the addition of a parameter to the smart contract which indicates the desired amount that the layer is wanting to match (layertokenamount). The betting smart contract will automatically update the amount of tokens remaining and allow for multiple offers to be matched until the offer has been satisfied or expired. Additional functionality common with betting exchanges is the ability to cancel the remainder of a partially matched bet and the ability to change the offering odds to attract layers to match the remaining stake. Both these functionalities will be implemented in the betting smart contract. The original backer will have to send a transaction to the smart contract indicating they want to cancel or change the odds on the remaining offer and will be required to pay the appropriate gas KYC / AML Implementation Although idealistically we support personal freedom and betting anonymity, we also believe there is a social responsibility to prevent underage gambling, money laundering, and gambling addiction by adhering to gambling laws in each jurisdiction. Know Your Customer (KYC) and Anti-Money Laundering (AML) will be implemented into the Protocol. There are many identity protocols that are under development, such as uport or Civic, and depending on the maturity of their technology at the time of implementation, we will decide which solution makes sense. Properly validated addresses will have to be whitelisted on the betting contract in order for it to accept any transactions. 21

22 5.3 - Event Resolution A network of incentivized oracles are employed to provide the requisite event data for market resolution. To foster initial adoption, a DApp is being created which allows anyone with the required stake of FAN to become an oracle and manually input event data for an event. Tech savvy developers can send event data directly to the smart contract or use our abstraction layer to programmatically send their results. The format of the event data depends on the parameters initially set for the event Oracle Staking and Reward Oracles stake FAN tokens to be eligible to provide event data that is ultimately used to grade wagers. If an Oracle provides data that is part of the consensus and the data is deemed as the correct result, the FAN tokens staked by the oracle are returned and the Oracle earns a reward proportional to the amount they staked, their reputation and the timeliness of the data provided. Oracles that provide data that is not part of the consensus and ultimately deemed as incorrect, will lose their FAN token stake and their reputability score will decrease. The tokens that were staked will be transferred to the Contingency Reserve Fund which is used as a final failsafe to pay out wagers that were graded incorrectly, for more see Section The risk of losing tokens incentivises the Oracles to act appropriately and provide accurate results. As betting volume increases, the total number of oracles and the number of tokens staked will increase and the network will become more distributed. It is not clear what level of incentivization grows the network efficiently. Too much incentivization adds unnecessary tax to the Ethereum network, while too little incentive might result in a quorum that is not resistant to false-positives. Our approach is to optimize the incentivization so to maximize the average and minimize the variance of the reputabilities distribution of the whole pool of Oracles. For this purpose, to each Oracle will be associated with a reputability score which reflects the accuracy of the information provided by the Oracle with respect to the quorum in past resolutions. For further details on the calculations relating to stake requirement, time incentivization and Oracle quorum selection, please review Appendix Oracle Consensus Consensus is not determined solely via majority vote. The Oracles votes will be weighted by their reputability score. This prevents a batch of bad actors with low reputation scores or a short history of providing data from prevailing over a smaller but more reputable batch of good nodes. For more details on the consensus weighting calculation, please review Appendix 3. 22

23 Simplified Oracle System 23 Copyright 2017 FansUnite Limited. All Rights Reserved.

24 Oracle Reputation To each Oracle will be associated a reputability based on the proportion of correct and incorrect data (as defined by agreement with consensus) is provided. To incentivize oracles to provide correct information, incorrect information will be weighted more in the reputability calculation. Figure 2 shows how the oracles are incentivized to maintain high reputability scores: oracles with low reputation will, in the long run, have lower, if not negative, ROIs. For oracles with high reputability the variance around the mean ROI is minimized and a steady gain is realized in the long run. Please see Appendix 4 for more information pertaining to the Oracle reputation calculation Bet Grading For each unique address, a Protocol betting smart contract will record the following: Token Balance - The total number of tokens that the account has escrowed and/or won; and Exposure - The total number of tokens that the account is potentially liable for (see Section 5.2.2); Once consensus has been reached by the selection of Oracles, the outcome of the event is determined and the event will be flagged as resolved. Parties will then be able to send a transaction to the smart contract that would grade their bet and update the token balance and exposure for the parties involved in that bet. The smart contract will contain all the logic to correctly determine the rightful winner based on the bet type, event parameters and the data provided by the Oracle consensus Bet Resolution Library Bets, in their simplest form, fall into one of the following three types: Boolean - The outcome occurs or does not occur; Differential - The difference between two values and whether it was greater or less than; and Totals - The summation of values and whether it was over or under. Common smart contract libraries will be used to perform routine operations such as grading wagers. The use of only one Bet Resolution smart contract library ensures that bets are graded identically and transparently across the entire protocol. Library deployments will be structured in a way that maintains the ability to upgrade them. This is important as Solidity is still a relatively immature language and future solutions may be more efficient. Additionally, maintaining the ability to upgrade will allow for more sophisticated bet types to be implemented as the platform matures and new bet types arise. Deployment of new libraries will be governed by token holders as discussed in Section

25 5.5 - Incorrectly Graded Wagers The FansUnite Protocol allows parties to grade bets and update token balances at the moment Oracles reach consensus. This approach emphasizes speed of bet resolution, which is critical for sports bettors. However, there may be scenarios when the results for an event are wrongfully reported and bets are incorrectly graded. A dispute process will be used to handle incorrectly graded bets. Parties will be subject to a withdrawal allowance that will reduce the severity of bad actors and a Contingency Reserve Fund will be used as a last resort fail-safe to guarantee rightful winners are made whole Dispute Process Betting parties have a window of 48 hours to initiate a dispute. After this 48 hour window, the event will be deemed final and the oracles stakes will be returned. To initiate a dispute, the disputer or disputers must suggest a result they believe to be correct and stake a total amount of FAN tokens equal to the current oracle reward for that event. Any bets that have not yet been graded on that event will be temporarily halted from being graded until the dispute has been resolved to prevent others from wrongfully claiming bets. Once a dispute has been initiated, a new selection of oracles will be notified to provide results for the event. The staked FAN tokens from the disputers is used as a potential reward for the new selection of oracles. Consensus is reached using the same methodology described in Section If the consensus from the new selection of oracles is equal to the suggested result from the disputers, the dispute will be deemed successful and the following will occur: Disputers stakes are returned; Reward for the event is distributed to the new selection of oracles; The initial Oracle selection will lose their stakes for providing incorrect results. These stakes are transferred to the Contingency Reserve Fund; The initial oracles will lose reputation; and Parties that were involved with the incorrectly graded bets will be able to regrade their bets which will update their token balances and exposure. If the consensus from the new selection of Oracles equals the same results from the original consensus, the dispute will be deemed as unsuccessful and the following will occur: Disputers stakes are distributed to the new oracles as a reward; Reward from the original oracle selection remains; Original oracle selection does not lose any reputation; and Disputers lose reputation. Alternatively, if the consensus from the new selection of Oracles does not equal the results from the original consensus and also does not match the result suggested by the disputers, the dispute will also be deemed as unsuccessful. The result from the new selection of Oracles will be considered the correct result and will be used to grade the wagers. 25

26 Withdrawal Allowance Once the event has exceeded the 48 hour dispute time-frame, the entire winnings/initial stake can be withdrawn from the betting smart contract. Prior to the 48 hour dispute time-frame, the number of tokens that can be withdrawn from a winning bet will be calculated based on token withdrawal allowance function, please see Appendix 5. Although the bettor is unable to withdraw the entire amount of winning tokens prior to the 48- hour dispute time-frame, they can still continue to bet their winnings. If at any time a dispute arises, the party will be subject to additional exposure and will be required to have a token balance that is greater than or equal to their exposure. The betting smart contract will automatically escrow additional tokens if the the owner has provided the required allowance and that the owner also has enough tokens in their wallet. A party must always have a token balance greater than their exposure in order to participate in the network Contingency Reserve Fund There is the case that a party withdraws a portion of tokens from a bet that was disputed and ultimately regraded and the party is unwilling or unable to escrow additional tokens to cover their exposure. A Contingency Reserve Fund (CRF) will be used to make wrongful parties whole in this scenario. The CRF will be initially seeded and further contributed to by loss stakes from oracles that provide incorrect data. 26

27 6.0 - FansUnite Token The FAN token will serve the following purposes: Decentralized governance on Protocol decisions; Betting exchange transaction fees; The required token for staking by Oracles; Resolution dispute staking; Contingency Reserve Fund; and Incentivise Oracles to provide accurate and low latency sports data Governance Decentralized governance is an integral part of the longevity and success of the Protocol. Token holders will have a proportional vote on development updates Protocol Upgrades Periodic upgrades and improvements to the smart contracts powering the underlying logic of the Protocol are necessary. Ethereum smart contracts are immutable and once deployed, the code cannot be changed. However, several smart contracts can be combined and structured in a way that allows for the underlying logic to be upgraded. Upgrading must be done in a fair and transparent way that doesn t negatively impact stakeholders. As such, a voting system will be implemented to decide how and when new code will be implemented and deployed. On-chain decentralized governance is still a heavily researched subject. While governance is an important component of the Protocol, it is also not part of our core business and we will lean on the expertise of a partner organization such as Aragon or Harbour for proper implementation. Community governance will be undertaken in phases with a gradual roll-out of functionality to the Community. These phases will be announced at a later date DApp Transaction Fees The protocol allows for DApps to charge fees in FAN tokens. DApps can cite their own fee schedule using any sort of method they choose, such as a flat rate or a rate dependent on the volume wagered. Although the Protocol allows for fees, DApps aren t required to charge transaction fees. 27 Copyright FansUnite Limited. All Rights Reserved.

28 6.3 - Resolution Dispute Staking FAN tokens are required to be staked to initiate a dispute if one of the wagering parties believe that the Oracle network reached an incorrect consensus. Staking is used for a potential reward for Oracles who provided the correct data and for the prevention of frivolous disputes Contingency Reserve Fund FAN tokens are accumulated in a Contingency Reserve Fund (CRF) to pay out successful disputes where one party decides not to return wrongfully claimed tokens. The reputation system is used to deter bad actors while the CRF is only used as a fail-safe Oracle Staking Oracles are required to stake FAN tokens to be eligible to provide event data that is ultimately used to resolve wagers. Oracles earn a reward proportional to the amount of FAN tokens they staked, their reputation and the timeliness of the data provided. See Section for more details. 28 Copyright FansUnite Limited. All Rights Reserved.

29 7.0 - Roadmap April 2018 Announce FansUnite Protocol and publish original version of White Paper and Business Case. June 2018 Funds raised allowed rapid expansion of data science and development teams. July 2018 Launched World Cup proof of concept on Kovan Testnet, see it here. Q Announce major partnerships with professional sports franchise and international poker brand. Q Open-source Smart Contract Repository and JS Library. Q Launch Token Sale. 29 Copyright 2017 FansUnite Limited. All Rights Reserved.

30 7.0 - Roadmap Q Launch Token Sale. Q Launch Betting Functionality for Protocol and take first bets on the FansUnite Sportsbook with centralized resolution. Q Release Oracle Resolution on Test Network in conjunction with open-source Oracle solution for nodes to deploy. Q2 - Q Release Oracle resolution on Main Network. Budgeting several months of testing on Testnet for the Oracle resolution as this is an integral component for disintermediated betting. Q Release native mobile apps for ios and Android. 30 Copyright 2017 FansUnite Limited. All Rights Reserved.

31 8.0 - Business Plan Market Factors The market for this platform is massive. The European Gaming and Betting Association (EGBA) published a report in 2014 estimating that the current total market size for sports betting globally exceeds $1 trillion per annum. Furthermore, legal sports betting profits are estimated at just over $70 billion in 2016, a 20% increase since Numerous other macroeconomic factors suggest exponential growth for the industry in the near term, including: US repeal of federal legislation prohibiting sports betting. The US market is estimated to be worth anywhere up to $70 billion in revenue annually 2. Improved penetration of smart phones and high-speed broadband connections is allowing for previously unreachable populations, like those in developing countries such as Africa, to bet on sports 3. Improved WiFi and broadband networks increasingly allow for bettors to participate in lucrative markets for sportsbooks including live in-play betting 4. Increased accessibility to online gambling attracts younger demographics of sports bettor - a demographic that is also more likely to adopt and hold cryptocurrency. The average age of a land-based sports bettor is 45 years, while the average age group of an online sports bettor is 38 years 4. A third of millennials say they plan to own cryptocurrency in the next 5 years 5. esports betting is growing at an unprecedented rate, with Pinnacle stating that they expect to hit 10 million bets on esports by the end of this year - it took them from 2010 through 2016 to hit their first million 6. esports will represent an entirely new demographic of bettors who may not have historically followed or bet on sports. Sports betting in the United States is estimated to be worth $ 70B in annual revenue 1 Sports betting report EGBA. facts-and-figures/studies/6-sports-betting-report/. 2 Market for illegal sports betting in US is not really a $150 billion business. 14 May. 2018, theconversation.com/market-for-illegal-sports-bettingin-us-is-not-really-a-150-billion-business Betting industry emerging as a major player in the mobile money Jul. 2018, betting-industry-major-player-mobile-money-industry/. 4 Top 4 Emerging Trends Impacting the Sports Betting... - Business Wire. 19 Oct. 2016, businesswire.com/news/home/ /en/ Top-4-Emerging-Trends-Impacting-Sports-Betting. 5 Millennials more likely to invest in cryptocurrency, study finds. millennials-more-likely-to-invest-in-cryptocurrencystudy-finds/. 6 The Rise of esports Betting & Gambling - Business Insider. 9 Jan. 2018, 31

32 8.2 - Corporate Structure FansUnite Media Inc. Owner of IP relating to the fansunite.com domain, the free-to-play social betting platform. This platform will continue to be maintained and updated to serve as an educational platform and introductory tool for novice bettors. FansUnite Venture Studio FansUnite is currently building out its Venture Studio to fund and develop new DApps specifically to leverage the FansUnite Protocol. FansUnite has assembled an in-house team of engineers and evangelists in the Ethereum developer community committed to developing this decentralized sports betting future we envision. Oracle Service The Oracle network will provide low-latency and accurate event data, incentivized by a percentage of the betting volume processed, while utilizing blockchain technology to deliver efficient pricing and transparent market information. Subject to regulatory approval, FansUnite will offer an Oracles as a Service option, allowing for token holders to participate in a proportional percentage of Oracle rewards. FansUnite Limited Licensed gaming arm incorporated in Gibraltar which will hold all IP relating to the FansUnite Sportsbook, as well as, serve as the issuing entity for the sale of FansUnite tokens (FAN). 32 Copyright 2017 FansUnite Limited. All Rights Reserved.

33 8.3 - Token Supply & Distribution Public Sale - 50% Partner & Affiliate Incentivization - 20% Sportsbook Liquidity - 15% Team Stake - 15% Use of Proceeds Platform Development - 40% Marketing - 25% Business Development - 15% Legal & Accounting - 10% Licenses - 10% 33 Copyright FansUnite Limited. All Rights Reserved.

34 9.0 - Team Darius Eghdami CEO, FansUnite Entertainment Inc. Duncan McIntyre COO, FansUnite Entertainment Inc. A chartered accountant by trade, Darius is a serial entrepreneur, investor, and sports junkie. He has previously founded and/or led multiple businesses in digital, data analytics, and consumer internet. Darius has been involved in the sports betting industry since 2008 and has been the CEO of FansUnite since His goal and passion with FansUnite was to create a community of sports bettors working together to beat the house. Darius has extensive experience managing companies, raising capital, as well as developing overall vision and business frameworks. Darius was recently named Canada s next 150 top entrepreneurs by the TMX Group. Duncan is a practicing lawyer and investor, experienced in mergers, acquisitions and various other corporate matters. He is Chief Operating Officer of FansUnite Entertainment Inc. and a cofounder of FansUnite. Duncan has over a decade of experience in sports betting and data analytics, with substantial involvement in product development, overseeing daily operations and business development across several ventures. Duncan is excited about working with the community to build a platform that finally levels the playing field and gives every member a sense of security when placing a bet. Graeme Moore CFO, FansUnite Entertainment Inc. Stephen Rothwell Head Trader, FansUnite Entertainment Inc. Graeme is a Big 4 trained Chartered Accountant and Masters of Professional Accounting who has extensive experience scaling finance departments through explosive growth. His last role saw him oversee financial reporting, financial analysis and internal controls at a radidly growing tech company. His leadership, business acumen and analytical mind prove invaluable to our team daily. Stephen is a veteren in the field of Machine Learning and studies the efficiency of global gambling markets and sports data economics. Stephen ensures the stability of our business by automating the production of efficient market prices and creating a gold standard for oddsmaking under the FansUnite Brand. An exceptional developer, he is versed in C++, Java, Elixir and Python having worked at Amazon. com and Dwave Quantum computers as a quantum programmer. 34

35 Ryan Cimoszko Technical Lead, FansUnite Entertainment Inc. Mirko Miorelli, PhD. Data Scientist, FansUnite Entertainment Inc. Ryan is a software developer by trade and has applied his technical expertise to the sports betting industry for the last five years. He s played a pivotal role in many early stage startups taking on the role of project manager, technical lead and software developer. Ryan is well versed in many programming languages such as python, PHP, Javascript, C#, Solidity and has launched full stack solutions for many companies. He s a longtime proponent of decentralization and blockchain technology. Manan Mehta Solidity Developer, FansUnite Entertainment Inc. Mirko is an expert in the field of mathematical modeling, machine learning and statistical analysis. His ability to take complex real world scenarios and distill them down into relevant and understandable mathematical models has proven invaluable to our team. He s acquired experience in natural language processing, machine learning and data science implementing SVMs, Naïve Bayes and Deep Learning classifiers working on projects for companies like Best Buy and Translink. Mirko has an in-depth knowledge of data science libraries such as scikit-learn, keras and tensorflow and is also a proficient programmer who primarily codes in C++ and Python. Manan is an open-source and decentralized applications enthusiast who has been developing Ethereum DApps professionally for over a year. He is highly proficient with Solidity, operating as Blockchain Development Team Lead in his prior role, and his passion for concise, scalable code is evident in his programming. He is proficient in Python and Golang and has a diverse array of knowledge spanning cloudbased services and dev-ops. Eric Ren Eric is a blockchain academic who wrote his Computer Science Masters thesis on Equity Crowdfunding with distributed ledger technology. He is particularly interested in functional programming having experience with Haskell and Erlang and how they contribute to scalable, maintainable applications. Eric s prior work experience saw him oversee a team charged with building several proof of concept builds at a leading blockchain consultancy. His leadership and ability to architect scalable solutions that leverage distributed computing are highly applicable to our use-case. Solidity Developer, FansUnite Entertainment Inc. 35

36 Jon Ingoldby Developer, FansUnite Entertainment Inc. Mark-Daniel Hughes Market Development, FansUnite Entertainment Inc. Jon is a former Chartered Accountant turned web developer, he has experience programming in PHP, Javascript and Python. He has worked on countless features at FansUnite spanning API development, natural language processing with chat bots and mobile app development. Justin Simon Marketing Lead, FansUnite Entertainment Inc. Mark-Daniel was previously a cryptocurrency analyst with a focus on market research, fundamental and technical analysis. He has advised multi-national VC firms looking to expand their business reach through cryptocurrency mining, blockchain enterprises ICOs and STOs. Mark-Daniel has been hired by numerous small businesses and cryptocurrency enthusiasts to engage in market research and provide investment analysis. Advisors Justin is a digital marketing and social media specialist with a focus in sports, tech, finance and entertainment. Justin has devised and implemented creative, innovative and relatable marketing and media campaigns for companies ranging from small startups to multi-national corporations, including many in the gaming space. He delivers quantitative results, drives online video views, oversees partnerships, generates leads and sales conversions. His experience as former Executive Director of Communications at Fox Sports Net, as well as his extensive background with social media influencer marketing will prove a huge boon to the promotion of FansUnite. Shafin Diamond Tejani is one of the most respected entrepreneurs and philanthropists in Canada. Shafin launched his first company, an online dating website, from his University dorm room at the age of 19. Since then, through his venture Victory Square Labs, he has launched over 40 startups in 21 different countries, employing over 350 people and generating over $100 million in annual revenues. In 2014, Shafin was named Angel Investor of the Year by Angel Forum. In 2015, Shafin was named the Ernst & Young Canadian Tech Entrepreneur of the Year. In 2017 Shafin was named Person of the Year at the BC Technology Impact awards. Shafin is also British Columbia s Top 40 under 40 winner and the recipient of the Prime Minister s Volunteer Award. Shafin is extremely excited about FansUnite and bringing his expertise in growth marketing and scaling companies to the platform. Shafin Diamond Tejani CEO, Victory Square Technologies 36

37 Peter Kroll Fmr. Development Manager, Pinnacle Sports Matt Lockyer Fmr Head of Blockchain, Vanbex Group. Peter Kroll is recognized as a pioneer in the cryptocurrency security space, with his greatest contribution to the field of cryptocurrency-based security being the invention of the first bitcoin paper wallet at bitaddress.org. Peter is a serial entrepreneur and computer science major at Wilfrid Laurier University. He has over 9 years of sports betting industry experience, working with Pinnacle as a developer, team leader and development manager. As a veteran of the sports-betting industry, a long time technologist, and an open-source contributor to the cryptocurrency community, Peter s ability to provide insight on both operational and technical aspects of the Protocol is immeasurable. Matt is an action oriented researcher of blockchain and crypto assets; a technology architect; and an active open-source contributor and crypto-evangelist. Matt did not delve into the space as early as most, the beginning of 2017, but has since obsessed over the potential that decentralization holds. He is currently leading a community at the forefront of non-fungible tokens (NFTs) and spearheading efforts on ERC-998. His insights have already made an impact on our technical architecture and we look forward to his continued contributions. Chris Torina Executive Director, World Poker Tour DeepStacks Ryan Mundy NFLPA Advisory Board Partner, Techlete Ventures Ryan played in the NFL for eight seasons, winning a championship in Super Bowl XLIII with the Pittsburgh Steelers. He is the Managing Director of Techlete Ventures, an alternative asset management company that invests in venture capital, private equity and digital asset opportunities. Ryan also currently serves on the Athlete Advisory Board for the NFLPA (NFL Players Association) One Team Collective, helping businesses incorporate sports sports strategies to drive growth. Chris founded one of the industry s most popular domestic and international gaming brands, DeepStacks. Ten years later, the World Poker Tour acquired DeepStacks and Chris was brought on as Executive Director of WPTDeepStacks, the premier mid-major poker tour in the world. Chris is responsible for the rebranding and successful relaunch of the World Poker Tour s European tour division as well as the expansion of WPTDS operations throughout North America. Under his leadership, WPTDS received the American Poker Award for 2017/2018 Mid-Major Circuit of the Year. His extensive knowledge of the gaming industry and experience in working with some of the most respected organizations in the world will prove invaluable with our efforts to partner with established operators throughout Europe and North America. 37

38 Ron Segev Partner, Segev LLP Gary Boddington Chief Commercialisation Officer, BTL Group Ltd. Ron is a founding partner of Segev LLP. Segev LLP has one of the leading igaming legal teams in the world. Ron is a specialized igaming lawyer and assists online gaming, social gaming, skill games, sportsbooks, daily fantasy sports, esports, v-sports, live-dealer, and other gaming and betting clients worldwide with their commercial, IP, transactional, licensing, regulatory and compliance needs. Ron has more than a decade of experience in the igaming sector and is widely sought as an expert speaker on the topic. Ron is also a General Member of the International Masters of Gaming Law and has been published in American Gaming Lawyer, Canadian Gaming Lawyer, igaming Business, and other leading publications. Ron Segev is one of the top igaming lawyers in the world and he and his team will guide FansUnite through all applicable regulatory issues. Gary is an entrepreneur, executive leader, and mentor and was the Chief Revenue Officer for Canada s first publicly traded blockchain company, BTL Group Ltd (TSXV: BTL). He is currently CEO of the Sports Technology Group and has previously co-founded and successfully exited multiple start-ups in the technology space. As a creative and entrepreneurial CEO, he has built teams that have grown direct and indirect license revenue channels on a global basis. He is an accomplished business executive that has cultivated key stakeholder relationships, worked with a boards of directors, shareholders and founders. Peter Smyrniotis CEO, Blockchain Assembly Peter is an entrepreneur, investor and consultant, and has over 25 years experience in the technology industry. These include enterprise software and hardware, security, gaming, payment processing, e-commerce, business development, strategic sales, channel and partnership, cloud brokerages, robotics, and augmented reality. Further, Peter is actively involved in the technology sector, advising companies on sustainable growth and scaling commercialization activities. 38

39 Summary The sports betting and sports data industries have long been dominated by centralized entities who charge high fees for the privilege of accessing their data or their liquidity in order to place a bet. While the advent of the Internet significantly improved conditions for bettors, it also served to further entrench large data monopolies atop the sports betting landscape. These monopolies successfully leverage their disproportionate share of market information to efficiently price markets and outcompete new market entrants, stifling innovation. Blockchain has the potential to significantly aid the sports betting and sports data industries by facilitating equal and transparent access to market data. FansUnite is focused on bringing this vision to reality by providing the following: a public library of smart contracts and standardized data structures that lowers technical thresholds for developer and traditional operator adoption; a token economy that incentivizes independently operated Oracles to provide low-latency data; and a free and token-agnostic protocol encourages adoption by allowing platforms to raise funds in and utilize their own tokens. By providing the necessary infrastructure for a disintermediated sports betting ecosystem on the Ethereum blockchain, we will be able to successfully restore network effects, reduce duplicate developer efforts, and democratize market information to all network participants. FansUnite will provide a level playing field to new market entrants, encouraging new decentralized applications and provide increased choice for bettors. FansUnite - The Protocol for Betting ERC20 Tokens on Ethereum FansUnite Limited. All Rights Reserved. Copyright 2017

40 Appendices 1.) Token Escrow Calculation Exposure can be defined by the following formula. (1) Where represents the set of possible outcomes, e.g. {win, draw, lose}, and and are defined as: (2) (3) and are the betting volume and the total payout for outcome, respectively. Equations (2) and (3) depend on the bet amount bet on the possible outcome by a bettor and from the odds Of the possible outcome. The total number of bettors is denoted as and is the outcome with the maximum payout, i.e., (4) 40

41 2.) Oracle Stake and Reward Calculation When participating in the resolution of an event, an oracle will have to stake an amount of tokens inversely proportional to its reputability probability, i.e. (5) where is the reward for providing correct information and is a numerical coefficient which tunes the penalization level for the low reputation oracles. The reward amount will be determined once the betting volume for the event is known as (6) with the number of oracles and representing the percentage of the total betting volume rewarded to the pool of oracles. From Eqs. (5) and (6) it is easy to see the ROI for an oracle providing the correct information is equivalent to its reputability percentage. Since the reward amount is fixed by Eq. (6) for an event, low reputability oracles will be required to stake more. The number of oracles in the quorum is selected using the Kolmogorov-Smirnov (KS) test between a sample from the oracles reputability distribution and the whole distribution itself. To show how this works in practice, in the left panel of Figure 1 we assume the reputability distribution to be normal in the interval [0, 1] with mean 0.95 and variance 0.3. In the right panel of Figure 1, we plot the KS statistic between the full reputability probability distribution (left panel) and distributions of varying sample size. The band represents the 95% CI for the KS statistic and has been obtained using repeated simulations. A very low KS statistic means we cannot confidently reject the null hypothesis, i.e., the hypothesis the two distributions are the same. From Figure 1 we see that the KS statistic converges as we increase the sample size. Although the more oracles, the better, at 100 we already have a reasonable convergence and the -value is large enough so that we cannot confidently reject the null hypothesis. Based on the results of Figure 1, for the next simulations we choose = 100 as the minimum number of oracles. 41

42 Once the number of oracles and the volume of the event are set, the stake amounts are determined using Eqs.(5) and (6). To investigate the possible ROI of an oracle, consider that the total betting volume for March Madness in 2017 was estimated to be around 10 billion USD, meaning roughly 140 million USD per game. Considering that the last games probably had more volume than the first, we can assume a varying betting volume per game between million USD. Setting the amount of rewards to be split between the oracles to be of 0.25% of the total betting volume of the game, and setting = 2 and = 100, in Figure 2 we show the ROI in USD for oracles with different reputabilities. The curves have been obtained via Monte Carlo simulations and the bands represent the 95% CI around the mean. 3.) Oracle Consensus Consensus is not determined solely via majority vote. The oracles votes will be weighted by their reputability score. This prevents a batch of M particularly bad oracles to prevail on a smaller batch of N < M of very good ones. If we have two possible outcomes o = A,B, and oracles vote for either o = A or o = B, a consensus score is calculated for both groups of oracles as (7) The consensus is then reached if any of the two scores is more than a threshold for example, at 80%. which can be set, 4.) Oracle Reputation To each oracle will be associated a reputability. The reputability probability Pi for an oracle i is calculated as the ratio between the number of correct information Ci provided by the oracle itself and the total number of times served as an oracle Ni. For the calculation of this ratio, only a limited number Ni of the most recent previous resolutions will be considered and Pi will be updated after each resolution. To incentivize oracles to provide correct information, incorrect information Ii will be weighted more in the reputability calculation. Specifically, the reputability probability can be calculated via (8) where 1 is a weight which tunes how much the reputability of incorrect oracles is penalized. 42

43 Figure 1: Left panel Assumed reputability probability distribution for the whole oracles pool. Right panel KS statistic between the probability distribution in the left panel and different distributions sampled randomly from the latter with varying sample size No. The colored band represents 95% CI around the KS statistic value. Figure 2: Possible ROI for stakers with different reputability as a function the number of games served as oracles. The solid lines represent averages, while the bands are the 95% CI. 43