Trusted Real-World Event Outcomes on a Blockchain: Staked Voting and Its Application to Distributed Gaming

Abstract

In 2008, Bitcoin was introduced to the public and became the first widely accepted fully decentralized cryptocurrency. Since the inception of Bitcoin, decentralized blockchain technology has been utilized across many industries with incredible impact. However, as effective as blockchain technology has proven to be, one challenge that exists is the ability to bring real-world data into a decentralized network. Previous approaches rely on “trusted” feeds, self-reporting with challenge mechanisms, and various, mostly centralized, oracles. All approaches, though, have their own deficiencies. What is needed is a system and method of authenticating real-world event outcomes across a decentralized network in a robust and low-cost way.

One application for such a method is gaming. Casinos offer many benefits to a gambler. They allow players to bet on games and events, determine event outcomes, and provide capital to manage payouts. However, the players also face large fees, often masked as unfavorable odds, in order to participate in this centralized process. It is in these high fees and unfavorable odds that there exists an opportunity and need for a decentralized platform with the ability to provide players with a more favorable means to engage in gambling.

As noted previously, a difficulty in creating a decentralized gambling platform is enabling the network to reliably agree on the outcome of a real-world event, such as the winner of the 2018 World Cup Final. Because a blockchain is a “closed-world” system, users can only access data that is created in that world. We seek to solve this problem by implementing a novel method of staked voting. Utilizing “actions” representing pools, bets, votes, and transactions, users can create pools representing real-world events, place bets on pools, cast votes on pool outcomes, and transact with other users. In order to ensure trusted outcome determination, we require winning bettors to vote on the outcome of another pool in order to redeem their winnings. If they vote with the consensus, their winnings will be released. If, however, they vote against the consensus, their winnings will be forfeited. This method of staked voting creates a fully distributed, self-regulated, pari-mutuel gambling platform.