What is ETHORSE?

ETHORSE is the world's first DApp for betting on the price of cryptocurrencies. From the whitepaper, "ETHORSE is the ultimate combination of horse betting, blockchain technology, and cryptocurrencies."

How does it work?

Users bet on one of the listed coins (currently BTC, ETH, LTC) to have the highest gain in a fixed period. The odds are determined by parimutuel betting: all wagered amounts are placed together in a pool, the house takes a cut, then the payout is shared among everyone who bets on the winner in proportion to the amount they bet. The race is run completely on the Ethereum blockchain via smart contracts, with no manual intervention. Prices are fetched through Oraclize, a blockchain oracle service. Following the race, winners have up to 30 days to claim their winnings.

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Safeguards

If the price fetching or any other aspect of the race fails (for example due to Ethereum network congestion), it automatically cancels and refunds all bets.

Dividends & The HORSE Token

The house cut is 5% from every race. This cut goes directly to the dividend pool, which is distributed to owners of the HORSE token on a quarterly basis, proportionally to the percent they own.

The HORSE token can be bought on IDEX: https://idex.market/eth/horse
HORSE on CoinMarketCap: https://coinmarketcap.com/currencies/ethorse/

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Should You Invest In HORSE?

As with all cryptocurrencies, the real value is whatever someone is willing to buy it for. In theory, though, the value of the HORSE token should be directly tied to the value of the dividends paid out to HORSE owners. This dividend pool is equal to 5% of the betting volume on the DApp. So how can you tell if buying HORSE is a good investment? Here's the formula for your dividend payout over the course of a year:

E = (365 * V * 0.05) * (H / 100,565,600)

where
E = Yearly sum of dividend payouts (in ETH)
V = Daily betting volume on the ETHORSE Dapp (in ETH)
H = Number of HORSE you own
365 represents the number of days in a year
0.05 represents the portion of betting volume that goes to dividends
100,565,600 represents the circulating supply of HORSE tokens.

So if the daily betting volume was 50 ETH, and you owned 100,000 HORSE, your yearly sum of dividends would be ...

(365 * 50 * 0.05) * (100,000 / 100,565,600) = 0.9 ETH

In order to put this in perspective of other investments, we need to figure out what the yearly ROI would be. For that, we need to know the price of the HORSE token and the value of ETH. Let's use the current prices, at the time of writing. ETH = $700, HORSE = $0.03

ROI = Profit / Investment
ROI = (0.9 * $700) / (100,000 * $0.03)
ROI =  0.21

A profit of 21% is amazing! This does not take into account appreciation of the price of HORSE itself. It is just the extra ETH payments you would get via dividends. Now, this is assuming 50 ETH volume which the the DApp has not achieved yet. But with further exposure I don't think that would be difficult, since it's already between 10-20 ETH per day and has had no marketing.

It is also important to note that the price of HORSE is likely to follow the change in dividends. If betting volume increases, the price of HORSE should increase, because the dividends would be larger. So with that dynamic in mind, we can create a formula for expected HORSE price based on betting volume ...

I'm gonna do some math here to simplify and isolate what we want. If you want, you can skip to the end.

ROI = (365 * DAILY_BET_VOLUME_USD * 0.05) / (100,565,600 * HORSE_PRICE)
ROI * (100,565,600 * HORSE_PRICE) = (365 * DAILY_BET_VOLUME_USD * 0.05)
(100,565,600 * HORSE_PRICE) = (365 * DAILY_BET_VOLUME_USD * 0.05) / ROI
HORSE_PRICE = (365 * DAILYBETUSD * 0.05) / (100,565,600 * ROI)

OK great, so now let's plug in some values. Let's say the equilibrium ROI is around 5%. Meaning that if dividends go up, people will buy more HORSE and price will rise. If dividends go down, people will sell HORSE and price will fall. And either way, it'll hover around an expected 5% ROI. If that's the case, we can plug in various betting volumes based on our future expectations of the success of the DApp ...

$10,000/day Betting Volume:

HORSE_PRICE = (365 * $10,000 * 0.05) / (100,565,600 * 0.05)
HORSE_PRICE = $0.0363

$100,000/day Betting Volume:

HORSE_PRICE = (365 * $100,000 * 0.05) / (100,565,600 * 0.05)
HORSE_PRICE = $0.363

$1,000,000/day Betting Volume:

HORSE_PRICE = (365 * $1,000,000 * 0.05) / (100,565,600 * 0.05)
HORSE_PRICE = $3.63

$10,000,000/day Betting Volume:

HORSE_PRICE = (365 * $10,000,000 * 0.05) / (100,565,600 * 0.05)
HORSE_PRICE = $36.30

Again, the true price of a coin is just what someone is willing to buy it for. But this should provide a reasonable expectation fo HORSE price going forward relative to the betting volume on the DApp.

Get Involved!

I encourage everyone to check out the platform for yourself at https://bet.ethorse.com/, and join the telegram channel: https://telegram.me/ethorse. The community is very active and there's constant excitement around the ongoing races.

ETHORSE: The World's First DApp for Betting on the Price of Cryptocurrencies