Tokenomics And Betting
The Sino betting contract is designed to only accept bets placed with SINO tokens. When a bet is placed, the contract burns these tokens. When a bet is won, it mints tokens to pay the winner.
The amount of tokens minted on a winning bet is lower than probability implies. Over time this will generate more burning than minting, therefore deflating the token supply.
How Betting Works
Let's say a gambler bets 1000 SINO with a chosen 2x payout, basically betting at decimal odds of 2.00. First the Sino betting contract burns the user's 1000 SINOs then asks an oracle for a random number.
In a separate transaction, when a random number between 1 and 10000 gets injected into chain, the Sino betting contract performs the following calculations.
It determines the bet's implied winning probability, in this case 50% (basically 100% divided by 2.00).
It applies the 2% house edge, giving this bet a 49% winning chance instead of 50%. Basically, the bet will be deemed a winner if the random number is between 1 and 4900.
If the bet is a loser then nothing else happens.
Let's say this bet is a winner. The contract mints 2000 SINOs and transfers it to the gambler's wallet, who gets their chosen payout.
Then it calculates the fair payout based on the 49% winning chance, which is 2040 SINOs (1000 * (100 / 49)).
Of these extra 40 "house edge" SINOs: 10 get minted and sent to the bet agent, 10 get minted and added to the jackpot fund, 20 never get minted and this is the deflation in action.
House Edge Over Several Bets
Now let's apply the above to a hypothetical 100 bets of 1000 SINOs at odds of 2.00, of which on average 49 will be winners:
100,000 SINOs burned at bet placing
98,000 SINOs minted to the winner
490 SINOs minted to agents
490 SINOs minted to jackpot fund
Net burn: 1020 SINOs
Basically the gambler wins their chosen payout, but slightly less frequently than the odds imply. This allows the tokenomics to: deflate the token, reward agents, incentivise more betting by increasing the jackpot fund.
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