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Expected Value Framework

For any entry, expected value (EV) is: EV=(P(win)×Payout)−Entry\text{EV} = (\text{P(win)} \times \text{Payout}) - \text{Entry}

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Player EV Analysis

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Base Case (No Jackpots)

Entry: 100 SOL
Horse win probability: 12%
Pool-based payout ratio: 5x

EV = (0.12 * 500) - 100 = 60 - 100 = -40 SOL
Negative EV because this horse is over-backed: a fair break-even multiplier for a 12% horse would be ~8.3×, but the pool is only paying 5× — too much of the volume sits on it. Pool positioning dominates any single entry’s EV; the protocol margin is separate (see below).

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With Jackpots

Jackpot contribution (Blazing Hoof + King's Run): +4% of volume (returned over time)
HORSE buyback value: +1% of volume (accrues to token holders)

Aggregate player return: 95% of volume
Aggregate EV ≈ −5 SOL per 100 SOL committed
Every accumulated jackpot is eventually paid out in full, so the expected jackpot value returned per race equals the per-race contribution (4% of volume) — independent of trigger frequency. Rarity only controls how lumpy the payouts are, not the total.

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The Protocol Margin

The 95% player return flows through three channels with different profiles — direct prizes (90%, every race), jackpots (4%, over time, weighted by entry and boosted by staked HORSE), and the buyback (1%, accrues to token holders). Your effective margin depends on how you participate: 
Direct prizes only (no staked HORSE, jackpot flows excluded):  ≈ −10% of entry
Aggregate, including jackpot and buyback flows:                ≈ −5% of entry
The 5% aggregate margin is the true long-run figure across all players. The extra 5% gap faced by a non-staking, prizes-only player is exactly the value routed through jackpots and the token — staking HORSE and participating in jackpots is how a player closes it. This asymmetry is deliberate: it rewards sustained participants over one-shot players.

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With Skill (Value Entries)

Individual entries can carry positive EV when the pool misprices a horse — probabilities are public, so a horse attracting less volume than its win probability warrants pays above fair payout ratios. Skilled players exploit this through:
  • Pool inefficiency exploitation (enter where probability > pool share)
  • Value-score screening (probability ÷ pool share, the higher the better)
  • Disciplined position sizing (fixed fraction per race)
No fixed advantage is guaranteed: the opportunity depends on how other players distribute their entries, and sharper pools mean thinner mispricings.

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Protocol Sustainability

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Revenue Model

The protocol generates revenue through a fixed 5% fee on all entry volume: 
Per race: 5% of total entry volume
Daily (576 races): 5% * daily volume
Revenue scales directly with game activity. Higher volume = higher revenue.

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Cost Structure

Protocol expenses include:
  • VRF oracle fees
  • Infrastructure (Solana RPC, hosting)
  • Development and maintenance
  • Marketing and growth
  • Treasury reserves for long-term stability
The 5% fee model ensures protocol sustainability while keeping the system economically aligned with player activity.

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Token Economics

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Supply-Demand Balance

Emission: volume-linked, E = min(c * B, cap) per race (bootstrap: c = 0.5, cap = 25; steps down at 50k and 1M SOL cumulative volume)
Sinks:
  - Buyback-and-burn: 1% of volume (volume-funded, continuous)
  - Jackpot burns: 10% / 50% of winners' staked tokens (depends on staking)

Both emission and buyback scale with volume, so the buyback
offsets issuance by construction. Net supply change = Emission - Burns.
Emission tracks real volume (no fixed daily issuance), and the buyback is the dependable volume-funded sink. Jackpot burns are a secondary sink that depends on staking behavior.

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Token Value Drivers

  1. Jackpot utility: staked HORSE boosts each winner’s jackpot share
  2. Scarcity: deflationary jackpot burns + 1% buyback-and-burn
  3. Value floor: the volume-funded buyback ties token value to real activity, not sentiment
  4. Protocol growth: more volume = more buy pressure per token
  5. Network effects: more players = higher competition for jackpot shares

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Position Sizing

For consistent, sustainable participation:
  • Fixed fraction — commit a small, fixed percentage of your balance per race (1-5%), independent of recent results
  • Diversify — spread entries across multiple horses or races rather than concentrating on one outcome
  • Moderate probabilities — mid-probability horses carry lower variance than extreme longshots
Sizing entries as a fixed fraction of your balance keeps variance manageable over many races — no formula can turn the aggregate protocol margin into a guaranteed profit.

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Next Steps

Security

Protocol security analysis

VRF Technical

Deep dive into randomness

Pari-Mutuel

Master pool dynamics

Start Playing

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