Deep Dive on Monaco Protocol

10 min readFeb 7, 2024

Introduction

You’ve probably heard the phrase “Blockchain will shape the future” multiple times, yet struggle to understand how it’s shaping today’s landscape. From banking and finance to shipping, supply chain management, manufacturing, and even sports prediction, blockchain has undeniably reshaped how we live and interact as a civilization.

Wait! Curious why sports prediction is among the industries blockchain has made better? Read on!

The bookmaking system used by Web2 betting companies often pits bookmakers against their users to make additional profits. With increasing blockchain adoption, it is now possible to establish a system where bookmakers can match opposing bets and earn a small commission, only providing a platform and removing themselves as middlemen. This article provides a deep dive into the leading blockchain protocol designed to create this functionality; The Monaco protocol, the prediction liquidity pool reshaping the predictions industry, with a fast-rising penetration into the sports betting market.

What is the Monaco Protocol?

If you’ve traded crypto or stocks before, you’re likely familiar with the order book used to populate trades, creating trading liquidity. Now, imagine creating this kind of liquidity for sports predictions. That’s where the Monaco Protocol comes in.

Operating on the Solana blockchain, the Monaco Protocol is a decentralized liquidity network designed to facilitate peer-to-peer prediction trading, cutting out reliance on centralized exchanges, and providing a secure and fast platform for asset transfers. It is a liquidity pool that prediction-based applications on the Solana ecosystem can connect to.

Consider Monaco protocol as the DeFi of the predictions industry. Get it now? More details below.

Features of the Monaco Protocol:

1. Peer-to-peer trading: The Monaco Protocol provides an efficient peer-to-peer platform where bettors can bet against each other, eliminating the need for bookmakers and ensuring an efficient betting process devoid of hidden commissions. Monaco protocol expands the use case of P2P in blockchain, taking the technology hype beyond crypto trading, and a host of other successful applications to sports betting.

2. Decentralized betting: Unlike centralized Web2 betting, where bookmakers can manipulate odds and include unannounced commissions, the Monaco Protocol creates a pool of betting orders and matches bets against each other, ensuring a transparent process. The process is decentralised and transparent for all to see.

3. No vigorish and hidden commissions: Web2 bookies often charge unannounced commissions, known as vigorish, on each bet, reducing odds and winnable payouts. The Monaco Protocol eliminates this practice, giving bettors more control over their bets.

4. Global liquidity: The protocol is a pool of predictions from different sources around the world. With two decentralized betting platforms already connected to the liquidity pool, It becomes easy to aggregate predictions placed on a global level, offering better odds and tighter spreads, resulting in an improved user experience.

6. Fully Non-Custodial: With the Monaco protocol, there’s zero counterparty risk. Users connect their wallets, retaining full custody of their funds while placing bets. There’s no concern about a betting company suddenly disappearing with your money. You’re in complete control at all times.

How does it differ from its web2 and web3 peers?

To truly understand the differences between the Monaco protocol and other prediction markets in Web2, it is essential to understand how traditional betting(web2) companies work.

The Web2 prediction market has a central party known as bookmakers(betting companies) who maintain platforms where users place bets on predetermined odds. The bookmakers generate the odds, and the bettors place their bets to make a profit. There are no prediction liquidity pools, every single bettor bets against the bookmakers, as they mostly match these bets to reduce risk.

The bookmakers make profits through house edging. They adjust odds presented to users in a way that they always earn a small commission from every bet placed, regardless of the outcome. This commission is known as Vigorish.

The Web2 market is designed to keep betting companies in business while offering bettors reduced odds. They also play against their users, meaning for every lost bet, the bookmakers earn a hidden commission by reducing odds and counter-betting.

Let’s visualize this;

Assuming Nigeria were playing South Africa in the AFCON tournament, “1” above, would represent a straight win for the home team (in this case, Nigeria), “X” would mean a draw, and “2” would signify a South African win. The odds are already reduced, as the bookie has taken an undisclosed part of the odds as commissions.

The Monaco protocol offers something different.

The Monaco protocol matches users’’ bets directly to each other, taking out the middlemen, which are the bookmakers, and enabling players to place bets directly against each other. That’s P2P on another level. Want to know the good news?

Web2 sports betting companies don’t need to go out of business for Monaco protocol to thrive, they can easily build their web3 application on Solana, tap into the existing liquidity pool Monaco protocol offers, and pair people’s trades to earn commissions.

Bookmakers make a lot of money!

According to AMRC group, the global online gambling market size reached US$ 86.6 Billion in 2023 and is expected to reach US$ 168.2 Billion by 2032. The question is, what percentage of this money ends up with the bookmakers, and how much ends up with the bettors? According to the American Gambling Association, only 15% of bettors make a profit. This data only covers the USA, others put it at 3%.

The other >85% lose money to the bookmakers, who are corporations designed to continue making profits for their shareholders. The Monaco protocol has created the means to make millions of ordinary citizens, like you, bookmakers, with the potential to earn millions from the betting industry.

How’s this even possible?

The Monaco protocol enables peer-to-peer sports betting (Sports trading), which means users place bets directly against each other, compared to traditional web2 betting where they bet against the bookies. Two projects already run on the Monaco protocol, which are BetDesk.com and purebet.io.

When placing a bet on these platforms, you act as either a bettor or a bookie. As a bettor, you either “Back” a bet, backing the said betting option to win, or “Lay” the bet. If you “Lay” the bet, you are acting as the bookie, counter-backing other users’ bets, meaning that you predict their bets will not win.

In the screenshot above, if you “Back” Nottingham Forest to win, you are betting Nottingham will win the game. If you however “Lay”, you act as a bookie and agree to pay off the bakers based on your liability(amount staked) if Nothinham wins. If Nothinham draws or loses, You win the bet.

For the draw option, if you “Back” you agree Nottingham will draw, if they win or Bristol City wins, you lose your bet. If you “Lay” you predict any other outcome aside from drawing the game. So, a Nottingham or Bristol win settles your ticket as won. Remember, these platforms run on the Monaco protocol, so your predictions, like those of other bettors around the world are added to the global prediction pool, meaning there is always liquidity.

The Monaco protocol is poised to unlock an estimated $86.6 Billion online betting market to millions of citizens, taking monopoly away from the bookies, this means a better opportunity to earn legitimately, which reduces the inequality in society. There may have been a few sports trading protocols before the Monaco Protocol, however, the Monaco Protocol edges them in remarkable ways.

It’s a simple and easy-to-use protocol, built on the Solana Blockchain, one of the fastest-growing ecosystems in the crypto space. Additionally,

The Monaco Protocol has also created an earning program designed to quantify and reward contributors to the ecosystem. With this program, Makers (liquidity providers), and takers (bettors who take existing liquidity), including dApps that allow individuals to interact with the Monaco Protocol earn Monaco Points! These points are earned based on matched trading volume and issued to respective users and operators for every trade made on the Monaco Protocol.

How can the protocol be used to drive better peer-to-peer experiences?

The presence of middlemen in any industry inevitably leads to additional costs for end users. When these middlemen are billion-dollar betting companies with shareholders, they prioritize creating additional revenue streams for their companies, often at the expense of their end users.

This is where blockchain technology comes in. Blockchain is designed to reduce the influence of central authorities and facilitate direct peer-to-peer transactions.

Similar to how Decentralized Finance (DeFi) enables peers to stake their digital assets and lend them to others for trading, the Monaco Protocol operates by bypassing traditional betting companies, directly connecting peers.

The Monaco Protocol aims to eliminate the middleman, creating significant implications across various levels. With this protocol, peers gain the ability to place bets directly against each other, bypassing bookmakers. This not only improves odds but also enhances potential winnings, marking a transformative shift in the dynamics of peer-to-peer betting.

What are the current use cases building on the Monaco protocol?

Decentralised sports betting platforms like BetDesk and Purebet are the two immediate Web3 betting platforms that have tapped into the Monaco protocol, with a recent announcement of the completion of 8 Million dollars matched trades, the Monaco protocol is poised to revolutionize the predictions industry, going beyond sports betting industry.

BetDex, launched in 2022, stands as the pioneering utility built on the Monaco protocol, offering an immersive peer-to-peer betting experience. This innovative platform has garnered acclaim for its interactive gaming features, allowing users to engage in seamless betting interactions directly with their peers.

Moreover, the Monaco protocol is witnessing a surge in the adoption of esports betting, further expanding its utility and reach within the gaming community. With its robust liquidity pool, the protocol has become a versatile platform catering to diverse prediction markets and betting opportunities.

From elections and financial markets to entertainment events, the Monaco protocol enables users to participate in prediction markets across various industries. As far as it’s a matter of probability, the Monaco protocol is best suited for it. Its flexibility and reliability make it the go-to destination for individuals seeking to engage in predictive activities with confidence and convenience.

Which use cases would you like to see on Monaco protocol and why?

The Monaco protocol provides excellent prediction capabilities. In addition to traditional sports betting, including physical and E-sports betting, the Monaco protocol can work seamlessly with other use cases. Decentralized Insurance is one of the greatest potential applications that can be implemented in the Monaco protocol.

Decentralized Finance has shown the wonders blockchain-based lending and borrowing platforms can do. Bringing this protocol to Insurance is a game-changer. With the Monaco protocol, individual users can create insurance liquidity against assets, which others can access to predict their probability of occurrence.

This is like creating prediction markets for specific events such as natural disasters or economic downturns, enabling decentralized insurance. Participants can bet on the likelihood of these events happening, and payouts are automatically triggered based on the result. Decentralized insurance reduces the need for traditional insurance companies, providing a more transparent and efficient insurance system.

Another application that could be added to the Monaco protocol is decentralized governance. Prediction markets can be used to gauge community sentiment before making decisions on crucial policy matters. Imagine sampling citizens’ opinions on whether Bitcoin should be accepted as a backup legal tender via a decentralized government application on the Moncao protocol. This can be done!

By allowing participants to bet on the outcomes of proposed decisions or initiatives, decentralized governance platforms can obtain valuable insights into community preferences and opinions, taking democratic values to another level. This fosters a more democratic and transparent decision-making process.

Conclusion

According to Statista, the online gambling industry is expected to earn US$107.30 billion in revenues for 2024, with projections to surpass US$500 billion by 2028. Additionally, the number of users in the online gambling market is anticipated to reach 243.2 million by 2028. As approximately 243.2 million individuals engage in various forms of betting by 2028, betting companies are projected to earn over $500 billion from their operations during the same period.

With over 24,000 betting companies worldwide, each of these companies stands to earn a portion of this sum, while more than 240 million bettors, participate simultaneously, with a modest 15% win ratio (according to US data). This is great inequality in plain sight, but that’s how sports betting works. Monaco protocol can change this for the better.

It presents a unique opportunity to address this disparity. You know, that’s what blockchain was originally designed for, breaking the dominance of central authorities and giving dominance to the collective power of the people. The Monaco protocol is a unique opportunity to go from empowering a few big central betting companies to creating millions of individuals that can operate as bookies “Laying” bets, as other bettors “Back” them.

The potential for this industry is great, even beyond sports betting, the Monaco protocol can change other predictive markets for the better. Traditional betting as you know it may look great, but until you wield the power to control your destiny, you will always be at the mercy of merciless capitalist companies, whose primary purpose is profit-making, and not great service delivery. Get started on the Monaco protocol today, start building on https://docs.monacoprotocol.xyz.