Tim Draper’s Los Angeles investment company, Draper Goren Holm, revealed this week an investment in Degens, a peer-to-peer betting operation.
The Degens betting exchange launched in 2017, is built on the Ethereum (ETH) and DAI blockchains with the promise of fast and cheap sports betting, but with the recent scaling issues of Ethereum, they may be hard-pressed to deliver either.
The deal provides access to additional capital funding, mentor-ship, product marketing assistance, a powerful public relations arm, hands-on marketing advice for development, and the potential sports collaborations they noted, as well as cooperation with other partners in the venture network.
Josef Holm, Founding Partner at Draper Goren Holm said: “Since the beginning, Degens has proved itself as a promising decentralised peer to peer sports betting exchange, one that users can trust and rely on. While we’re all curious to see how the sports industry overcomes COVID, the act of betting isn’t going anywhere; users will continue to win using Degens.”
The press release states that Degens has managed more than $20 million in volume since its inception, which translates into sales of just $100,000 in 4 years.
How they should want to create their sports betting application on ETH is the guess of all since the Ethereum protocol has been widely reported as having major scaling problems. After a card game became popular on the Ethereum network in late 2019 and in the few days generated $220,000 in value, the entire system was brought to its knees. Users looking to make Ethereum transactions charged as much as $40 for a single transaction to stop the congestion. That sort of fee structure is a catastrophe formula for any trivial-volume transaction.
Switching to Bitcoin SV will solve the scaling problems and fee spikes Degens predicted. Despite of their infinite block size, the BSV network is now capable of handling millions of transactions in a short time. Being the world’s only global micropayment network, payments will still remain small no matter how popular an application is. Ironically, by choosing ETH and DAI to create their sports betting application, they have ensured that even if they succeed they will go bankrupt due to the transaction costs and congestion they will face, which will shut off the sports bettors they gain.
Ethereum has struggled to manage even a moderate load, with its resources maxed out at 15 transactions per second, higher fees forced the competition to be processed first.
Experts say that Ethereum would be completely unusable in five years, at current development rates. The research team at ETH is actively searching for options for switching from a Proof of Work model to a Delegated Stake Evidence framework. Blockchain experts have estimated that it would take 4 to 5 years to introduce these kinds of improvements without any assurance that they will even work. Contrast this with BSV that’s overcome this problem already.
The BSV network has shown it can handle a sustained 350 transactions per second, and the cost per transaction remains negligible even at times of large network spikes with its unbounded blocks.