Among the top 10 DApps, 7 are gambling, 2 are DEX, and the one remaining is a CPU rental service. Once you take a look at the table on the upper right, you should be able to grasp the idea why the gambling space is a cruel red sea: top 10 generate revenue of 190 million+ EOS vs the rest 51 only share 1.7 million EOS — extreme Matthew Effect indeed.

1.1 Mechanism and competition in the gambling gameplay

Holistically speaking, most EOS gambling games follow a similar rudimentary framework despite the variety of rules.

Here’s how it works: the DApp issues its own tokens in the game and distributes the tokens proportionally by the amount users contribute in every round. The rewards also follow a halving schedule every specific period of time. The development team periodically distributes dividends to all the token holders. For the token holders (assuming they are rational investors), although the expected value of the winning probability in such gambling games is negative, they could still realize profits from dividends and selling the tokens when the token is listed.

We have a few examples here:

EOSBet:

EOSBet is the first gambling DApp on EOS, also being the first one distributing dividends. The good user experience, coming from its strong operation, easily sent it to the top of the EOS DApps ranking. Nonetheless, the tokens are not transferable, nor was it listed on any exchange. In other words, it lacks necessary liquidity: many players with a large share of tokens could hardly cash out despite all the dividends received. Not to mention that it got hacked twice. The game itself did not seek for room of improvement in either the gameplay or the operational strategies since the initial launch, so people got bored of the game more or less quickly.

Then it came BetDice, a game with seemingly better operation, tech, and token-economy designed. Speedily it took over the top ranking of EOSBet.

BetDice:

1. The well-designed token-economy and the promise of exchange listing enticed a bunch of initial miners. The bounty program, referral rewards, and lottery program also attracted some early adopters of the game. The participation of these miners and players contributed a dividend pool with a considerable size

2. Benefited from the halving mining schedule, BetDice allowed early miners and private investors to reap profits from trading on the exchange, whereas retail investors who are bullish on the dividends can buy tokens on the exchange

3. The game was able to control the amount of tokens circulating in the market and thus stabilize the token price by applying a staking program to lock up tokens and avoid volatile market movement. Such market making ability attracted more capital injection

4. The lottery gameplay intensified user retention of the game as it diversified the product offering. The VIP program also improved the user experience for the players who spent a lot. The acceptance of BT and Black token for payment opened up other channels of customer acquisition.

In a word, BetDice embraced true prosperity with the optimizing efforts described above, and never fell off from the top since the beginning of October.

Since mid-October, tens of new gameplay came into the limelight, including FarmEOS, EOS Poker, and Endless Dice.

EOS Poker was the first EOS gambling game that involved some strategy / game theory — more complicated but more fun for the players. The DApp was able to kick off the project with only the miners by allowing them mining with low-cost optimal strategies and trade with a pre-set price on the exchange. The first group of players were attracted to the game by the dividends they could earn from their collateralized tokens. The team also complimented players with POKER tokens to exchange for players staking CPU. Though got hacked once, the dev team announced to took all responsibility to make up players’ loss.

Endless Dice was a game that hyped late yet still hyped. Quoted the mechanic analysis from “链金术” (A Chinese crypto community and media):

The essence of the game lies within the trading volume, which was pushed up by the miners and the halving schedule. 1. The game doesn’t have a token sale — meaning sale (i.e. no “pre-mine”), allowing the game to start generating dividends shortly. As a result, first-mover advantage for the early adopters was high enough to attract miners and large investors to participate in the trading. For example, an account named liketerryfox, a large token holder in BetDice as well as the largest holder of ET, has owned 4.15M tokens in Endless Dice and accumulated 3000+EOS from the game. 2. Immediately after the game hit the halving point, the token was listed on Newdex to gain more liquidity — a very strategic move of the game 3. The dividends brings more players onboard and higher trading volume. More importantly, the game does not require depositing the tokens as collaterals to receive dividends. … In a nutshell, the halving schedule in mining is a seemingly direct and simple way to kick off and to incentivize the early participants. Still, a game without a matrix of products and corresponding operational strategy can simply die hard and quickly.

Note: All these DApps are highly risky — this article only aims to articulate on how the ecosystems work but not to provide any investment advice

1.2 Exchanges on EOS

DEX (Decentralized Exchange) has long been a thriving category in the ETH ecosystem. Usually there are two types of DEX:

1. Order book mode: it has on-chain and off-chain order book. The former has a higher degree of decentralization, but not so cost-effective and efficient. The latter is more seen in the DEX world, with 0x as the best known project (others including EtherDelta and Loopering)

2. Reserve Mode: this type is more sensitive to the trading speed, targeting at some instant trading scenarios, such as internal DEX of a wallet. An example would be Kyber Network.

DEX is the second largest type of DApps on EOS, with the user activity level slightly below gambing DApps. Higher speed and no gas fee are the two features that offset the weakness of a lower degree of decentralization on EOS,to some extent. Still, DEXs on EOS are very nascent. The most mature one in the market is probably Newdex, as it delivers the best user experience and owns more than 80% of the market share with its trending DAU and trading volume.