Disclaimer: I do have an interest in seeing Ethorse succeed. I think the largest source of bias comes in the calculation of token price.

Ethorse has just finished their ICO and have deployed their dapp to the testnet. For those who don’t know Ethorse is a gambling app where cryptocurrencies (such as BTC, LTC and ETH) act as metaphors for horses. Before each race people can bet on which cryptocurrency they think will have the largest gains in a 24 hour time period. Possible winnings are dynamic, (see Parimutuel Betting) when more people bet on a specific ‘horse’ their payout becomes smaller and smaller. At the same time the payout for other ‘horses’ becomes larger.

The beauty of this system is that it requires no house bankroll. The house simply takes a cut of the betting pool, five percent at this time, before paying out the winners. That five percent is then distributed to all HORSE holders.

Before running through the calculations it’s important to note the following items:

There are 125.000.000 HORSE tokens in existence

1 HORSE entitles you to 0.0000008% of the house cut

There’s also one very large assumption I make when it comes to valuing the HORSE token itself. I assume that token value is derived solely from yearly profit. In reality it is more nuanced than this; speculation on future rewards and other market forces contribute to a tokens value.

When dealing with the stock market we can usually observe average dividend stocks selling at 50x their dividend rate. I don’t think it’s fair to use 50x because a stocks value is derived from other things. (Ownership of the company and the service/products they sell) In the end I choose to be more conservative and calculated the token value at 6.67x the dividend rate.

Update 1: Vitali has pointed out that casino stocks payout a dividend that can reach 2% so it actually is possible to assume that HORSE value is 50x of the dividend rate.

With that said here are the calculations at different daily betting volumes:

For comparisons sake I’ve included etheroll’s average daily betting volume ($250.000)

Make of it what you will and please let me know if I should make any changes to the math.

Cheers,

Cryptosaurus-rex

P.S. This model will be fine tuned when we get more concrete data after the mainnet launch.

Ethorse Main Website: https://ethorse.com/

Ethorse Dapp (Testnet): https://ethorse.github.io/Betting/

Subreddit: https://www.reddit.com/r/Ethorse/

Telegram: https://telegram.me/ethorse