Application of Gambling Models in Encryption Games: GGR Model and Its Revenue Control Strategies

The encryption gaming industry is undergoing a paradigm shift. The past belief that "games must have playability" is no longer the only rule. In fact, gaming teams that cannot recognize the gambling nature of encryption users or do not understand the "bet" may face elimination. When starting new encryption game projects or investments, it is crucial to have a deep understanding of the GGR model in the gambling industry.

GGR (Gross Gaming Revenue) is the most commonly used performance indicator in the gaming industry. It represents the total losses of players over a specific period, which is the gross profit of the casino, calculated as: total bets - total payouts (the amount won by players).

Another related concept is NGR (Net Gaming Revenue), calculated as: Total Bets - Total Payouts - Total Rewards Distributed (such as chips given away in promotional activities) - Total Gaming Taxes.

GGR has another alternative calculation method: Total Bet Amount × Kill Rate. The Kill Rate refers to the proportion of the Total Bet Amount that is ultimately won by the casino.

As we all know, even if the house does not cheat, gambling is not a fair game. Even relatively fair games like blackjack, baccarat, or dice have a house edge ranging from 0.5% to 20%.

Putting aside the extreme case of infinite funds, the dealer hopes that the players:

1. Continuous Participation
2. Increase the betting amount (increase the turnover)

Therefore, especially in online gambling, casinos carefully control the actual house edge. This creates a delicate balance: if the kill rate is too low, there is no profit, and if it is too high, it will scare away players. Operators need to find a balance between allowing customers to continue making profits and losses while providing clear odds expectations for customers.

Applying these concepts to encryption games and even the encryption trading market, we can find some interesting correlations.

The biggest difference between encryption gaming and traditional gambling lies in whether players accept floating odds. The odds framework in traditional gambling games is relatively fixed, while the odds for each project in the encryption market can vary significantly, and even the odds for the same project can change over different time periods.

This explains why most GambleFi products have such similar game types, all offering classic items like sports betting, baccarat, fishing, and roulette. Gambling emphasizes mechanism consensus and odds frameworks, and its target user group is committed to seeking advantages within fixed rules, which does not completely overlap with the characteristics of cryptocurrency speculators or traders.

The gambling industry does not need countless types of games, but rather a widely adopted mechanism. Online gambling typically uses an agency model, where game providers share GGR with online casinos. An excessive variety of games can significantly increase costs, which is also why NGR usually remains around 3%.

The controllability of the kill rate is another key issue. Depending on the liquidity, we can divide the market into three categories:

1. Gambling: Fixed odds, no liquidity, and the kill rate is completely controllable.
2. Contract trading: The odds are relatively fixed (for mainstream cryptocurrencies), with certain liquidity (can close positions at any time), and the flow model or killing rate is relatively controllable.
3. Small coin CEX/DEX trading: odds are completely not fixed, absolute liquidity (unless withdrawal barriers are set), killing rate is almost uncontrollable (unless the exchange is targeting the project party)

The less fixed the odds are, the greater the liquidity of the chips, and the harder it is to control the kill rate.

This also explains why almost all games, whether they belong to the gambling category or not, do not use true random mechanisms. Because once the kill rate goes out of control, a high kill rate can lead to player loss. In online poker games, the common "live dealer" mode is actually to prevent pure algorithmic randomness from being easily cracked by advanced algorithms, which could lead to losses for the online casino.

This is a game themed around "balance and tugging." The kill rate directly affects the players' unit lifecycle GGR. From gambling to small coin trading, user stickiness is gradually decreasing, which directly impacts the user growth conversion logic.

The most profitable part of the gambling industry is the VIP room, which can account for over 80% of the total profits of a casino. The VIP room relies on "Diemazai" (casino intermediaries) to achieve growth conversion. How do casinos share profits with Diemazai, and how do they track each customer's betting amount? This involves the casino's code output mechanism.

Chips are divided into two types: cash codes and mud codes. Cash codes can be exchanged in both directions, while mud codes can only be used for betting. The chips won are cash codes. Each bet is a wash code, and the iterative code users can receive commissions, and even gamblers can get rebates. This is quite similar to the rebate system of contract exchanges. The contract experience gold is equivalent to mud codes, and the benefit is to incentivize users without the need to invest actual funds.

The key insight here is:

• The mud code has locked in liquidity, directly promoting betting (trading) behavior.
• Wash betting and rebate are essentially the alignment of interests that form key growth nodes, where the larger the turnover, the more profit (for gamblers, it can even be a way to make money through turnover), which further ensures that the kill rate is controllable and increases the unit lifecycle GGR.

In summary, we discussed the three core elements of gambling:

1. Fixed Odds Framework
2. Controllable Kill Rate
3. Growth Conversion

Insights for encryption game teams:

1. First, it is important to understand that encryption players differ from traditional game consumers; they will not consume without returns to provide benefits for your "ROI participants": their primary characteristic is "gambling" rather than simply "fun."
2. Flexibly apply gaming models, consider whether GGR is suitable for your project, clarify your revenue model, and how to control the kill rate.
3. Learn how to manage customer experience from Diema Zai.

The path that Macau has explored is worth our reference and learning.