From GGR to NGR: The Law of Attraction in Encryption Games

When starting a new encryption gaming project or considering an investment, it is crucial to understand the GGR model in the gaming industry. GGR(Gross Gaming Revenue) is a commonly used performance metric in the gaming industry, referring to the total loss amount of players over a certain period, that is, the gross profit of the casino, calculated as total bets minus total payouts.

Another relevant indicator is NGR(Net Gaming Revenue), which is the net profit from gaming, calculated as total bets minus total payouts, bonuses, and gaming taxes.

There is another way to calculate GGR: total bets multiplied by the house edge. The house edge refers to the percentage of total bets that the casino wins. Even in relatively fair games, such as blackjack, baccarat, or dice, there exists a house advantage ranging from 0.5% to 20%.

Casinos hope that players continue to place bets and that the stakes are high to increase the turnover. Therefore, casinos will control the actual house edge, especially in online gambling. If the kill rate is too low, there will be no profit; if it is too high, it will lead to player attrition. Casinos need to strike a balance between player wins and losses and provide players with predictable odds.

The main difference between encryption games and traditional gambling lies in whether the odds are fixed. Gambling games have a fixed odds framework, while the odds on cryptocurrency trading platforms vary depending on the currency and time. This explains why most GambleFi products offer similar game options, such as sports betting, baccarat, fishing, and roulette. Gambling focuses on mechanism consensus and odds frameworks, and its target user group does not completely overlap with cryptocurrency speculators.

The gambling industry does not require a large variety of games, but rather a mechanism that is widely used by agents or online gaming platforms. Online gambling often adopts an agency system, where game providers share GGR with online gaming platforms, so having too many types of games increases costs, which is also why NGR typically remains around 3%.

Controlling the kill rate is key in the gambling industry. Different types of games vary in terms of fixed odds and liquidity, which directly affects the controllability of the kill rate:

1. Gambling: Fixed odds, no liquidity, and the kill rate is completely controllable.
2. Contract Trading: The odds are relatively fixed (for major currencies), with a certain level of liquidity and a relatively controllable kill rate.
3. Small-cap coin trading: the odds are not fixed, liquidity is high, and the kill rate is difficult to control.

The less fixed the odds are, the greater the liquidity of the chips, and the more difficult it is to control the kill rate. This also explains why most games, whether or not they are gambling-related, do not use a true random mechanism. An excessively high kill rate can lead to player attrition, while purely algorithmic pseudo-randomness can be easily cracked, potentially causing losses for the online casino.

The kill rate directly affects the unit lifecycle GGR of players. From gambling to small currency trading, user stickiness is gradually decreasing, which impacts user growth and conversion logic.

In terms of growth strategy, the gaming industry has adopted a unique approach. The most profitable part of the casino is the VIP room, accounting for over 80% of total profits. The VIP room relies on "Diemazi" (casino intermediaries) to achieve growth and conversion. Casinos share profits with Diemazi through a chip system and track customer betting activity.

Chips are divided into two types: cash codes and clay codes. Cash codes can be exchanged in both directions, while clay codes are only used for betting. Each bet is referred to as "washing chips," and the iterative chip players can receive rebates, and even the gamblers can get cashback. This model is similar to the rebate system of contract exchanges. The experience gold in contract trading is equivalent to clay codes, which can incentivize users without using real money.

The main advantage of this mechanism is:

• Locking liquidity with mud tokens to promote betting (trading).
• The wash code and rebate mechanism align the interests of key growth nodes, where larger turnover results in greater profits, which helps control the kill rate and improve unit lifecycle GGR.

Inspiration for encryption game teams:

1. Recognize that the main motivation of encryption players is "gambling" rather than simply pursuing the fun of the game.
2. Consider adopting a gaming model to evaluate whether GGR is suitable for the project, determine the revenue model, and control the kill rate.
3. Learn the customer acquisition strategies of Diema.

Encryption game developers should draw on the mature experience of the traditional gambling industry, rather than starting from scratch.