Lottery is a next generation token raffle and gambling app built on blockchain, providing never before seen transparency, efficiency, and a unique value proposition to existing blockchain infrastructures.
We’ve been talking about securities and tokenizing said securities on the blockchain for such a long time now that it has become a bit of a tired meme at this point. On one hand, you have many ICO’s, developers, and project teams going on endlessly about how regulation is a bad thing for crypto, how conforming to the rules will ultimately stifle growth and how no holds barred innovation is really good for the space. On the other side, you have more traditional third parties stating the many dangers of an unregulated ecosystem like crypto as well as the myriad of benefits that blockchain stands to gain should companies and tokens follow certain agreed upon standards.
The truth is likely somewhere in the middle – unfortunately, greed and self-interest are one of the main driving factors in the zeitgeist that is taking place with respect to Bitcoin and, crucially, Ethereum. What this means – simply put, is that the current market participants are fighting tooth and nail in order to avoid any kind of regulation whatsoever.
We’ve seen the mental gymnastics many teams running ICO’s have done in order to mask what they are actually offering – securities. Some examples of this include renaming their ICO to “Token Generation Events”, “donations”, and in recent cases, simply not even allowing price discussion or exchange discussion to take place in their community channels. Large syndicates purportedly have begun to go under fire from regulators, and sales as of late have increased KYC/AML measures and even gone as far as to close their sales during presale stages to only accredited investors. All of this really begs the question – why? If it looks like a duck, and quacks like a duck…
The simple truth is that most of these ICO’s are simply securities, masquerading as something other than what they really are. Tokens generally stay centralized (and the recent SEC announcement noted that ETH is not a security due to its decentralized token economics), time goes into dressing up these projects into marketable investments for traders, and there is clearly an expectation of value that goes into purchasing most if not all tokens that are on the market. Which is why it was so interesting to me when I saw one of the first real tokenized securities that went in the complete opposite direction – Lottery.
So what is Lottery? First, let’s talk about the history of the project before it entered into blockchain. Autolotto is a relatively new company dating back to 2015, built for the purpose of transitioning incumbent Lottery systems (raffles, contests, etc.) into the tech scene by the creation of the Lottery mobile app. The app itself grew to be a smashing success, gaining more than 400’000 users and garnering support from Millenials – founder Tony DiMatteo has been quoted as saying over 50% of Lottery users are Millenials. Quite the astonishing feat for a generation of individuals who simply don’t purchase Lottery tickets.
Running high off their current success, the team has made yet another innovative leap forward, by drafting up plans to merge their current infrastructure onto the blockchain. We already know that gambling is one of the many advantages of blockchain – for example, the transparency and permissionless nature of Ethereum allowing anyone to create provably fair games. While Lottery initially won’t be playing their games directly on Ethereum, there is another innovation that they are boldly pushing forward – yes, this is a tokenized security.
Tokenized securities have long been touted as one of the premiere benefits that blockchain affords its users – after all, if I have a tokenized Google stock, I can simply hand it over to my friend without having to go through a broker. This vision for tokenized securities is somewhat of a minority in the thoughtspace at large, but for a few select investors (myself included) the benefits of having a tokenized security means that, for me these kinds of tokens will likely comprise the majority of the mature crypto market.
How does Lottery actually work? Essentially, tokens you purchase don’t have any real utility – rather they have actual real world value. The way this works is that Lottery is raising a large amount of money (to the tune of 100 Million dollars) for promotion and marketing campaigns of their upcoming raffles. In fact, their upcoming raffle is rumored to be a 5 Billion dollar global raffle – if blockchain and gambling weren’t exciting enough, how about the biggest prize pool ever to be ran in history?
But the fun doesn’t stop there – about 7% of the proceeds from these raffles will be given back towards LDCC holders who bought tokens. Details on this are still unclear, but there are ongoing talks about Ethereum dividends, cash payouts, and token buybacks on the market. Any way you slice it, the Lottery team is going to be paying their holders handsomely over the lifetime of their business. We’ve ran the numbers on our end, and the profit margins for token buyers are absolutely impressive – this is similar to a KuCoin or Binance style of investment in terms of the returns that they can generate for investors, and we urge readers to check out the math themselves to be as impressed as we were.
Lottery actually casts aside any suspicion of whether their token is or is not a security – and boldly makes the claim that yes, we are a security, and yes, we are having an ICO. Naturally, they are doing strict KYC/AML checks and not every investor can simply walk in and get some of those tokens. That said, if you do fit the bill, are accredited, and want a slice of the pie, you can safely purchase Lottery tokens and be comfortable knowing you are legally compliant in doing so.
This is a massive development for crypto and the sphere as a whole, as the question for a long time has been – how can insitutional money and investors get exposure to crypto while not suffering the downsides of regulation? See, the smart money is really smart – they’re more worried about potential downside than any potential upside. They don’t want to chase 100x moon missions that may or may not have the floor fall out from underneath them. An intelligent investor is concerned with the possible downsides of purchasing an asset and having it be classified as an illegal security offering; a big no no.
Currently we have projects such as Ethereum and Bitcoin as being relatively safe for smart money to invest in – but it definitely closes off much of the possible exposure that institutional money can gain in crypto. With the release of upcoming compliant exchanges such as tZero and GBX (read our review on GBX here), trading of these securitized offerings will become commonplace for big money. That means they will, of course, buy up these legally compliant tokens in a bid to get more exposure to the market. What will one of the first tokens be that they can buy? That’s right – Lottery.
The revenue distribution model, the blockchain aspect, the legal compliance allowing institutional (and retail!) money to buy into these tokens, the world’s first 5 Billion dollar raffle, and a slew of the world’s top partners makes us incredibly bullish on Lottery as investment, both for long term holding (and receiving of dividends) and short term price appreciation.
In my opinion this is a massive step forward into the tokenization of securities, and a successful Lottery launch will pave the path for more companies to being their transition onto blockchain, thereby distributing securities tokens and realizing one of the true great benefits of blockchain. Look for Lottery on exchanges around August, as this is one we are extremely bullish on.
Disclaimer: I hold some Lottery tokens. I’m not missing this moon mission lads.