We have been hard at work during the Chainlink hack to mature our protocol and test our app on Kovan. This represents a major advancement for Pharo. The initial Thorchain Experiment was all about staking, governance, and validating the algorithm, which we’ve done. We proved that based on a simple question we can use the wisdom of the crowds to identify a defensible position and algorithmic distribution for DeFi coverage. We’re moving forward fast, expanding our solution to the Kovan network, increasing the number of participants, and increasing the overall sophistication of Pharo.
Our algorithm for aggregating the wisdom of the DeFi crowd was tested and proved during the Thorchain hack. The work we’ve done during the Chainlink hackathon has focused on:
- Wrapping our algorithm in an API
- Developing an intuitive UI
- Developing an overall UX responsive to our UI and Chainlink data
- Choosing a fun market!
Speaking of fun markets, we landed on the Cowboys vs Raiders on Thanksgiving! We’ll be covering the spread, which as of this post is favoring the Cowboys by a touchdown. We started with “sports bettering” because it’s another example, like the Thorchain test, where we can compare the wisdom of the crowds against what the “experts” say.
Let’s pretend we’ve launched on mainnet and people are asking, “What’s the value of buying spread cover for the game?” Now let’s say your team has to win by more than a touchdown 😝💨 Cowboys 😝💨 how much cover should you buy?
If you’re one of the first into the market, you should come ready with confidence in your own analysis. You may have $100 on the underdog Raiders to “win” (not lose by more than a touchdown), and if they do you’ll win $100. You believe the Raiders will likely lose by a field goal, which would be -3 instead of -7, and so you go to the Pharo market to cover that difference. Since you’re the first person in the market, REWARDS ARE MAXED OUT, and cover is initialized to the bookie’s odds, which in this case is 75.2% expectation for the Cowboys to win, but if your -3 is right then the expectation is really 59.4%. So you can cover your entire bet of $100 for $24.8; but wait, there’s your reward, which might double your cover and yield $200!! So if the Cowboys cover the spread, you win and the bookie pays you $100, if the Cowboys only win by a field goal Pharo pays you $200!! But wait, there’s more 😆 your $24.8 stake could buy MORE COVER over time as your colleagues’ estimates roll in!
Whether your rewards double your cover depends on what everyone else thinks will happen, how consistent everyone’s predictions are, and of course whether you’re proven right. Regardless, Pharo offers cover for a premium based on the wisdom of estimates from this market’s crowd. Ultimately you are able to see everyone’s opinion, develop your own, take advantage of any arbitrage opportunity and then make an informed, fiscally savvy decision.
This is a test market, we haven’t deployed on mainnet yet, so like our Thorchain tests we will be rewarding from a pool of $25K in $PHRO. Just like the Thorchain test rewards will be based on your prediction accuracy, but this time the grand prize winner, the tester with the earliest and best estimate, will be awarded a Pharo NFT!
Our Chainlink grand prize is the first in a series of Pharo NFTs designed during the Chainlink hack. Not only will the Pharo NFTs give governance rights (by staking for gPHRO) but they will also serve as a Pharo Market Index, paying dividends for ALL Pharo markets in perpetuity. This means that for every market going forward the NFT will pay dividends. We mention this because one way to get these NFTs is to participate in the upcoming Kovan test. We’ll be launching our app on kovan.pharo.tech, looking forward to watching the game with everyone 😎 🏈