Automated Market Making for Sports Betting Platforms

Problem to Solve:

Central limit order books are a great platform for high liquidity binary outcome wagers, yet they are limited in their ability to provide accumulator or parlay bets - an integral part of any sports betting platform.

Possible Solution:

An automated market maker protocol which allows for long-tail markets and parlays, all while maintaining high liquidity to ensure users can get their bet matched timely, and the pricing reflects the true odds of the outcome. This could be used in a variety of manners including:

Bringing accumulators/parlays to on-chain betting exchanges has long been considered the holy grail of web3 betting platforms. The margin on a parlay/accumulator can get up to 40%, the protocol which solves this problem could take in significant revenue.  (Note - exposure could be hedged by individual underlying markets on Monaco)

AMM’s could also be used to augment liquidity on regular markets. For example, if an AMM was built on top of a Monaco match winner CLOB market for Liverpool vs Real Madrid, users could theoretically have a much deeper and more efficient market to trade on.

What does the smart contract and economic incentive design look like for these type of solutions?

Resources:

1. Raydium has built an AMM on top of Serum/Openbook for crypto token markets, something similar could potentially be built for sports betting
2. A list of DeFi projects that have won Solana global hackathons in the past

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