A pricing model for CryptoCup bets (my attempt at doing sports for a living)

What's CryptoCup?

My friend Federico, who was my cofounder at Sherpals, has been working since earlier this year on CryptoCup. CryptoCup is an Ethereum Dapp version of a traditional office betting game that is played in Argentina during the FIFA World Cup (the world championship for the type of football that is actually played with feet).

A single CryptoCup ticket. I shit you not, 800 people filled this in (and paid for the privilege).
  • The betting phase: People can pay to purchase a ticket and fill in their predictions. This stage finishes a few hours before the beginning of the World Cup (and it's been over for approximately a week as I write this).
  • The marketplace phase: Even though people can't buy new tickets once the World Cup begins, they are able to trade their bets by buying or selling other people’s bets on a marketplace. This is the phase we are in right now.

Analyzing the market

During the betting phase the winning strategy is clear: make the most accurate bets. But that was then and this is now. Is it possible to make a profit by discovering underpriced bets in the marketplace and buying them?

If you buy this then I have some BitConnect tokens that you might like

Kicking it up a notch

Here's the unsurprising fact of the day: I suck at predicting football results. But some friends at the University of Buenos Aires have been doing this kind of thing for a while and recently put out a website called 301060 where they publish some very useful information about their models of FIFA World Cup games.

Bonus question: what's the best bet for this match-up?
  1. Generate a full World Cup simulation, including the known results so far
  2. Score every existing ticket in CryptoCup for that World Cup outcome
  3. With that score, rank the tickets
  4. Calculate the payouts for each ticket based on the ranking
  5. Repeat the process a few thousand times and get some average payouts for each ticket

Becoming an overnight millionaire

How's that for some wishful thinking? Unsurprisingly, it turns out that according to Saveliy’s simulation most tokens available for sale are indeed very overpriced right now. As a matter of fact, there is exactly one CryptoCup ticket that is being sold below its expected value right now. So there goes my sports betting career.

  • Ticket #239, currently at 619th, is the only underpriced ticket for sale right now (expected payout of 0.05 eth, but for sale at 0.033 eth)
  • Ticket #254, currently at 91st, is the most overpriced ticket (selling at 2 eth, 2817x its expected payout of 0.0007 eth)
  • Ticket #46, currently at 7th, is the best ticket in the game at this point with an expected payout of 0.528 eth (current price: 2 eth).
The most beautiful spreadsheet you’ve seen all week

So what now?

Generally speaking, the expected payout for every ticket is very low at this point. As can be seen in the chart below, almost all tickets have an expected value under 0.3 eth. The reason for this is that the way the game is designed, most of the CryptoCup points will be awarded later in the World Cup. The current top ranking bets are still under 100 points, whereas the maximum theoretical number of points a single ticket can receive is 1895.

Tickets for each predicted payout range

I hereby offer to purchase any CryptoCup ticket at 60% of its expected payout value according to the model above.*

(*) Unless your ticket predicts Argentina to be the champion, based on extremely recent developments. Fuck.

Last but not least

I would like to thank Saveliy for his help as well as all the researchers behind 301060, which I find to be an incredibly cool project. This blog post is truly a case of standing on the shoulders of giants, as the only reason we could put this together in a few days is that the research had been going on for years already.

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