Magic Dice - Mathematical Analysis on Dividends and Sustainability

in magicdice •  3 months ago


Hey guys! Today we're coming into the fifth day of Magic Dice paying dividends and we've just hit 20% of the total tokens being distributed. So, is Magic Dice still worth playing? Firstly, if you don't care about its profitability and just like gambling then yes, it's a fair way to gamble with a 2% house edge. However, if you're looking to earn a profit, this article aims to explore the profitability of Magic Credits, taking the house edge and future sustainability of the platform into consideration.

In this article, I'll aim to be completely unbiased. Although I am a stakeholder and obviously want Magic Dice to succeed, all statistics and information in this article is purely objective and sourced. However, the last two sections regarding its sustainability and my thoughts on @powerguy will be mostly opinionated, so take it with a grain of salt and form your own opinions.

Look forward to any discussion in the comments!

Table of Contents

  • What are Magic Credits?
  • How much can I expect to earn from Magic Credits?
  • Is "mining" them worth it?
  • How sustainable is the platform?
  • My thoughts on @powerguy (who owns ~25% of the distributed Magic Credits)
  • Some reminders/cautions

What Are Magic Credits?

Firstly, Magic Credits are shares in the website magic-dice.com. By owning Magic Credits, you're entitled to receive dividends. Currently, they are sharing 40% of their profits to Magic Credit holders. Since they currently hold 60% of the circulating supply, 40% profit share to distributed tokens is essentially 100% profit share to circulating tokens.

However, as more tokens are distributed and the profit share remains at 40%, your tokens are going to be diluted and thus worth less value. This is where I encourage the @magicdice team to change it to 100% between circulating rather than a set 40%. It is quite a bitter-sweet feeling for investors to see their tokens get diluted and thus lose value as more volume comes onto the platform.

Some terminology

I'll be using a lot of these terms throughout the article, so here's a glossary:

  • Distributed supply: tokens distributed from betting (1,400,000,000 = 20%)
  • Team supply: the 2,100,000,000 (30%) the team hold
  • Circulating supply: total tokens in circulation (team's token + distributed = 50%)
  • Total supply: 7,000,000,000 which is the total amount there ever will be

How much can you expect to earn from Magic Credits?

Now comes to the question, is it worth playing Magic Dice purely to earn Magic Credits? Let's do some maths!

Simplifying Assumptions

  • Volume stays the same (using the last 30 day's average)
  • Profit share is set to 40%
  • Working within the confines of 25 MC per STEEM wagered and 20% distributed, this means profitability will be OVER-ESTIMATED

Working it out

So, right now we're getting 25 MCs per 1 STEEM wagered, and at a 2% house edge that means we're expected to spend 0.02 STEEM per 25 MCs, or 1250 MCs per STEEM lost statistically.

So, the question simply is: is 1250 MCs worth 1 STEEM?

Let's work with an easier figure, 1,000,000 MCs, which you can expect to earn by losing 800 STEEM, or 40,000 STEEM wagered at a 2% house edge. By owning 1,000,000 MCs, you own approximately 0.07143% of the current distributed supply. Using the volume of the last 30 days as an expected earning, which has been 11.45 million STEEM according to Steem Apps, we can expect to earn 65.43 STEEM in a month with an investment of 800 STEEM.


How we got to 65.43 STEEM per month:

  • 11,450,000 STEEM volume = 229,000 STEEM expected profit per month from house edge
  • 40% of 229,000 STEEM is shared with the token holders = 91,600 STEEM
  • 0.07143% of 229,000 is 65.43 STEEM
  • Thus you can expect to earn 65.43 STEEM per month by holding 1 million MCs

Is "mining" MCs by gambling worth it?

If you can expect to earn 65.43 STEEM per month by wagering 800 STEEM, that's an expected return of 785.16 STEEM per year, which is over 98% ROI. Furthermore, many expect this is just the start and that the volume of Magic Dice will continue to grow as the adoption of STEEM grows. So, looking at it like this it's obviously very profitable to be playing right now, especially when the tokens become liquid and you can sell them for money.

However, now the question comes down to will Magic Dice last that long and will it be THE casino here on the Steem blockchain?

My thoughts on sustainability of Magic Dice

First of all, I think there is a massive demand for a casino here on the STEEM blockchain. I know many (including myself) love to gamble, albeit a little too much sometimes. I think for as long as STEEM is sustainable as a blockchain and community, casinos here will be viable. Furthermore, I feel like there's an untapped audience of older Chinese and Korean people who are usually the main demographic I see at the casino.

However, as I questioned before, will Magic Dice actually become the main casino hon ere? There are already many more copy-cats popping up, like @steem-bet and @steemslotgames. Magic Dice has first mover's advantage, since it's the first dice game here on Steem to really take off, but in order to stay ahead the @magicdice team will really need to start pushing out more updates and more games. Although @steem-bet feels quite scammy, I (as well as many others) are keeping a close eye on their development to see if they can overtake @magicdice.

If @magicdice can push out more games to become a real virtual (haha) casino and attract more real gamblers instead of just token farmers, then that's when real volume will start coming in to both Magic Dice AND the steem blockchain. By the way, I want roulette on here with a 2% house edge!!

Thoughts on @powerguy

Recently, there's been a lot of rumours regarding @powerguy regarding an inside deal. I've heard he owns around 25% of the distributed tokens (5% of total tokens) but I haven't done the maths on it myself. I've also heard he's down around 156k STEEM. In my opinion both of these statistics are not unbelievable and it doesn't necessarily point to an inside deal. Therefore, I'm sceptical something dodgy happened behind the scenes unless there's some solid proof on the blockchain (like transactions going from @magicdice to powerguy or a @powerguy affiliated account). If STEEM went directly from @magicdice to an exchange, then this is next to impossible to track without the involvement of the exchange.

Furthermore, the worst case scenario from this is there really was an inside deal. All that means is that the @magicdice team owns 35% of the total tokens, instead of 30%, which to me isn't THAT much of a deal breaker.

However, it paints a very bad image of their business ethic and since Magic Credits are still a centralised token, I'd be worried what further implications there are.

I'd be happy to hear any opinions regarding this issue since it's probably the biggest FUD against @magicdice right now.

Some Reminders

  • This is NOT financial advice
  • This is a VERY risky "investment"
  • Never gamble more than you can afford to lose

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Thanks for this. I'm contemplating a big delegation; even if it's only for the next 6 months.
Hoping its a sustainable business model.

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It's definitely a sustainable business model in my opinion, since casinos by themselves are already sustainable and this adds bonus incentive. However, there is a lot of competition in the space so it needs to be the best to stay ahead of the competition.

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Its actually not sustainable. Quite the opposite. Unless steem increase adoption or they manage to steal gamblers from other platforms.
Its designed as being an app with a dead end.

Over time all the crypto gamblers money ends up in the hands of magic-dice owner due to the 2% edge.
Once that happens the dividends start drying up making the tokens worthless.
Its already started happening on EOS and TRON...

This isnt a scam since the final outcome is obvious. But it does leave you with something worthless in the end you spent money to accumulate.

Most definetly do not support...
Not sure about the math you did, but this is only a semi decent short term inv.

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One thing you discount a little is that steem users keep earning steem just by being here. So even if I lost each week. I would also be earning steem to come back with. They have a upvote plan for players that just needs a better format. I got one of these votes but it seems lucky right now. But the payout to me will be like 10 steem from the vote. I haven't lost close to 10 steem playing yet. Given I am a small time player with just like 12k magic tokens. So in the end I might never make it to 1 million tokens but I still say that people that earn steem might want to gamble it.

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Sure. That might offset it a bit, but really, the slowdown would be extremely insignificant.

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I do agree that once earning magic tokens starts to slow down so is the site unless like he said there are more games to play. So at some point it makes sense to just stop and collect what you can and that point might be soon.