Back in May 2021, I wrote a long analysis of FUNToken, focusing mainly on the P2P crypto sportsbook, following changes in the organization and the new $FUN token. In that analysis, I wrote quite a bit about the planned L2 token. Essentially, a Layer 2 utility token running on an alternate blockchain, pegged 1:1 with $FUN.
The big takeaway from my previous FUNToken analysis:
The L2 token will be a utility token in a side-chain where the dApps that are used is being run, e.g. crypto sportsbook, crypto casino, crypto poker etc. This is the token that will be used for gas fees when transactions are made relating to bet placement, a spin a slots game in the casino or in a hand of Texas Hold'Em.
What is more, in the roadmap it is mentioned that the L2 token will be pegged 1:1 with the $FUN token. So, the value of $FUN would relate to the new token.
This is an important step in allowing for adoption of the FUN Token sportsbook. The issue with BETR was the high transaction fees. At its worst, a $20 bet would have a $450 transaction fee. The side-chain tokens of FUN are going to have very low transaction fees. Effectively sidestepping the issues BETR had with unsustainable transaction fees.
Now, last week, news hit us that FUNToken are getting deflationary elements to its tokenomics along with launching new L2 token $XFUN. Back in May, I was just speculating around usage, I thought it would be good timing following up on that, now that we have news of the new XFUN token.
Brief background as to why FUNToken need the new Layer 2 token $XFUN. FUNToken has served a lot of purpose through the years, but has a less than optimal underlying infrastructure, severely limited the network's growth. Recently, with the split between FunFair Technologies and FUNToken, the use case of FUNToken has changed, as you can read in my other posts on the subject. The biggest issue with the OG FUNToken is that it is an ERC-20 token, running on the Ethereum blockchain. As such, FUNToken suffers from the weaknesses of Ethereum 1.0, mainly high latency and extremely high gas fees. Issues that makes it difficult for FUNToken to get adaption, use cases are limited, or rather, impossible for what is needed for crypto gambling activities.
The solution is creating a separate token running on an alternate blockchain, enter XFUN, which will be launched on the Polygon network. The choice fell on Polygon because it is the best option right now to leverage Ethereum-based networks through a multichain approach (other, similar interoperability projects include Polkadot and Cosmos). What Polygon does is make the Ethereum blockchain compatible with other blockchain network through a purpose-built framework which allows blockchains to be built and provide a protocol to connect them to the Ethereum network. The results is a multichain protocol with interoperability, leveraging the massive Ethereum network while solving the pain points like slow speeds and high gas fees. You can read more about Polygon here if you are interested, it is, in my opinion, one of the better interoperability projects along with Cosmos and Polkadot.
As planned, $XFUN is a new L2 token that is going to be pegged 1:1 with $FUN, this means that the two tokens will have the same value. This means that $XFUN and $FUN will coexist gaming ecosystems where FUNToken is supported, such as the crypto casino dPlay which should be launching this week.
What I wrote in my analysis in May holds true:
The L2 token will be a utility token in a side-chain where the dApps that are used is being run, e.g. crypto sportsbook, crypto casino, crypto poker etc. This is the token that will be used for gas fees when transactions are made relating to bet placement, a spin a slots game in the casino or in a hand of Texas Hold'Em.
The new XFUN token will indeed be integrated into new crypto gambling products which will be launched in the coming months and during 2022, finally improving the utility by having higher performance, faster speeds and much, much lower gas fees - without compromising security. This is possible through the Polygon framework and protocol where $XFUN will run.
$FUN will remain as the trading options on crypto exchanges such as Binance.
One of the coolest things with this new utility token is that it is designed to be non-custodial. This means that the funds of a player in the crypto casino are held in a non-custodial wallet that is 100% under the player's own control. Compare this to the conventional wallet structure of online casinos, where the player deposit money into the casino account that is 100% controlled by the casino operator. This is quite the shift in control.
When a bet is placed in a crypto sportsbook or a spin in an online slot, that gambling activity will likely remain in an escrow account. The escrow account will have the standard function of escrow in insurance or mortgages, securing the amount of money relating to the bet to ensure that a payment can be made in the case of a loss. The same thing happens on the other side, if it is a P2P transactions or from the casino operator, the potential loss from their end is secured to payout the amount in case you win that bet.
This is a big step for FUNToken, it is also a strong signal that the team is delivering on their planned roadmap. Siloed in the Ethereum network, FUNToken had no future. With a new Layer 2, Polygon have opened the doors to the future of $FUN and $XFUN.
I have to stop here, in the coming days I will write more about the new structure and deflationary mechanisms of the new token ecosystem. Thanks for reading!
Edit:
Continue reading part two.
