Project Spotlight: Ethorse

January update: The team have sent all the ICO funds to Bitfinex in the past week. Make of that what you will.

This article was first published on FlatOutCrypto on the 16th April. If you enjoy this article please follow me @FlatOutCrypto

I know what you’re thinking. I’ve reviewed a few larger and generally well thought of projects in the past week to build legitimacy and now comes the shill for a low market cap project. So, for the avoidance of any doubt, Ethorse is my biggest single holding and is addressing a use case I both like and find interesting. With that said, the following will still hopefully be an objective look at Ethorse which launches 17th April 17:00 GMT.

What is it?

Unlike some other projects that I’ve looked at, Ethorse is simplicity personified, letting users bet on which cryptoasset they believe will see the biggest price percentage increase over a given time. Unsurprisingly, given the name, it aims to replicate gambling on horse racing — only substituting cryptoassets for horses.

We want a large set of users who find it entertaining to use the platform — and we want them to use it repeatedly.

— Fager, Ethorse Developer

Owing to the parimutuel betting method the project adopts, backing an unfancied cryptocurrency could be highly profitable as winners share the pot between them proportional to the amount they bet — if you are the only winner you take the whole pot, regardless of how much you bet.

Why should I care?

I’ve written before about the outsized poker community prevalent in crypto and I suspect the average crypto investor is more predisposed to gambling than the average person. Indeed, trading cryptoassets is for many already pretty close to gambling. The cryptoasset market is like a normal market on steroids. Everything moves faster, more violently. 30–40% swings in one day are commonplace. There are thousands of cryptoassets being traded worldwide and the market never stops. It is 24 hours a day, every day.

There was an interesting article recently which looked at the difference between a dopamine portfolio (focused on instant gratification/euphoria/close to an addiction) and a serotonin portfolio (longer term/not worried about how other investors are faring/diversified). I would hazard a guess, simply from observing community sentiment and comments, that there is a large proportion of people invested in cryptoassets who would have to admit their portfolio is much more focused on instant gratification than a long term investment.

This may seem like a tangent but I believe this addictive nature is one that Ethorse will inevitably tap into. It takes a highly volatile asset and combines it with a risky pastime aimed squarely at a community I believe is going to be highly receptive. In doing so it also fills several niches:

  1. It offers the ability to bet against a particular cryptoasset, not an option offered on many exchanges
  2. It provides a means to bet quickly and easily on the short term movement of a cryptoasset, removing the need to buy and hold cryptoassets for short periods — which can be annoying if you have to register with (or sometimes even log into) a new exchange, downloading wallets for niche coins etc
  3. Depending on your country of residence it can make sense for tax purposes to gamble on the price of crypto rather than trade and invest (which can trigger capital gains taxes). For example, in the UK gamblers do not pay tax on their winnings, with the onus rather on the companies and bookmakers themselves. Gambling winnings also do not need to be declared as part of a tax return. With CGT applied at a 40% rate on all profits over £11,300 per year in the UK, this is a significant advantage

The team also have future ambitions that make HORSE a more compelling proposition. Fager, one of the project team, explained to me that the teams ambition is to not just be a niche proposition but to ultimately take volume from the exchanges and become a mainstream fixture of the cryptoasset sector.

We want to compete with exchanges and take volume from them.

— Fager, Ethorse Developer

People have also focused on Ethorse’s potential ability to expand to become a facility for binary options trading. Whilst I can see the approach, I am squarely focusing on Ethorse for gambling at present. Until the system has been proven and garners significant volume that is all I think it can be viewed as.

How does it work?

The process a bet follows is relatively simple.

  • Users log into Ethorse with MetaMask and navigate to a race that is starting shortly (betting windows are six hours long)
  • They place a bet on the coin of their choice for X ETH (betting is only in ETH) which subsequently will ask for confirmation the user wants to send X ETH to the smart contract which locks in everyone’s payments.
  • Bets are locked prior to the race start time and the smart contract closed
  • The race period elapses
  • The winning cryptoasset is defined through Oraclize which derives an aggregated price from a set of chosen exchanges (in the future the team is designed their own price index drawing on multiple exchanges instead)
  • Users claim their winnings (this is manual at present but will be made automatic in future)

This process is illustrated below:

How is the token used?

The token (HORSE) has two basic functions.

Firstly, it provides a proportional claim to the 5% rake the Ethorse house takes. If you own 1% of the total tokens, you will get 1% of the total rake taken. This is paid out on a quarterly basis. The 5% rake is higher than competing projects (Etheroll, for example, has a 1% house edge which it distributes to holders) and that rake is distributed proportionally to token holders quarterly. This rake is attractive to investors, but it also leaves open the possibility that a competitor could undercut the project quite significantly.

Secondly, HORSE holders will be able to vote on features such as game rules, features and the takeout rate. Again, this will be proportional to amount of HORSE held.

Viability and potential concerns

Unlike many projects I have no concerns as to the idea’s viability. It launches tomorrow, the testnet has worked well and it is targeting a popular sector and marketing it to a community not short on a) rich people and b) degenerate gamblers.

There are several concerns that should be raised however.


Gambling is heavily regulated and although pari-mutuel betting is generally more tolerated than many forms of bookmakers it remains an issue for the team should they ever wish to begin marketing in earnest (outside of the crypto community). It is part of the reason as to why the team have remained anonymous and is one of the factors meaning the token will likely struggle to get listed on many of the large/centralised exchanges. The other reason is the dividend and the tokens securities like nature — don’t expect to see this on Coinbase anytime soon, put it that way.


Given the team have published their work, imitations (or flat out copies) are inevitable. The 5% rake of Ethorse means it could be susceptible to losing users to a cheaper alternative. However, gambling is generally not price sensitive — bookmakers usually take in excess of 5% — and is usually seen as just the cost of doing business. From a fee perspective there are also gas fees to consider (which the team has worked to minimise) — perhaps there will be a future vote to return gas fees to users as a rebate out of the house take. I suspect the design/user experience and the rate new features are added will be more important to retaining users.

Furthermore, the team also only raised 4,000 ETH, a relative pittance compared to many ICOs, which could limit future marketing ability and reduce the likelihood of attracting a wider crowd.


The HORSE team control 18,750,000 tokens out of a total 125,000,000 making them the biggest stakeholder by a stretch. This means that they will likely be able to force through voting in the future. As their fortune is tied to the success of the platform obviously it is in their interests to make the ‘right’ decision — but it does mean the community may struggle to have any impact on decisions.

Future roadmap

The team have delivered (albeit slightly delayed from their original goal of a February launch) on their roadmap thus far. A new roadmap will be published post launch and it will be important to see when expanded features (particularly new betting options which was scheduled for Q2 and a mobile app which was Q3) are scheduled for. I am expecting these prior deadlines to slip by 2–3 months.


The spectre of gambling is one that is particularly stark in the UK at present, where the giant gambling companies fill our airwaves with advert after advert for their wares. They are trying to make gambling a normal way of life (witness the ‘Ladbrokes life’ adverts) and particularly to convince the young and impressionable that sports cannot be separated from gambling. I have sympathy with those who may find a gambling DApp morally distasteful. There is no doubt that excessive gambling can cause huge social issues. However, this is not something that I will focus on bar this section as — by and large — everyone will have their own ideas and thoughts as to the positives or negatives.

Furthermore, a decentralised network is a perfect use case when taking on an industry with numerous dodgy practices (particularly in the more unregulated/markets where gambling is illegal). The smart contract means no-one can tamper with results or prevent users from accessing their winnings and it also means gamblers do not have to resort to using potentially illegal parties (again, this is obviously country dependent).

User adoption

I seem to bring this up in every Project Spotlight but that does not minimise the issue. The project needs volume of users to survive. Without volume no-one will come to the site and it will become a vicious cycle where users dwindle. Without volume there is no dividends and the project will die.


So how should we value Ethorse?

The project is currently the 532nd ranked project with a market cap of just $7m. It sits c. 3–4x vs ETH since the ICO and around 1.75x vs USD. It is only available on IDEX and FD/ED and volume is small, having dropped from a peak of $600k+ on launch to $30–60k now. Like most projects it is around 70% off its ATH, although it did rise on news of the imminent launch.

There are a whole spate of projects that have dumped upon launch. Ethorse is harder to predict because unlike most projects there will be an immediate and public representation of just how many people are using the platform. I am braced for low volumes on opening week, although the team will use some ICO funds to fund 25ETH worth of bets per day initially. There are just 1,800 holders of the HORSE token and general knowledge of the project is low (although it is a favourite low cap pick of many). Crypto projects all struggle with a similar issue which is that it is quite cumbersome to actually use the project — you can’t use your phone and just open an app, you have to go on your PC, use MetaMask, sign the transactions. This is not the seamless user experience that people have become accustomed to.

Many people compare the project to the likes of Etheroll, which has a substantially higher daily volume than 100 ETH (c. 700 ETH in the last 24 hours according to DappRadar) but this is not a true comparison to estimate a potential price for Ethorse. For one, Etheroll only takes a 1% rake. But the house can also lose in Etheroll (as indeed happened in the period from November to February where there were no dividends as the house was in the red to the tune of $400k). Etheroll is also largely dominated volume wise by a small cadre of regular players in a way Ethorse is probably unlikely to be.

With that said, Ethorse only needs a relatively small following to generate daily volume that would justify its current price. 100 ETH (c. $50,000) of daily volume would give a near 10% ROI on the current price, providing $730 annual dividends on a current investment of $7,500 at current ETH prices. This is a good dividend, although personally I would always expect crypto projects dividends to be higher than a traditional investment owing to the higher risk. A more thorough look at the potential returns of the HORSE token can be found here.


Ethorse faces a number of issues, not least user adoption. For that reason it is a high risk proposition — but so too is nearly all of crypto as even the biggest projects have witnessed very little true user adoption bar as a trading vehicle. There are a number of projects where holders can sit comfortable for the next few months, riding a stream of news about the projects upcoming launch, partnerships or exchange listings. Ethorse holders do not have that luxury, as despite the team’s best efforts to dampen expectations, the opening week volume will set future expectations.

There are a lot of reasons to be sceptical over a project like Ethorse. It didn’t raise much at ICO, it will not begin to market in earnest until later in the year, it faces competition should it be an initial success and it is not widely known. But the idea is one that I believe will be a success in the long term, as it makes too much sense to marry highly volatile cryptoassets to gambling.

Ethorse is currently the only game in town providing this. The community is rich, has a higher than average risk appetite and we have centuries of proof as to the popular appeal of gambling worldwide. The team has delivered noticeable upgrades to both the backend and frontend of the project since the ICO concluded (and unlike some, had a working product before ICO). It is ranked in the 500+ range and yet as of tomorrow has a no-lose and working product providing 5% dividends. As at ICO, I still believe this is an easy decision for those willing to gamble on its ability to capture even a small amount of daily volume.

Disclaimer: I hold HORSE as of today.

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