The Complexities of Using Ethereum for Simple Wagers: A Case Study on Tossing a Coin for an NFT

Introduction

Blockchain technology has often been touted as having the potential to revolutionise various sectors by providing a decentralized platform for secure and transparent transactions. Ethereum, in particular, has been at the forefront, enabling not only financial transactions but also complex applications through smart contracts. However, the use of Ethereum for seemingly simple applications like games of chance involves considerable complexity, especially for users with minimal technical expertise.

This article explains the intricacies involved in executing a basic game of chance using the Ethereum blockchain. For the purposes of this article, let’s imagine that two people would like to toss a coin to decide ownership of an NFT of a meditating goat.

Scenario Setup

Consider two parties interested in wagering on the outcome of a coin toss, where the winner receives an NFT. Here’s how the process typically unfolds on the Ethereum blockchain:

Step 1: Smart Contract Development

Firstly, a smart contract in Solidity must be written to handle the coin toss and transfer of the NFT. This requires programming skills and an understanding of blockchain concepts, which already sets a high entry barrier.

Sample Smart Contract

// SPDX-License-Identifier: MIT
pragma solidity ^0.8.0;

import "@openzeppelin/contracts/token/ERC721/IERC721.sol";

contract CoinToss {
    address public owner;
    IERC721 public nftToken;
    uint256 public tokenId;
    address public player1;
    address public player2;
    bool public tossResult;
    bool public gameEnded;

    constructor(address _nftAddress, uint256 _tokenId) {
        owner = msg.sender;
        nftToken = IERC721(_nftAddress);
        tokenId = _tokenId;
    }

    function joinGame(address player) public {
        require(player1 == address(0) || player2 == address(0), "Game already full");
        require(player != address(0), "Invalid player address");
        
        if(player1 == address(0)) {
            player1 = player;
        } else {
            player2 = player;
        }
    }

    function tossCoin() public {
        require(msg.sender == owner, "Only owner can toss the coin");
        require(player2 != address(0), "Second player not joined");
        require(!gameEnded, "Game already ended");

        tossResult = block.timestamp % 2 == 0; // Simulating a 50/50 toss
        gameEnded = true;

        address winner = tossResult ? player1 : player2;
        nftToken.transferFrom(owner, winner, tokenId);
    }
}

Step 2: Smart Contract Deployment

The contract must then be deployed to the Ethereum network, which involves gas fees. During periods of high congestion, these fees can reach upwards of $40.

Step 3: Interacting with the Contract

Participants need to interact with the contract, which involves joining the game and executing the toss. Each interaction can cost up to $10 per player under high network congestion conditions.

Step 4: Potential Issues and Resolution

Any bugs or vulnerabilities in the contract can lead to loss of funds or the NFT. The contract also needs to be thoroughly tested, which can be time-consuming and requires additional expertise.

Analysis of Friction Points

The main friction points in this process include:

Technical Skill Requirement: Writing and deploying smart contracts requires knowledge of Solidity and the Ethereum platform.
Cost: Gas fees for contract deployment and interaction can be significant, especially during peak times. The cost to create a simple game and toss a coin can cost more than $50 at peak times.
Time and Effort: Developing, testing, and maintaining smart contracts demand considerable time and effort.

Workarounds Provided by Ethereum

To mitigate high transaction costs and complexity, Ethereum offers workarounds like transaction batching and Layer 2 solutions. However, these introduce additional complexities and centralization risks:

Transaction Batching

Services that batch multiple transactions into one can reduce individual costs but require integration and increase the risk of central points of failure as some transaction batching services are fully centralised and custodial. Transaction batching services aimed at reducing fees introduce delays to transaction processing as they are scheduled to be processed at low demand off peak times. This is something that is not acceptable to two people playing a simple game.

Layer 2 Solutions

These include state channels, sidechains, and rollups, which offer faster and cheaper transactions by processing off the main ethereum chain. They can also provide extra services such as random number generation. However, they require additional integration efforts and can introduce liquidity and security concerns due to their varying degrees of centralization. Some gaming specific Layer 2 solutions are fully centralised and therefore require trust in a third party to use.

Conclusion

The complexity, cost, and skills required to implement a simple game of chance on the Ethereum blockchain highlight the barriers to entry for casual users. In extreme network conditions, the tossing of a coin for an NFT can cost more than $50. This scenario underscores the need for simpler, more accessible blockchain solutions for games and small-scale wagers, which our new technology aims to address. By eliminating the need for smart contract writing and reducing transaction costs, we can democratize access to blockchain gaming, making it feasible for everyday use in casual gaming scenarios.

In our next articles, we will explore how Hemis PTX technology simplifies these processes by providing simple trustless on-chain tools, offering insights into its advantages and potential applications.

The Blog