HXRO is a site built by crypto gamers to be a legitimate trading site with very much of a gamer feel to it. In fact their tagline is “everything that you love about trading crypto, now as a game.”
They include a venn diagram to show that this is the G-spot for crypto traders, where trading and gaming intersect. Everything about the site has very much of a gamer feel to it, and they’re clearly trying to create a bridge between the online gaming world and crypto trading.
But is it gambling? Or is it a skills-based venture where you can be rewarded for creating edge?
First, let’s define what gambling is, since it usually carries a risky, negative connotation: According to wikipedia, “Gambling is the wagering of money or something of value (referred to as “the stakes”) on an event with an uncertain outcome, with the primary intent of winning money or material goods. And when it comes to gambling in the United States, you’re playing a game where the house has a very small edge in probability. If you have skills, you can bend the probabilities slightly in your favor but the casino will more than likely ask that you leave. So true gambling is not fair, with the edge to the house, and everyone’s clearly aware of this, yet people still play the game of chance looking for the payoff. It’s in our nature to be optimistic and expect that it’ll be different this time.
Now let’s look at HXRO, and specifically their game Moon/Rekt. You’re going to place your guess as to future direction over the next five minutes, which is called a card. Once the price is locked, that card begins. If the candle closes even a penny higher than the locked price at the end of five minutes, those that chose the “moon” side will will their payout. If the candle closes even a penny lower then the rekt side wins. This is a form of binary options, with the differences being that the spread is very narrow, yet you can’t get out early. You’re locked into that card for exactly five minutes.
Here’s where it gets interesting; note how the payout percentages differ; the current card “Rekt” has a much larger payout if that direction wins. This rewards those willing to bet against the trend or go against the herd if the trend is obvious. You can earn an asymmetric payout, sometimes as much as 10x for the right card when everyone else piles onto the other side.
I initially believed that “direction” was where skill came into the game: if you play along with the trend, you increase your chances of being able to increase the probability of having the next candle close higher or lower in the direction of that trend, especially at the beginning of a reversal where the reaction is strongest.
In practice, even when I’ve pulled out all of the tools in my bag like multiple timeframes and fractal energy analysis, I’ve found that it’s harder than it sounds. In fact, I looked at the current leaderboard to see what what we can learn from them.
The first thing you’ll note is that the winning percentage of most of these guys is right around 50%. They’re not doing much better than a coin flip at predicting the future closing price of a five minute candle. What they are doing is in finding those asymmetric payouts where they are going against the crowd. In a case like that, you can actually have less than a 50% win rate and still have a positive expectancy, which is what most professional trading systems are based off of, earning larger wins vs. smaller losses even if you’re winning less than half the time.
And if we look at the loserboard, note that the winning percentage is about the same as the leaderboard, right around 50%! But these guys are apparently doing a horrible job of identifying WHEN to play, such that their losing hands are much larger than their winning hands…or put another way, when they win, they win small….and when they lose, that is likely when they’ve doubled down on a position, probably by backing up the truck and going moon at the top of a trend or going rekt at the bottom of a sell-off. This is a great example of how going with the crowd feels good but gives you bad results.
I’ve had my beta account for about a week now. They start you off with 100 HXRO tokens and the minimum entry fee for moon/rekt is ten HXRO. I can attest to the fact that it can be very addictive and you can live and die several times in the space of five minutes, even when betting something that amounts to 80 cents. I’ve used price action reads to play in the direction of a few trends and you feel invincible, but I’ve lost some rounds where the price was in my favor for 4 minutes and 58 seconds only to lose it by a penny below the locked price and I got rekt on that round.
So is it gambling? In the manner that most will play this, yes.
If you come to this game with the attitude that it will be all fun and games, it will be nothing more than a digital one-armed bandit that you get to pull the lever every five minutes, and your initial 100 hxro tokens will be gone in a day. If you have an impulsive personality this can be addictive and dangerous like any other game of chance, if you cannot dedicate yourself to finding edge.
But I’m convinced that for those that are willing to dedicate themselves to identifying scenarios where the reward-to-risk is asymmetric, and you use money management skillfully and aggressively, then this can create some great opportunities for you, and I’m sure that HXRO is just getting started creating these games of skill.
So what do you think? Is this a great application for crypto or is this somehow sacreligious to the potential of cryptocurrency? Let me know in the comments below.