With the launch of the Nezha Draw approaching, it is worth deep-diving into the dynamics of how one can win the most attractive Prizes of the Solana ecosystem with Nezha. With the test-net launch approaching, let’s take a few minutes together to understand how to win big with Nezha!

What Are Nezha’s Jackpots?

At the Nezha Draw, there are three prize tiers to be won! To understand the prize dynamics of the game, one must first understand the underlying dynamics of the game. The Nezha Draw entails trying to match the sequence of six randomly generated numbers. Prizes are distributed depending on how the players match these numbers.

At each draw event, three tiers are available to players. The first tier prize, which we refer to as the jackpot, is distributed to players who match all six numbers of the draw event. The jackpot starts at a whopping $100,000 USDC with the option to grow in the future. How can we offer this sustainably you may ask yourself? Well, continue reading, as we will go into more detail about our insurance in the second half of this article.

First, let us continue with the second prize tier, awarded to players who match the first five out of the six numbers. This prize entails 50% of the yield left after the insurance is covered. The prize size varies, determined by the number of winners, the total value locked (TVL) of the Nezha protocol, the interest we generate on USDC, and the insurance payment.

Thirdly, the tertiary prizes are awarded to any player who matches the first four out of six numbers of the Nezha draw correctly. The payout follows the same dynamics as the second prize tier, with the remaining 50% distributed to tertiary winners. As the probability of winning is higher, we expect more winners compared to the second tier. As the same variables determine the prize, we expect the payouts for the third tier to be less than for the second tier.

How Is Nezha’s Jackpot Insured, And How Is It Different To Existing Platforms?

Insured jackpots are a common practice in traditional prediction markets. Due to the industry experience of our co-founder Phil, we built a fruitful partnership with the leading fixed-risk insurer RISQ. We are their first partnership to explore the great possibilities for prediction games through DeFi and Blockchain technology.

While some of the existing platforms with gamified payout mechanisms such as PoolTogether simply distribute the generated yield, we can offer an outsized jackpot right from the start. The agreement functions as follows: A portion of the yield generated from staking rewards covers the insurance. The payment depends on the prize size, the insurance risk premium, and the probability.

Basically, each ticket of the liquidity providers is insured independently. Thereby, the total cost of the insurance depends on the TVL and scales with the protocol. Factors such as the prize size can be adjusted, which allows for scaling the jackpot even further in the future. In return, we can offer a weekly 100,000$ up for grabs right in the first game cycle.

Thereby, the prizes offered by Nezha are attractive right from the start, even when there is not much liquidity locked in the protocol! The insurance covers each game cycle, giving you the chance to win $100,000 USDC or even more weekly. Isn’t that exciting!

How Does Insurance Enable Larger Prizes On Nezha?

The insurance agreement is critical for Nezha to attract liquidity, as it resolved the greatest problem we faced when building the protocol: The issue of scaling. Finding a way to make the protocol attractive in the early days proves difficult without such an agreement. If there is low liquidity in the protocol, prizes would be small and therefore unattractive for players to join in. That would be expensive for the protocol to overcome and potentially prolong the time until the protocol can sustainably operate, which would require more funding. Organically growing to $100,000 USDC weekly jackpots would be a long way without this agreement.

Secondly, and perhaps counterintuitively, the insurance agreement also helps scale the secondary and tertiary prizes. Even though some of the yield covers the insurance costs, we are confident that the attractiveness of the protocol through the prize offering will attract greater liquidity. Therefore, the secondary and tertiary prizes, as well as the randomized payouts, can grow much faster than without the agreement. Thus, the insurance agreement is a win-win situation for the whole Nezha community, fitting the theme of our positive-sum prediction market, which we are so proud of!

Who Can Win A Jackpot On Nezha?

Everybody who stakes USDC into the protocol and receives their ticket has the opportunity to win the jackpot. As long as the numbers match, you win. We at Nezha want to make our application accessible for everyone, which is why we keep the entry barrier low. A single ticket comes as cheap as through staking $25 USDC, giving you a chance for the big win. Of course, the more you stake, the more tickets you receive, giving you a higher chance to win!

Additionally to the prizes, the protocol mechanisms ensure that at least 50% of the yield is paid out to the participating wallets if less than 50% is distributed through the game’s outcome! That mechanism gives equal chances for whales and stakers who can only afford one ticket.

Stick It To The Man – Will You Beat The Insurers?

So, what is left to do except winning! Let’s play together and stick it to the insurance. The great about Nezha is that everyone can play together as everyone benefits if more value is locked in the protocol! So, invite your friend, and we will see who first manages to grab a 100,000 from the insurance! Play together and make good use of this amazing agreement!