DeFi Lottery System

How No One Loses Money in a DeFi Lottery System?

Believe it or not but Americans spent over $80 billion on traditional lottery tickets and electronic lottery games in 2016. That’s a huge sum especially when you have some pretty long odds. To state an example, the odds of winning a recent Powerball drawing were 1 in 292.2 million.

Of course, if there is a draw, someone will win the lottery. Unfortunately, a lottery system is designed in a way that there is an independent probability of winning just like a coin toss. Simply put, winning is completely independent of the number of times you participate in a lottery. However, you can always increase your odds of winning a lottery by purchasing more tickets.

Let us do some simple maths here based on a hypothetical scenario:

A lottery participation ticket costs you $10 and there are 14 million participants. With 1 lottery ticket, you stand 1 in 14 million chances to hit that jackpot. Let’s increase your odds. You went ahead and bought 5 lottery tickets increasing your chances of winning the lottery to 5 in 14 million. This still sounds insignificant. Right?

You spent $50 to buy a couple of lottery tickets where the chances of winning are grim. In nutshell, every time a user participates in a lottery, he loses some money irrespective of the fact whether he wins a lottery or not. And the fact is that these inexpensive lottery tickets do add up to serious expenses.

Lottery Market has phenomenal scope

Despite all the challenges, Global Lottery Market Insights 2019–2026 by suggests that the revenue generated from the global lottery market will exhibit a CAGR of 10.6% from 2018 to 2026. Statistically, The revenue will go up from $157 billion to $353 billion. This could be even higher if none would lose any money in a lottery system.

Interestingly, advanced technologies like blockchain promise innovation in the lottery industry. “No Loss” Crypto lottery is something where you literally don’t lose any money and yet stand a chance to win.

How does the no-loss crypto lottery work?

A ‘no-loss lottery over blockchain system consists of -

  • A blockchain to record the transactions
  • A mobile app or web UI for the lottery participants
  • A web platform for admins to deploy the smart contracts

Here is how it works

Step 1: Sign-ups

Participants sign-up by providing details like wallet address, name, phone number, and more.

Step 2: Lottery smart contract deployed

The admin deploys the smart contract that stores predefined rules & policies for the lottery. Subsequently, the admin announces the lottery game for players to register their participation.

Step 3: Stake into pools

Interestingly, when the lottery participants deposit their funds in the pool, the funds automatically get staked in DeFi platforms like Compound, Aave, and more. The interest generated on these staked assets pays the lottery rewards.

The admin announces the tickets after which the lottery participants need to deposit or (stake) their cryptocurrencies into. These pools are governed by basically lottery smart contracts. Once the users deposit the required funds, they get a lottery ticket for participation. For example, a user stakes 100 ‘A’ tokens in the lottery smart contract and receives the same number of tickets.

The users can hold their lottery tickets and enroll for the next game or they can request total retrieval of their staked token. In either case, they don’t lose anything.

Remember, unstaking the tokens discontinue the subscription in the lottery. Once you discontinue the participation, the tokens are automatically transferred to your address after a set unstaking period.

Step4: Fair Lottery Draw

Different staking pool designs facilitate weekly, bi-weekly, or monthly draws. A random number generator (such as ChainLink) generates the winning number sequence. As random number generators based on blockchain, adds an extra layer of randomness for lottery fairness.

When a smart contract is deployed to generate a random number, it drops a hint to the Chainlink Oracle network. The Oracle uses its private assigned keys to generate these random numbers.

Once the random number generator provides the number, the winner’s lottery ticket match is carried out and the winning amount is instantly released. . The amount is generally the interest earned by the staked assets of the lottery pool.

However, if a lottery participant did not win, his/her tickets won’t expire. They get rolled over automatically to the next draw and then next until the user chooses to withdraw his/her funds from the pool.

Advantages of a no loss crypto lottery

Deposited funds are never lost

You don’t pay any cost for buying a ticket. You just stake your crypto assets and that becomes your ticket to the lottery.

On-demand Funds Withdrawal — Interesting, the participants can withdraw their assets at any time. Generally, the lottery systems do put a minimum lock-in period for the staked assets, 10 days or more.


The traditional lottery systems remain plagued with challenges like counterfeit tickets, random generation number manipulation, payment of prize money in time, and more. Blockchain promises to overcome these challenges by replacing tickets with a blockchain record that cannot be corrupted.

As no one can predict the next transaction on the blockchain, its random number generation is also more trustless. In addition to this, once the coded events in the smart contract get triggered, the reward amounts are automatically transferred to the winner’s wallet address.

Market Access

Traditional and online lottery systems have to comply with the laws of their registered jurisdiction. As a result, it limits access to lottery participants across the globe. Blockchain can change this as it can provide access to lottery participants across the globe.

Fair Distribution of Funds

Many lottery setups have gotten into legal battles because of the participants doubting their methods of random number generation and distribution of funds. In a traditional setup, it’s very difficult to keep track of all this information. Blockchain simplifies this as every transaction remains recorded on the chain in an immutable manner.


The lottery industry contributes almost 29% to the total global gambling revenue. And no loss lottery provision can drive the growth of the global lottery market. While no loss lottery or saving prices system is conceptually pretty old, due to technical limitations, the concept has been struggling to get implemented in the real world. But blockchain has made it possible to win big jackpots without actually losing a dime.



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