Real-Time Betting and Settlement on L2 Solution

Overview

The real-time betting and settlement system on a Layer 2 (L2) blockchain solution leverages the benefits of L2 scalability, speed, and lower transaction costs while ensuring the security and finality provided by the Layer 1 (L1) blockchain. The system is designed to handle high throughput, low latency, and secure transactions for betting and settlements.

Architectural Design Diagramm

+------------------+        +------------------+        +------------------+
|  Web/Mobile UI   | <----> |   API Gateway    | <----> | Backend Services |
+------------------+        +------------------+        +------------------+
     |                                |                       |
     v                                v                       v
+-----------+   +-----------+   +-----------+   +-----------+   +-----------+
| Bet Mgmt  |   | Settlement|   | User Mgmt |   |  Oracle   |   | Analytics |
|  Service  |   |  Service  |   |  Service  |   |  Service  |   |  Service  |
+-----------+   +-----------+   +-----------+   +-----------+   +-----------+
     |                                |                       |
     v                                v                       v
+-----------------------------------------------------------+
|                     Layer 2 Blockchain                    |
|      (Smart Contracts, Rollup/Sidechain Mechanisms)       |
+-----------------------------------------------------------+
     |                                |
     v                                v
+-----------------------------------------------------------+
|                     Layer 1 Blockchain                    |
|                 (Mainnet for Finality)                    |
+-----------------------------------------------------------+
     |                                |
     v                                v
+-----------+   +-----------+   +-----------+   +-----------+
| Relational|   |   NoSQL   |   |  Security |   | Compliance|
| Database  |   |  Database |   |  & Auth   |   |  Module   |
+-----------+   +-----------+   +-----------+   +-----------+

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graph TB
    subgraph User Interaction Layer
        A[User Interface] --> B[User Authentication]
    end

    subgraph Betting Service
        B1[Bet Placement] --> B2[Odds Calculation]
        B2 --> B3[Bet Acceptance]
        B3 --> C[Blockchain Interaction Layer]
    end

    subgraph Settlement Service
        S1[Bet Results] --> S2[Winnings Calculation]
        S2 --> S3[Funds Distribution]
        S3 --> C
    end

    subgraph Blockchain Interaction Layer
        C1[Transaction Manager] --> L2[Layer 2 Solution]
        L2 --> C2[Smart Contracts]
        C2 --> C3[Settlement Transactions]
    end

    subgraph Data Layer
        D1[User Data] --> D2[Betting Data]
        D2 --> D3[Settlement Data]
        D3 --> DB[(Database)]
    end

    C1 --> D1
    C1 --> D2
    C1 --> D3

    A --> B1
    S1 --> B1
    C --> L2
    L2 --> C1
    C3 --> DB

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Components

User Interface (UI)

• Web and Mobile Applications
  • Frameworks: Use modern frameworks such as React or Angular for web and Flutter or React Native for mobile applications.
  • Features:
    • User registration and login
    • Bet placement and history
    • Real-time odds and status updates
    • User notifications for bet outcomes

API Gateway

• Technology: Implement using API Gateway services like AWS API Gateway or Kong.
• Functions:
  • RESTful APIs: For handling HTTP requests from the UI.
  • WebSocket: For real-time communication.
  • Rate Limiting and Security: Apply rate limiting, API key validation, and other security measures.

Backend Services

• Bet Management Service

  • Technology: Develop using Golang.
  • Functions:
    • Validate and process bet placements.
    • Calculate and update betting odds.
    • Track bet status and outcomes.
    • Communicate with the Settlement Service for payouts.

• Settlement Service

  • Technology: Develop using Golang.
  • Functions:
    • Handle the settlement of bets based on outcomes.
    • Ensure correct payout calculations.
    • Update user balances.
    • Record transactions on the L2 blockchain.

• User Management Service

  • Technology: Develop using Golang.
  • Functions:
    • Manage user profiles and account settings.
    • Authenticate users using JWT, OAuth, or similar mechanisms.
    • Handle user authorization for accessing different parts of the system.

Layer 2 Solution (L2)

• Smart Contracts

  • Language: Write using Solidity or Vyper.
  • Functions:
    • Manage bet placements and stakes.
    • Record bets and outcomes.
    • Ensure transparent and verifiable transactions.
    • Handle disputes and edge cases.

• Rollup or Sidechain

  • Technology: Choose between Optimistic Rollup, zk-Rollup, or Sidechain (e.g., Polygon, Arbitrum).
  • Functions:
    • Batch transactions for scalability.
    • Provide faster and cheaper transaction processing.
    • Periodically commit batched transactions to L1 for finality.

Layer 1 Blockchain (L1)

• Mainnet (e.g., Ethereum)
  • Functions:
    • Ensure security and immutability of transactions.
    • Provide finality for transactions batched from L2.

Off-Chain Services

• Oracle Service

  • Technology: Implement using services like Chainlink or Band Protocol.
  • Functions:
    • Fetch real-time data feeds for events and outcomes.
    • Ensure accurate and reliable information for bet settlements.
    • Push data to L2 smart contracts.

• Data Analytics and Reporting

  • Technology: Use tools Apache Kafka, Flink.
  • Functions:
    • Analyze betting patterns and user behavior.
    • Monitor system performance.
    • Generate insights for continuous improvement.
    • Provide reporting dashboards for administrators.

Database

• Relational Database (e.g., PostgreSQL)

  • Functions:
    • Store user data, bet history, and transaction logs.
    • Ensure ACID compliance for critical data.
    • Support complex queries and reporting.

• NoSQL Database (e.g., Redis)

  • Functions:
    • Cache frequently accessed data to reduce latency.
    • Store real-time data for quick access.
    • Support high-throughput and low-latency operations.

Security and Compliance

• Authentication and Authorization

  • Technology: Implement using JWT, OAuth, or similar mechanisms.
  • Functions:
    • Ensure secure access to the system.
    • Manage user roles and permissions.
    • Protect against unauthorized access and attacks.

• Compliance Module

  • Functions:
    • Ensure adherence to relevant regulations and standards.
    • Monitor transactions for suspicious activity.
    • Generate compliance reports for regulatory bodies.

Workflow

1. User Interaction

   • Users interact with the system through web/mobile applications, placing bets, viewing odds, and tracking bet statuses in real-time.

2. API Gateway

   • The API Gateway handles incoming requests, validates them, and routes them to the appropriate backend services.

3. Backend Processing

   • The Bet Management Service processes bet placements, updates odds, and communicates with the Settlement Service for payout processing.
   • The User Management Service handles user authentication, profile management, and authorization.

4. L2 Smart Contracts

   • Bet transactions are processed on the L2 blockchain using smart contracts, ensuring quick and cost-effective execution.
   • The smart contracts manage stakes, record bets, and execute settlements based on outcomes provided by the Oracle Service.

5. Off-Chain Oracle Service

   • The Oracle Service fetches real-time event data and outcomes, pushing this information to the smart contracts on L2 for accurate bet settlement.

6. Settlement and Finality

   • Settled bets and batched transactions are periodically committed to the L1 blockchain, ensuring security and finality.

7. Data Storage and Analytics

   • All transaction data, bet history, and user information are stored in the relational and NoSQL databases for persistence and quick access.
   • Data Analytics services process this information for insights and reporting.

8. Real-Time Updates

   • The WebSocket connection provides users with real-time updates on betting odds, status, and settlements, ensuring a seamless user experience.