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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
Loading

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.