Context:
- I built a crypto lottery last month and wrote about it: patricklung.co/megapot
- I decided not to continue with this due to risks and regulation: patricklung.co/lottery-decision2
- Sent out my monthly email update, and some folks reached out saying it’s worth giving it a try
What are the risks? | How can I reduce these? | What is the worst case scenario? | How can I get more feedback? |
Smart contract hack leading to loss of funds | - State this is an alpha everywhere in logo
- Require users to check a checkbox saying they understand this is risky, and has not been audited
- Cap the maximum that can be invested
- Personally put money at stake as well, so any hack impacts me too | Users lose funds. They claim that I am liable even though they acknowledged the risk. | - Post on Twitter asking for whitehat hackers
- Put up a bounties for evaluating
- Put up a bug bounty |
Giving up on points program can lead to reputation risk | - Add clear end date for points program (eg. May 31) to cap my responsibility
- Be clear that only incentives provided are Blast points and Blast Gold. No token, etc.
- Set expectation that this is a proof of concept, with 1 person working on this | Users claim rugpull. They invested time into referring friends and getting a lot of points, but the project got no/limited traction so no rewards. | - Ask others who have given up on building consumer crypto |
Operating a non-government-sanctioned lottery | - Block all US users
- Require that users check a checkbox stating they are not US residents
- Be clear in guidance that this is a proof-of-concept, and that we will aim to be compliant with US law and any other regulators that reach out | Some US users get through via VPN, or contribute via contract, and sue us for offering a non-compliant lottery.
Polymarket settled by shutting down US facing product, but can still be VPN.
PoolTogether did get sued, but founder just said to block US users is fine. | - Reach out to Vice Ventures
- Ask the founders of Polymarket
- Look at the PoolTogether, Polymarket, and High5 cases
- Ask Bobby and other legal counsel |