You may not have to head to Flemington Racecourse for Melbourne Cup Day next year to get in on the action. You can now get involved in horse racing virtually – using cryptocurrency.
Traditional and virtual hose racing will fuse next month after the Victorian Racing Club, the custodians of the Melbourne Cup Carnival, signed a deal for the Flemington racetrack to feature on Zed Run.
A recreation of Flemington will feature in Decentraland, a 3D virtual world powered by the Ethereal blockchain. Attendees at Zed HQ will have the ability to watch a live stream of Australian horse racing, with music by DJ Havana Brown. There will also be a virtual non-fungible token art gallery, race day fashion and a collection of Melbourne Cup NFTs will go to auction.
Zed Run, which launched in 2019, is a digital horse racing platform that combines horse racing, buying, selling, and breeding with blockchain technology that taps into the non-fungible tokens (NFTs). A non-fungible token is a unique unit of data that is stored on a digital ledger. NFTs grew in popularity this year.
Instead of just sitting there, increasing in value, a Zed Run hose is a “living NFT” that has its own bloodline, races, breeds, and a virtual life of its own. The races are held on Zed Run’s website and streaming platform Twitch. Each race has 12 horses and the outcome is decided by more than 10,000 potential outcomes in the company’s algorithms.
Currently, there are over 100,000 horses in the Zed Run ecosystem and up to $20 million is traded on the secondary hose market daily.
Celebrities such as Mike Tyson, Paris Hilton, Ja Rule, and MC Hammer are all owners of virtual horses, which, just like physical thoroughbreds can be bred, bought, and sold.
Co-founder Chris Laurent came up with the idea while he was at his local Chinese takeaway store in the Hunter Valley. He had seen a sign with a picture of a horse and $15,000 on it.
He told The Australian; “It wasn’t $15,000 to buy the racehorse, it was $15,000 to breed with it. Then I read the fine print and it said it will breed up to 200 times per year. Doing the maths, I thought, ‘Wow, what a lucrative business stud farms are’. That part of the industry is more lucrative than a bunch of mates going to buy a horse and racing it.”
He found it fascinating that the horse racing industry could be replicated to a degree and it would potentially be more profitable to develop that in the real world.
Co-founder Rob Salha had been an accountant at Ernst & Young before holding marketing and digital roles and met Laurent while he was working for the wagering firm BetMakers.
Salha told The Australian, “Chris was the mad scientist in the corner of the room coming up with wacky ideas. But he’s extremely creative and what he noticed was at 10 in the morning when the horse racing markets open up all these people start placing bets on races, there’s all this engagement. But by 3pm it all dies down.”
They thought it would be cool if a 24/7 ecosystem could be built with thousands of races a day where each of those digital racehorses was actually owned by someone and those digital racehorses had value.
Zed Run has thousands of daily events that are streamed to millions of people around the world and it’s all powered by blockchain technology so it never ends. There is no quiet period.
When it first launched, a horse sold for $100, and then a couple of months later the horse was sold on the secondary market and then the price increased to $500, $1000, and then $2000 because it’s seen as a valuable asset.
People pay for their horses to breed and they also pay fees to enter races. The fastest are the Genesis horses but there are only 38,000 of those. The Genesis horses are Zed first-generation racehorses.
All of Zed Run’s horses have benchmarked ratings and receive points. The better the racing performance, the higher the breeding price and the greater the prize money will be. Prize money is paid in cryptocurrency.
Zed Run horses are sold in limited edition drops with the last one in April yielding $25 million worth of sales in four hours.
A single horse can be sold for hundreds of thousands of dollars.
Just last week Zed Run achieved the biggest individual sale when a stallion, named Breathless Edge was bought for $561,845 using cryptocurrency, and a handful of horses recently sold for $3.05 million.
Zed Run attracts a younger demographic than traditional horse racing, with the average user aged between 18 and 45. Some of the stable owners have even become celebrities, with the merits and performance of horses even being discussed by commentators in the US, which is a major Zed Run market.
Co-founder Salha told The Australian; “you’re watching the screen, you’re cheering, just like you would with a typical racehorse and it’s earning your income potentially just like that of a real racehorse. And everything else is inclusive – breeding, trading, being strategic where to race and over what distance, who to compete against and so on.”
VRC Chair, Neil Wilson told The Australian, the partnership will see people embrace the digital age so that old and new audiences can experience the magic of Cup Week.
Zed Run has attracted the attention of US-based investors including TCG Capital Management, Andreessen Horowitz, and Red Beard Ventures.
Salha told The Australian the money would be used to expand the business and some gambling companies have also thought about approaching Zed Run to field markets on its own races.
Laurent shares the vision and says the business is only about 30 percent of where they want to be. With deals like Melbourne Cup and the recent one with the NASCAR racing series in the US, Zed Run’s profile will keep building.
They want to be one of those products that are the catalyst for mainstream adoption and they don’t think it should matter that they are built on the blockchain or that owning a racehorse is also owning an NFT.