What is Player Payout?

Player payout is a new automatic method for compensating online gaming players immediately after a tournament ends. All payments made with cryptocurrencies such as ETH, MATIC, DAI, USDC, and others are handled instantly thanks to the underlying blockchain network and smart contract technology.

Automated player payouts are a great solution for the gaming industry, especially for the e-sport community, which is one of the fastest-growing communities that exceed billions of dollars in revenue. E-sports competitions attract large sponsorships from VC firms, Fortune 500 organizations, and major media networks due to their increasing demands and expanding audience globally.

However, e-sports tournament organizers are known to hold off on paying players for weeks or even months. It's understandable to some extent, given that organizers must personally distribute rewards to all winners. 

Traditional transaction models such as wire transfers, ACH transfers, paper checks, and so forth are used by the majority of organizers. These approaches are costly, reliant on human resources, and painfully slow, resulting in payment delays.

Player payouts come to the rescue in this case. Tournament organizers can automate the process of distributing rewards and transferring them immediately to the winner's crypto wallet by using smart contracts and decentralized exchanges (DEXs). 

Not only does this allows both parties to avoid paying excessive transaction fees to banking institutions, but it also encourages more organizers and players to join the Play2Earn gaming revolution.

How Do Player Payouts Work?

If we’re talking about the e-sports industry, each tournament contains a prize pool of money that is divided among a limited number of winners. Organizers can tailor and control payments based on each player's performance in the competition using smart contracts stored on a blockchain network. In addition, smart contracts make a tournament's structure and payout schedule more transparent.

Smart contracts are electronic contracts that perform transactions automatically based on pre-defined parameters. Consider the following scenario to see how an Ethereum-based smart contract for an e-sports tournament functions. Note that tournament contracts deployed on the Polygon network, or any other smart contract ecosystem, would go through the same procedure.

The Ethereum blockchain is powered by a network of computers (known as nodes) that constantly confirm and log all network transactions. The payout distribution is pre-configured by tournament organizers, who choose how many participants will be paid out and what percentage of the contract funds each place will receive. The Ethereum blockchain is then used to deploy the tournament smart contract.

The prize pool is usually made up of player entry fees and/or sponsor donations that are sent in and held in escrow while the tournament is taking place. The organizers only need a little amount of ETH to start the smart contract-powered player payout procedure after the tournament is finished.

The defined transactions are processed and documented on the underlying blockchain as the players achieve the ranking conditions. Since there is no third party involved, tournament winners get paid almost promptly and for a small fee.