Many more casual online poker players may be only vaguely aware of rake, but it’s a fundamental and necessary element of the poker ecosystem.
It’s what keeps the operators’ lights on, ensures standards are maintained, and allows a site to grow in terms of new features, available games and, thanks to marketing spend, the number of players.
But if rake is important for operators, rakeback can be equally important for players. Every poker site allocates a portion of their revenue to be given back to players as a loyalty incentive. This is usually tiered to encourage more time spent playing, with those putting in extra volume rewarded accordingly, and can take many forms.
Exclusive freerolls, tournament tickets, randomized prizes or cold, hard cash in your account are some of the ways players have been paid back for their play over the years. Some sites, such as Phil Galfond’s former platform Run It Once Poker, have tried to innovate with ideas such as inflating the size of random pots with cash drops, but creating a new system that truly caters to all players is a tough task.
Enter the ‘Phenom Token’ at Phenom Poker. Instead of cash, tickets or the chance of winning your rake back, Phenom Poker has created a system that aims to align the interests of both the players and the operator by awarding tokens which can be instantly traded for cash or kept, effectively as a share in the business.
The more revenue the site generates, the more valuable the tokens, and the higher the dividends paid out to token holders. And if that’s not your thing, just cash them out instantly.
“The Phenom token is key to how we differentiate from other poker sites,” says Phenom CEO Matt Valeo. “One of the main things we want to accomplish with Phenom Poker is to create alignment between the community and the player base.
“We just felt that, in the existing landscape, the operators and the players are on different sides of the equation and have opposing interests. So by giving ownership of the site, or at least a large portion of it, to the player community itself, we all have the same interests. And that’s to make the best possible site and deliver the best possible player experience.”
How the Phenom Token works
You don’t need to be a crypto bro or a city slicker to get your head around the Phenom Token. Every Monday, players receive tokens relative to the rake they’ve paid that week, with higher tiered (i.e. greater volume) players receiving a bigger amount. The value of the token is directly linked to the revenue generated on the site over the previous four weeks.
Those who prefer a more traditional rakeback structure can immediately exchange their tokens for USDT — a ‘stablecoin’ currency tethered to the price of the US dollar. The other option is to hold onto your tokens, which increases your ownership share of the site, affords you voting opportunities on major platform decisions, and pays a share of revenue each Monday at 12pm GMT.
Technically, the token is an ERC20 smart contract on the Polygon blockchain, but unlike most cryptocurrencies it is not designed as a tool for speculation.
“We don't want people buying the token, betting it's gonna go up, or shorting the token,” says Valeo. “We don't even list it on exchanges at all.
“If we did, and we tried to hype it up and get people to bid the price up, what usually happens in these crypto projects is the ownership, or the large holders, will just dump at the high prices, and use retail as their exit liquidity. And then you start to see a cratering in price, but by then ownership's already made all their money, and they don't really care.
“We did not want to create a scenario where this was even possible with the Phenom Token, so that's one reason why we decided not to list the token on any exchanges. Instead, we want to create a system of long-term alignment, so in general the large holders don't sell.”
Another reason not to sell is that holding the tokens is a bet on the future of a product that token holders actually use — and crucially, one that pays out weekly.
“There's a revenue share component to holding the token — it automatically pays a piece of revenue every Monday to holders. 50% of the site revenues get distributed to those holders, so the idea here is you have an incentive for people to hold indefinitely.
“It's very simple. If the site does well, then the holders should do well. And if the site does not do well, then obviously the price would go down. We feel that that's fair and equitable for everybody.”
Building for the future
Phenom Poker is already making significant inroads into the competitive online poker sphere, attracting numerous big-name ambassadors such as Alec Torelli, Brian Rast and Dan ‘Jungleman’ Cates, but plans are already in motion for growth designed to see the token increase yet further in value.
The site intends to introduce a decentralized betting exchange, a lending protocol, casino games and more products in future, all with the purpose of driving more growth and more revenue — including for those holding Phenom Tokens.
Valeo shares a story of one early adopter, and a vision for the future.
“I spoke to a gentleman a few weeks ago, who was one of the earliest players, plays on the site almost every day, and he's earned about 100,000 tokens. Here's a guy who's playing very low stakes, $4-8 limit and lower, and he now has tokens which are worth around $265,000. He's earned around 5 times the amount he's actually paid in rake, because he's held them through the growth of the site.
“Those 100,000 tokens pay him something like $300 a week in revenue share. So as the site grows, not only does the value of those tokens grow, but so does the amount he will earn in revenue share. If the price of the token might be, let's just say, $20, he would earn $100,000 a year in revenue share, whether he's playing or not, because he already owns those tokens.”
It’s an attractive thought, but also appealing is the idea that you don’t have to buy into it at all. If you’re the type of player who thinks ‘leaves in the garden’ rather than ‘chips on the table’ when you hear the word ‘rake’, there’s nothing to stop you claiming your rakeback in a more immediate fashion.
And that’s without any opt-in or effort, not funneled through freerolls or at the mercy of an RNG prize draw or cash drop, but simply paid in automatically on a weekly basis.
“We don't lock people in,” says Valeo. “If somebody just wants to get their cash back every Monday and use it to play or whatever, that's totally fine, we don't prevent that from happening.
“But if somebody says, ‘I really like the idea of just doing something I enjoy, which is playing poker, and in the process of that I'm continually growing my ownership stake in this young and early growth-stage poker site.’... That's an opportunity that's never existed before.”
Find out more about the Phenom Token at Phenom Poker
