Hive-Based Deflationary Lottery Protocol (HDLP)
I think all of us come up with good ideas—sometimes even great ones—that we hold onto with white knuckles. Maybe I should only speak for myself, but there's a voice in my head that lies and tells me I'm the one who has to implement them. Maybe it’s just that I’m getting older, and becoming a little more honest with myself.
If someone decides to bring any of the ideas I share on this little blog to life, all I ask as “payment,” if you will, is that you open-source the code. Just as I’m offering the white paper freely, the spirit of shared knowledge should remain intact.
Hive-Based Deflationary Lottery Protocol (HDLP)
White Paper
Version 1.0
Date: May 9, 2025
Author: MenO
Abstract
This white paper outlines the design, functionality, and implementation of a transparent, decentralized, deflationary lottery system on the Hive blockchain. The Hive-Based Deflationary Lottery Protocol (HDLP) allows users to participate in a weekly lottery by simply upvoting a designated post or comment. The lottery incorporates a deflationary mechanism by burning a portion of the prize pool, while also providing incentives for participants and operators. It leverages Hive's immutable ledger and transparent reward distribution system to ensure fairness, verifiability, and sustainability.
1. Objectives
The HDLP seeks to achieve the following goals:
- Deflationary Mechanics – A portion of the prize pool is burned weekly, reducing token supply and increasing token value over time.
- User-Friendly Entry Mechanism – Participation is facilitated via a simple upvote, avoiding complex transactions or sign-ups.
- Transparent & Verifiable Randomness – The selection mechanism is deterministic and verifiable on-chain.
- Rollover Incentives – Unclaimed prizes roll over to the next round, increasing the incentive to play.
- Sustainable Operations – A small percentage of the pool funds the development and maintenance team.
2. Tokenomics & Distribution
Each weekly prize pool (100%) is allocated as follows:
| Category | Percentage | Description |
|---|---|---|
| Winner Payout | 70% | Awarded to the verified winner |
| Token Burn | 20% | Sent to null address to reduce supply |
| Operations | 10% | Paid to developers/lottery host |
Note: These percentages are adjustable via community vote or DAO mechanism in later versions.
3. Participation Model
- Entry: Users enter by upvoting a designated Hive post/comment within a fixed window (typically 7 days).
- Minimum Vote Threshold: Only votes with a value of at least 0.1 HIVE (or equivalent in tokenized form) are considered valid tickets.
- One Entry Per Account: To encourage fairness and reduce sybil attacks, only one entry per account is permitted each round. (Enforced via backend script or smart contract.)
- Optional Entries: direct ticket purchases. This way smaller accounts could participate. (0.10 hive minimum)
4. Winner Selection Mechanism
Randomness Source
- A future Hive block ID (e.g., block at +1000 height after post payout) is hashed.
- The hash is converted to an integer and the modulo operation is used to select a winner:
Winner_Index = Hash(Block_ID) % Number_of_Valid_Entries
- The winning entry is selected from a sorted list of valid voters.
- All data is published weekly for on-chain verification.
No Winner Scenario
- If the selected index corresponds to an invalid entry (e.g., vote below threshold or disqualified account), the prize pool rolls over to the next week.
- This increases the next week’s prize, creating gamified momentum.
5. Payout Mechanism
Automated via Script or Smart Contract: Upon winner determination, the script:
- Sends 70% of the prize to the winner
- Transfers 20% to @null for burning
- Sends 10% to the operator wallet
All transactions are recorded on-chain and linked in the weekly lottery result post.
6. Technical Implementation
Backend Tools
- Python or Node.js script
- Hive API (Hivemind + Blockchain data)
- Hive-Engine support for token-based versions (optional)
Front-End Integration
- Weekly announcement & result posts on Hive
- Optional frontend widget or leaderboard dashboard (future release)
Smart Contract Potential
- SPK Network or Dlux smart contracts for fully decentralized implementation
- Verifiable random functions (VRFs) for added trustlessness
7. Governance & DAO Potential
In future phases, integrate a token-based governance mechanism where token holders can vote on:
- Prize distribution percentages
- Burn ratios
- Entry thresholds
- Weekly themes or charity tie-ins
8. Incentive & Growth Strategies
- Leaderboard System: Track frequent participants and offer occasional bonuses
- Sponsorship Slots: Let Hive projects sponsor prize pools for exposure
- Referral Bonuses: Give operators tools to reward participant referrals
- Theme Weeks: E.g., Meme Lotto, Charity Round, Double Burn Week
9. Security & Fairness Considerations
- Transparency: All transactions and logic must be open-source and documented
- Audits: Encourage peer-review of scripts and, later, smart contracts
- Sybil Resistance: Enforce one-account-per-entry; consider reputation-based filters in the future
- Privacy: Only public account names are exposed; no personal data collected
10. Future Roadmap
| Phase | Milestone | Target Date |
|---|---|---|
| 1 | Manual script-based lottery using upvotes | Q2 2025 |
| 2 | Hive-Engine token integration + frontend dashboard | Q3 2025 |
| 3 | Full smart contract deployment (SPK/Dlux) | Q4 2025 |
| 4 | DAO governance + community-owned treasury | Q1 2026 |
11. Conclusion
The Hive-Based Deflationary Lottery Protocol (HDLP) introduces a playful, transparent, and deflationary mechanism to increase engagement on the Hive blockchain. By leveraging existing Hive infrastructure and its upvote economy, HDLP provides a seamless entry point for users while burning tokens, increasing scarcity, and funding ecosystem development. With potential for full decentralization and DAO governance, this system offers both short-term fun and long-term value.
Afterword:
As with the other ideas I’ve shared here, this too is a gift to Hive. I’m not looking to collect DHF funds to build it or anything like that. I did take the time to run it by a few friends—mostly to surface any potential concerns or pushback they might have.
Please feel free to add your two cents to the conversation. There are obviously some levers here that can be adjusted. My suggestions for payouts, token burns, and administrative compensation are just that—suggestions. At best, they’re informed guesses.
Much love
MenO
Have my 0.1 hive upvote ;)
I like the idea of being able to use one upvote a day or buying tickets for fairness and burning 20%. More Hive needs to be burnt, this way even losers are winners!
That is the idea... glad you like it
I wonder if something like Hive Premium Bonds would be a good idea?
https://en.m.wikipedia.org/wiki/Premium_Bonds
PBs require you to hold a stake and the greater the stake and longer it’s held, the greater the odds of winning.
On Hive, I guess it’d act like a third way of staking your tokens. Sure it might not give you a guaranteed level of return as high as HP or HBD in savings but you could win big!
They are incredibly popular in the UK with about £150 Billion currently invested in them even though they return on average only 3.8%. I’m sure Hive could offer considerably better than that!
I remember reading a blog a while back about several other countries trying to start them up but ultimately meeting resistance from powerful and established lotteries that didn’t like the competition 😅
What a cool freaking idea... I'm going to chew on this for a while...
how cool is this idea..
Some things I would change:
don't include voting, make it cost liquid hive and/or hbd only. Odds to win are based on amount of tickets/entries.
No burning of hive/hbd.
Smaller operator fee, 1% maybe or post rewards if it seems to raise enough interest by the community/others*
Allocate part of the funds towards other things you mentioned like referrals.
Try and avoid any and all forms of sybil attacks getting an advantage, I.e. referral rewards are based on referred accounts participation/input.
*Smart contracts are nice and in the future include outside participation through evm addresses easily swapping stable tokens/coins through vsc/other swaps and price distribution out the same gate.
just some things at the top of my head but interested what others think.
I've been thinking about this one quite a bit... Here's my reasoning behind it.
If your vote doesn't get up to 10 cents, but you want to participate "for free" wouldn't that not motivate you to power up more? Thus creating a stronger population of minnows?
I thought about this because I was thinking it would make big stake holders feel at ease with something like this running. Meaning, they would not feel like its extractive. But, as I told Eco, I'm more than willing to change my mind on this.
Thanks for the feedback bro
I'd be interested in hearing what people think about the voting aspect, based on the amount of gamification and burning it could maybe work as long as it doesn't start counting like a "self-vote". I.e. people voting on hbd.funder don't get anything more than 50% curation rewards but the rewards help stabilize hive and or turn some profit for the DHF which helps everyone.
If gamifications are that there's always some winners and more likely those with a lot of stake it may take away a lot of voting power from curation/other more beneficial things from hive if average return is consistently higher than 50% curation rewards for instance.
Either way, a good idea and might make for interesting discussions and possibly even better additional ideas so interested to see how it plays out. Maybe votes can involve some bonuses along with burning some hive - or use it to market the lottery and our blockchain in regards to bringing traffic and volume from the outside in - even if temporarily (if they win and want the rewards back in original coin).
if this idea was to be built into something fun, gamified to the nth power. I could see it being very valuable as a "bait" so to speak. Bringing outside eyes into our ecosystem. Once they are here... Well, they see "Oh wow.. there's this, and that... ohh how cool"
Yeah definitely, the reason I like the fee or "house edge" to be as low as possible (0 preferably) is that others can't compete with that. If we could build a lottery that's evergrowing and selfsustainable and gives you higher than regular lottery odds to either often win something at least while maintaining a growing jackpot it could change a lot of things about lotteries. Maybe the DHF could even help sponsor with additional prize funds over time if it proves to bring in outside money.
Found this at first search: https://www.pbs.org/wgbh/pages/frontline/shows/gamble/odds/house.html
shit's such a scam, if we can improve that it'd make a big difference many would feel and even though we'd have to start small with chains becoming everconnecting, PayPal and venmo accepting crypto, etc, who knows, we could have people move away from the regular lotteries and onto transparent and more fair ones.
i like where your mind is at
Another thing, if there doesn't have to be a winner, or winning ticket has to be very close to output making it rare for a "jackpot" winner to be picked, have previous entries roll over to next so they're not wasted fully but deflate somewhat.
I.e. if 2 people pay 10 hive to win ~20 hive but no one wins that week, they still have ~100 entries per person next week (0.1 hive/entry ticket) minus a certain % so those entering next week with 10 hive have slightly higher odds since previous ones already had a shot at it.
or some kind of gamification like that where if one user buys 10 hive worth of tickets every week increases his odds to win eventually.
oh, i get it... makes sense.. i like it
https://x.com/jewellery_all/status/1921211964249833805
#hive