sharko

Sharko is a gasless prediction market platform that solves the biggest pain point in decentralized betting: transaction fees. Traditional prediction markets require users to pay gas for every single bet they place, making active trading prohibitively expensive. If you want to make 20 predictions, you're paying 20 separate gas fees plus dealing with 20 MetaMask popups.

Sharko changes this with a simple flow: deposit once, make unlimited gasless predictions, withdraw once. Between your deposit and withdrawal, all betting happens off-chain through Yellow Network's state channels, resulting in zero gas fees and instant transactions.

The second major innovation is portable reputation. In traditional platforms, your prediction history and win rate are trapped on that specific platform. With Sharko, we store your reputation data directly in ENS text records. This means your track record lives in your ENS name and travels with you across the entire Web3 ecosystem. Future platforms can verify your prediction accuracy, DAOs could weight governance votes based on your forecasting skills, and lending protocols could assess risk using your on-chain reputation.

Sharko integrates with Manifold Markets to provide real-world event data, giving users access to markets they actually care about - from sports to politics to crypto events. The platform features a real-time leaderboard showcasing top predictors, creating competitive engagement while maintaining full decentralization.

Built for active traders who want to make predictions without bleeding money on gas fees, Sharko makes prediction markets accessible, portable, and actually usable.

Architecture Overview:

Sharko is built on a hybrid architecture combining Layer 1 security with Layer 2 scalability. The core custody contract is deployed on Ethereum Sepolia, handling deposits, withdrawals, and final settlement. Between these on-chain actions, all prediction activity happens off-chain using Yellow Network's ERC-7824 state channels.

Technology Stack:

Yellow Network State Channels - This is the heart of our gasless betting system. When users deposit funds, they open a state channel that allows unlimited off-chain transactions. Each prediction updates the channel state without touching the blockchain. Only when users withdraw do we settle the final state on-chain. This gave us instant transactions with zero gas fees, which was critical for the user experience we wanted.

ENS Integration - We use ENS text records as a decentralized reputation database. When users make predictions, we track their win rate, total bets, and accuracy score. This data gets written to their ENS name's text records using the setText() function. The particularly cool part is that this reputation is truly portable - it's not stored in our database, it's stored in the user's own ENS name. Any future dApp can read this data and make decisions based on a user's prediction track record.

Smart Contracts - The custody contract is written in Solidity and handles the critical security components: accepting deposits, locking funds during the betting period, and processing withdrawals. We implemented a simple but effective escrow system where funds are held securely until markets resolve. The contract is fully verified on Etherscan.

Manifold Markets Integration - Rather than creating our own oracle system, we integrated with Manifold Markets' API to pull real-world event data. This gives us access to hundreds of prediction markets across sports, politics, crypto, and current events. The API provides market questions, resolution criteria, and current odds, which we display in our UI.

Backend & Database - We built a Node.js/Express backend that handles session management, bet tracking, and leaderboard calculations. Originally we used in-memory storage, but switched to Supabase for production. The database tracks active markets, user bets, and calculates real-time rankings. We implemented WebSocket connections for live leaderboard updates.

Frontend - Built with React and Vite for fast development and optimal performance. We used wagmi and viem for Web3 interactions, which made wallet connections and transaction handling straightforward. The UI is deliberately minimal following Y Combinator's design principles - large fonts, high contrast, and one action per screen.

Particularly Hacky Parts:

The trickiest technical challenge was managing the state channel lifecycle. Since Yellow Network's state channels require careful coordination between deposits, off-chain state updates, and final settlement, we built a custom session manager that tracks channel state client-side while maintaining sync with our backend. If users close their browser mid-betting, we persist their channel state in localStorage and rehydrate it on return.

Another hack worth mentioning: ENS text record updates normally cost gas, which defeats our gasless premise. Our workaround is batching reputation updates - we track changes off-chain and only write to ENS when users withdraw. This means users pay one gas fee for withdrawal + reputation update, but still get unlimited gasless predictions in between.

For the demo, we also implemented a faucet system that auto-funds new users with testnet ETH, removing onboarding friction for judges testing the platform.

Partner Technology Benefits:

Yellow Network was essential - without state channels, we'd either need our own Layer 2 or accept that users pay gas per bet. Their ERC-7824 implementation gave us production-ready gasless transactions.

ENS provided the perfect solution for reputation storage. We considered storing reputation in our database or an IPFS file, but ENS text records are queryable on-chain, owned by the user, and already part of Web3 infrastructure. It made the reputation truly portable instead of just theoretically portable.

The result is a fully functional prediction market that actually delivers on the promise of gasless betting with portable reputation - all deployed and testable on Ethereum Sepolia.