DeFi has officially entered the mainstream and has presented exciting developments to how we know finance. From granting us more autonomy to easing international money transfers, blockchain technology is being increasingly adopted to accelerate other areas of our lives as well as finance. Decentraland (MANA) and HUH Token (HUH) are transforming social networking through their versions of the metaverse, while NFL just issued club-specific NFTs for the participating teams in Super Bowl LVI, and will release a final NFT of the winning team later this month. Additionally, Terra (LUNA) has requested investors to fund an undisclosed partnership with a sports team, which was followed by an 11% price surge.
The industry's interest in crypto is concurrent with heavier restrictions being placed on gambling marketing and advertising. As betting companies have sponsored teams and advertised during tournaments for decades, the unregulated crypto market makes an alluring substitute, particularly as the gambling industry is relatively stigmatized in wider society due to the risks and addiction potential it carries.
Sports as an industry has recognised the potential of crypto and blockchain technologies to further monetise fan engagement, draw in sponsors, and engage a global market in ways that were once unfathomable. Passionate fans, all of whom rely on technology, consume sports and associated content much beyond the time of a game. To thrive in the new digital age and meet fan expectations, teams, clubs, and sporting organisations are innovating.
Crypto exchanges and currencies sponsoring sports teams is on the rise, with the first taking place in 2014 between BitPay and ESPN Events. Since then, it's exploded in popularity, with Litecoin being the official crypto partner of the 2018 UFC 232 and Aston Martin Cognizant Formula One becoming the first Formula One team to partner with a crypto company, Crypto.com, in March 2021. Crypto gaining widespread attention through sports is beneficial to the community as a whole because crypto prices can be raised through new investors.
Crypto's sense of community can be felt through the latest news of Terra (LUNA) asking investors to fund a $38 million sports partnership. Details of the partnership remain undisclosed for now but Terra CEO, Do Kwon, described the sports franchise as "legendary" and a "household name in one of the major four American professional sports leagues – the NFL, NBA, NHL, and MLB." In response, LUNA leapt 11%.
The sports industry has also been among the earliest adopters of using crypto to facilitate various payments. Fans have been able to purchase tickets and products using crypto, while sports' clubs have been able to pay players' salaries and transfer fees this way. The blockchain has also benefited sports clubs and organisations by allowing them to build more secure and transparent ticket exchange systems.
Harunustaspor, an amateur Turkish football club, became the world's first football club to buy a player with Bitcoin in early 2018. As part of the transaction with Harunustaspor, the footballer, Omar Faruk Kiroglu, got 0.0524 BTC (£385) and 2,500 Lira (£470).
After signing a partnership deal with crypto platform Quantocoin in July 2018, Gibraltar United Football Club paid a portion of their players' salaries in BTC. Quantocoin also owns 25% of Rimini FC 1912, an Italian Serie C football team that was the first FC to be owned by a crypto company. The project followed new Gibraltar government legislation that allowed firms to participate in ICOs at the time.
Similarly, there has been a recent trend of athletes wanting to receive their salaries in crypto. Famously tweeting "pay me in Bitcoin"' in May 2019, the Carolina Panthers paid half of Russell Okung's $13 million salaries in BTC in December 2020. On December 29th, 2020, BTC was worth approximately $27,318.00 when Okung converted $7.5 million of his paycheck to BTC. Since then, its price has more than doubled, meaning he made immense profits. Okung's total pay, including BTC earnings, would make him one of the highest-paid offensive linemen in the NFL. Since then, many players have followed Okung's lead and made arrangements to be paid in BTC.
The Perth Heat of the Australian Baseball League became the first professional sports team to fully embrace BTC in November 2021, offering to pay all of its players and staff in the digital currency. Nicknamed the 'Bitcoin Baseball Team', they declared they had adopted a 'BTC standard', even recruiting a Chief Bitcoin Officer to transition its corporate treasury from Australian dollars to BTC.
One of the most groundbreaking additions to fan engagements in sports has been introducing fan tokens. A fan token is a type of utility token that allows fans to have a say in their favourite team's decisions. Token owners gain the ability to vote on club affairs such as shirt designs, training ground names, and charitable projects. It's similar to a membership card in that it gives supporters access to unique benefits such as exclusive VIP access and treatment at various events.
Chiliz ($CHZ), crypto and platform that focuses on sports and esports, delivers these fan tokens. The platform lets fans vote on issues such as who the FC should play during non-competitive matches. This voting power doesn't extend to institutional or corporate governance decisions, which could have TPO ramifications.
Through a Fan Token Offering, fan tokens are produced and distributed, as with an ICO. Fan tokens don't represent ownership in the equity of any sporting club, in contrast to an IPO, yet the endeavour can be very profitable. Less than two hours after going on sale in Chiliz, FC Barcelona ($BAR) made $1.3 million.
Likewise, HUH Token (HUH) is a utility token aiming to create a decentralized metaverse in which people gain from the data they generate. Soaring 6000% within a month of its launch in December 2021, there's been speculation that the MetHUH could ameliorate sports' fan engagement. Hundreds of influencers already joined the platform last week as the MetHUH gives them the opportunity to interact with each other as well as companies without an intermediary.
Yesterday, HUH dropped its NFT presale as NFTs will also form a crucial aspect of the MetHUH. Influencers will be able to turn their content into NFTs to be auctioned and bought by users. Content engagement from users can also earn them, as well as the content creators, sentiment tokens which can be converted into HUH tokens. Despite launching less than 2 months ago, HUH already has over 17,000 holders waiting for the MetHUH.
Here we can see how features of DeFi can transfigure the sports industry, and no wonder FCs, players, and fans have embraced blockchain developments fully. NFTs in particular presents a valuable opportunity to fans to treasure authentic memorabilia from matches and tournaments. Further developments are eagerly anticipated, with many keeping an eye on HUH and its upcoming metaverse.
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