Can Sporting Events Rejuvenate "NFT+Sports" This Time Around?

From 2019 to 2020, the total transaction amount of NFT has increased nearly three times. According to DappRadar, a market analysis company, in the first quarter of 2021, NFT sales exceeded $1.5 billion, 20 times of the fourth quarter of 2020, which is the highest period ever since NFT developed. The cases of tens of millions of high price auctions constantly refresh the public's awareness, and NFT ignites the whole industry and even out of the circle.

Classification and Development of NFT NFT have formed a perfect track since its appearance, and the use cases of the application layer have been involved more and more widely. At present, it mainly develops six categories, including art, collectibles, virtual reality, game, utility, and sports. As can be seen from the three graphs below, collections, virtual realities, and games account for the majority of the NFT market in 2020. In the first two quarters of 2021, the market is mainly divided by collectibles and artworks. Among those, the proportion of sports has increased steadily, from 3% to 7%, and is gradually rising.

The enthusiastic expectation of Sports Year 2021 The combination of art and technology has always been ongoing, and NFT is just a way to continue this trend. There already are many relatively mature projects in the combination of NFT and collectibles or artworks. On the other hand, the enthusiasm of sports events and sports fans implies that the sports field has unlimited potential. The sports industry has grasped this trend and stepped into the field of NFT one after another. Since the appearance of sports NFT in 2018, there have been more than 85 million US dollars in sales, 480000 sales volume, and 18 million active wallets. As can be seen from the figure below, from the fourth quarter of 2020, NFT began to enter the public's vision, the NFT + Sports field started, and the sales volume skyrocketed. It reached its peak in March. The overall sales volume in the first quarter of 2021 was the highest, and the second quarter declined. However, the overall sales volume was several times higher than 2020, and it has been steadily maintained in certain sale volumes.

Why NFT + Sports is developing so rapidly? This might be related to the booming expectation of the sports industry in 2021. Due to the covid, 2020 was a Sports off-year which makes 2021 the Sports Year. In addition to the annual NBA, the five major European football leagues, the F1 Grand Prix, and the NFL Rugby professional league, this year has become an extremely rare sports year. There are also postponed world-class events such as the Tokyo Olympic Games, the European Cup, the Americas’ Cup, and the National Games. With the most crowded sports calendar in 2021, it is destined to be a year of enthusiasm for sports fans.

According to the data of Google keyword search from 2020 to 2021, the global heat for basketball and football is much higher than car racing and baseball. In terms of social network activity, compared with football, major league baseball, and American football, the NBA has a much larger voice, with more than one billion fans worldwide.

NFT + Sports Classification and Representative Events

In NFT + Sports, there are two categories. One is the combination of NFT and sports IP, including sports IP and sports game IP. Among the sports track, the number of projects involving football type is the most, while those involving other sports types are relatively scattered, such as SoRare, NBA Top Shot, REVV, and Zed Run. In the sports game IP, the representative is Fantasy Sports, the projects involved include Rage.Fan and TradeStars. Second are some NFT sports comprehensive application platform projects, including Chiliz, sports auction platform Opusbeat, sports athlete collection platform Sportsicon and E-sports Club app service platform Blocksport.

NFT sports collectibles have occupied an important position in the whole NFT collectibles category. Up to the beginning of July, the sales volume of NBA Top Shot ranked first, with a total amount of more than 600 million US dollars, and reached its peak in February and March 2021, with a sales volume of more than 200 million US dollars each, with a maximum daily sales volume of 45.77 million US dollars. NBA Top Shot and the earliest NFT project CryptoKitties belong to the same founding team, Dapper Labs, and the project belongs to the Flow public chain, which once rose by 3000%, and has extremely rich successful experience in operation. SoRare ranked 7th with a total sales volume of over USD 50 million, Topps ranked 12th with a total sales volume of over USD 14 million, F1 Delta Time ranked 17th with a total sales volume of USD 5.24 million.

According to Coingecko data, the total value of NFT tokens ranked in the top ten increased significantly in the first half of this year. In the first quarter, the total value of Chiliz(CHZ) in the NFT+ sports field rose slightly, and soared in April and May, followed by a decline in the second quarter. Among the top 10 by market value, CHZ occupies third place, reaching $1.2 billion.

NFT+ Sports Strong IP Fan Economy

At present, who master the Fan Economy, who can win the market. Fans with super-purchasing power are willing to pay to support idols, not only in the entertainment business but also in the sports world. NBA Top Shot is the NFT representative product that makes full use of fan economies, and there are also SoRare and Chiliz. The essence of NFT+ Sports IP is actually a kind of ownership economy. What are the benefits of a virtual intangible collection?

The fun of ownership is more important to fans than touchable satisfaction. For example, "NBA Top Shot" is a collection of small videos of high-light moments of basketball stars, which are "authorized by the NBA and created in limited quantities in the blockchain". Fans are willing to pay thousands of dollars for it. Once an athlete hits the top spot in the competition or ends his career, these NFTs will appreciate immediately, so fans think that the NFT purchased at present is still at the stage of underestimating its value.

When the assets have a sufficient premium, fans pay more attention to it than they like. The upgrading of purchasing power of young consumers reflects the demand behind their consumption.

For example, the explosion of blind boxes is a kind of IP consumer identity, but they need to express themselves freely through the virtual world. They like personalized customization, which is a unique cultural identity, and because of their hobby of diversity, they pursue cross-border IP cooperation.

The combination of NFT+ and sports is just a strong outcome, which is virtual enough, rare，novel enough, diverse enough, and cross-borders. Advantages of NFT+ sports IP mode project: IP has a large number of fans' basic attention, and there is no need to accumulate from scratch; Disadvantages: IP copyright dependence is very strong. Once the value of IP ownership is lost, the fan base will inevitably be lost;

Therefore, the key of this kind of project is to turn fans into participants of NFT ecology and to test the ability of team marketing and operation. As can be seen from the following figure, among all the collectibles up to now, the highest sales volume is NBA Top Shot, which is as high as USD 6.89 million, and Sorare, which is also combined with fan economy, sold USD 460,000, ranking 4th.

Can the success of NBA Top Shot be replicated again? Before the covid, the North American Professional Ice Hockey League (NFL) earned almost twice as much as the NBA, but at the same time, its social media activity was far less than that of the NBA, which made the NBA get the NFT bonus first. In 2021, it also actively contacted Dapper Labs.

Use Value and Application Scenario of NFT+ Sports

There are the following ways to combine various sports clubs and alliances with blockchain NFT.

1. They issue their own NFTs, and most teams issue NFTs on SoRare player cards.
2. When issuing fans' tokens, most teams will choose to issue them on Socios (socies.com is the first tokenized-based voting platform, launched by Chiliz), fans need to purchase the token CHZ before exchanging the fan tokens.
3. Sponsorship and endorsement: blockchain companies sponsor teams with cryptocurrency. Of course, NFT assets may not be involved in this way.
4. For technical cooperation, teams can cooperate with blockchain technology companies to obtain data support or ticketing system services. For example, the 2020 European Cup has announced that it has become a global partner with ant chain.

NFT + sports application scenarios have gradually developed, including Purchase, collect and sell, auction collectibles (such as player cards), participate in-game transactions (purchase game props, build teams and pay for game tickets), earn game rewards (such as competition bonus and game points), live VIP experience, participate in platform governance (such as voting), invite friends to return to the commission, social media promotion awards, obtain pledge income and mining rewards.

NFT + Sports Infrastructure and Economic Model

Some people think that NFT is essentially a protocol layer or middleware between the application layer and the infrastructure layer. In fact, in the field of NFT+Sports, limited infrastructure can be used. It mainly relies on erc721, erc1155, and some modified versions, which can meet the basic requirements. However, it may require some complex or interactive application which is still quite rare in the market. Therefore, in the field of NFT + sports, the project application is still in the state of simple graphic display and simple game. In terms of the economic model, most projects in NFT + Sports field have relatively simple functions, which are relatively primitive economic systems. The economic incentive mode generated by the original NFT application includes the functions of display/transaction/ pledge.

However, the new derivative value functions generated by the interaction between applications have not been explored. While for now, a single NFT asset can be traded through an NFT trading platform. However, it cannot combine too many compound asset values. NFT + Sports assets have either strong IP color or platform token of sports platform token. The goal of interworking application is only a possibility for later development because the infrastructure of NFT is not enough to support it in its current state. However, there are still projects that are trying in various forms, such as Rage.Fan, increasing the liquidity mining, increasing the variety of sports competitions, and increasing the partnership between clubs and leagues.

Future Prospects In the first quarter of 2021, NFT surged rapidly, but there was definitely a bubble. In the long run, the development of the NFT plate still needs to return to rationality, which can be seen from the obvious decline of data in the second quarter, which is an inevitable trend. The application scenarios of NFT + Sports are still too few, and the IP economy has low requirements for technical barriers, and it is easy to have overvalued situations. Even in the NFT sector, NFT + Sports is still in a relatively early stage of development, but it also has unlimited potential, which is beyond doubt.