With the World Cup approaching, will sports-related crypto projects usher in a springtime?

Author: Tangyuan, Hive Tech

On August 16, the countdown to the 2022 FIFA World Cup officially began, with 100 days remaining, and the crypto sector related to football started to become active, especially NFTs.

The native token CHZ of the sports fan economy service platform Chiliz, which covers fans, has increased by 42% in the past 7 days and by 95% in the past 30 days. Analysts believe that the approaching World Cup has driven the rise of CHZ.

In addition to CHZ, the market performance of football-related NFTs is even more prominent. According to data statistics website Cryptoslam, in the past 30 days, NFT player cards in the football card game Sorare ranked second with sales of $37.03 million, only behind BAYC (Bored Ape Yacht Club) at $47.8 million, while the number of buyers for Sorare NFTs reached 39,000, with 400,000 transactions.

Outsiders predict that the impact of sports events on the crypto economy will be concentrated in this year's World Cup, with NFTs becoming a particularly focused track, as the landing cases of NFTs combined with sports are becoming increasingly rich.

On August 1, Canadian market research firm Market Decipher released an analysis and forecast report on the sports NFT market from 2022 to 2032, showing that in 2021, the sports memorabilia market reached $26 billion, and by 2032, it is expected to grow to $227.2 billion. Among them, the NFT sports digital collectibles market has the greatest growth potential in the future. Currently, NFT sports products are estimated to be worth $1.4 billion, and it is expected to reach $9.2 billion by 2032, with nearly 65 times growth potential.

As early as March this year, Deloitte, one of the world's four major management consulting firms, released the "2022 Technology, Media, and Telecommunications Industry Outlook" report, indicating that sports memorabilia has entered a new digital era of NFTs, and the trading volume of sports-related NFTs is expected to exceed $2 billion in 2022. By the end of 2022, more than 4-5 million sports fans are expected to purchase or obtain sports NFT collectibles, "NFTs can add value to ticketing and physical collectibles in the sports industry."

Currently, the combination of NFTs and sports mainly has three forms: digital collectible cards, games, and fan economy tokens.

• Digital collectible cards ------ Creating NFTs of player appearances, jerseys, or event tickets for fans to collect and trade.
• Games ------ Users can earn crypto assets or NFT rewards by purchasing NFTs and participating in competitions.
• Fan tokens ------ Allowing fans to participate in the management or trading of related events.

So, on the eve of the World Cup, how are the representative products of "Sports + NFT" operating? What key points of the sports industry do they hit? This article will sort them out one by one.

Sorare Links Real Events with NFTs

The blockchain football game Sorare has recently risen to the top projects in the NFT field.

Compared to sales metrics, Sorare's number of buyers and transaction volume are particularly impressive, with 39,000 buyers of NFT player cards in the game within 30 days and 400,000 transactions. In contrast, the leading NFT project BAYC had 226 buyers and 368 transactions in the past 30 days; CryptoPunk had 124 buyers and 188 transactions. Sorare far exceeds the two NFT ranking leaders in user activity and transaction frequency.

Sorare is built on the Ethereum Layer 2 StarkEx network, focusing on football and baseball, primarily offering NFT player cards of real clubs or teams for users to purchase, allowing them to create their own clubs. Users operate player NFT cards as "club managers" and participate in competitions set by the platform, with winners receiving NFT cards or ETH as rewards.

The player prototypes in Sorare mainly come from football and baseball

Compared to single-collection NFT card projects, Sorare offers a stronger gameplay experience.

As a blockchain gaming platform, it is particularly important for Sorare to help fans without blockchain knowledge understand blockchain games and NFTs, given the broad user base involved in sports.

Sorare has lowered the participation threshold for users in two ways. First, in terms of user experience, Sorare has chosen a "gradual transition from Web2 to Web3" approach, starting with a Web2-style registration method—creating a game account with just an email and a password—before allowing users to decide whether to link a crypto wallet; additionally, the game has a free mode that does not require users to purchase NFTs upfront—when new players enter the game, Sorare directly gifts them a certain number of common player cards, which are unlimited in quantity and have no collectible value. Players can use these free player cards to create their own clubs and familiarize themselves with the gameplay through completing tasks.

Clearly, Sorare prioritizes the gaming process, not involving blockchain knowledge or on-chain operations initially. Only when players want to earn NFTs or crypto rewards will they gradually learn about using crypto wallets, purchasing and transferring on-chain NFTs, and using crypto assets. NFT rewards serve as a potential incentive for regular card users to enter the world of blockchain games.

The overall structure and gameplay of Sorare are similar to the "FIFA Football Game," where players collect player cards, build their team lineup, participate in matches, and compete for rankings. The difference is that Sorare is not a completely virtual competition; the game is linked to real match data—the performance data (such as goals and assists) of the players on the cards in real stadiums translates into points in the game, and players aim to configure their teams to compete based on weekly points. This requires cardholders to pay attention to the players' real matches, adding a strategic element to the Sorare game.

In Sorare, player cards are divided into four levels based on rarity: "Limited," "Rare," "Super Rare," and "Unique." The higher the rarity, the fewer the number of cards, and the higher the card price. Some competitions in the game can only be participated in with high-rarity cards.

The number of participating cards must be at least five, meaning players can form a dedicated football team with five NFT player cards to compete. The rankings in the game's season are influenced not only by the rarity of the cards but also by the performance of the athletes on the cards in real matches. This requires players to continuously refresh the card's strength based on the athletes' real match performance and to develop competition strategies accordingly.

This design not only connects NFTs with real sports events but also creates a liquid market for NFTs within Sorare, where the value of player cards fluctuates with demand and the real performance of the players.

Sorare's rules require a large number of athlete cards, so it has obtained the rights to create NFT player cards through a licensing model. Currently, the platform has obtained authorization from over 250 international football clubs, including globally renowned clubs like Juventus, AC Milan, and Real Madrid. In May of this year, it began to enter the baseball market, collaborating with Major League Baseball (MLB) to launch an NFT card game based on baseball players, similar in format to its football game. Entering the baseball sector allows Sorare to expand its user market.

NBA Top Shot Brings an NFT Collectible Craze

In terms of establishment time, the Sorare game predates another player card NFT project, NBA Top Shot, which was created in December 2018. NBA Top Shot was founded in July 2019 and only began public sales in August 2020. However, before NBA Top Shot was established, Sorare was not well-known.

NBA Top Shot player collectible cards have long been regarded as one of the key products driving the application of NFTs in the sports industry. Before it, there had not been a standout NFT representative product in the sports sector. After NBA Top Shot launched, it auctioned off player cards at sky-high prices multiple times, successfully gaining attention and sparking interest in the NFT market within the sports industry.

NBA Top Shot is a sports NFT collectible game on the Flow blockchain that mints player cards as NFTs, allowing users to draw and collect cards on-chain. The project was developed by Dapper Labs, the team behind the pioneering NFT project CryptoKitties, and secured official IP authorization from the NBA, becoming the first officially licensed large IP digital product in the sports category to go on-chain.

According to NFT market data platform Cryptoslam, NBA Top Shot has achieved a trading volume of $1 billion since its launch, with the number of cardholders reaching 690,000 and the number of transactions totaling 21.43 million, consistently ranking among the top ten in the entire NFT digital product sales market.

NBA Top Shot incorporates iconic moments of star players into NFTs, such as game-winning shots, dunks, and milestone highlights. Notably, an NFT card capturing LeBron James' shot sold for a high price of $208,000.

Unlike traditional printed player cards, NBA Top Shot issues cards on the blockchain, with information recorded on-chain, making each player card a unique NFT asset. Each NFT player card is one-of-a-kind, and holders have absolute control over it. This prevents the images of player cards from being tampered with or pirated, and they will not fade, oxidize, or deteriorate over time.

Compared to printed player cards, NBA Top Shot, stored on-chain, offers more presentation methods. In addition to images and text, NBA Top Shot features three-dimensional dynamic presentations, with each player card containing a specific short video or GIF of a remarkable shot moment. These elements together form a complete NBA Top Shot NFT asset.

In terms of rarity, NBA Top Shot player cards are classified into four levels: Common, Fandom, Rare, and Legendary, with prices determined by the rarity of the player recorded on the card, the rarity of the shooting action, and the card's serial number. Generally, the more famous the player, the higher the card price; the rarer the card, or the more widely regarded as a classic moment in a game, the higher the price.

NBA Top Shot Rarity

NBA Top Shot officials state that NFT player cards not only have collectible value but also grant access to VIP events and opportunities to meet players. It is reported that future game functions will be developed to enhance playability, such as allowing players to create an NFT-style team based on their collected player cards to participate in online competitions.

However, entering 2022, NBA Top Shot's trading volume has entered a downward spiral, with many users complaining that the NFTs issued by NBA Top Shot only have collectible attributes and lack playability, with no updates on the promised game development from the officials.

Chiliz Reshapes Fan Economy with Tokens

Sorare and NBA Top Shot connect users with players and games through NFTs, forming a new commercial loop between users, platforms, and sports. The buyers of these NFTs mainly fall into two categories: fans or investors. Investors often profit from the price fluctuations of NFTs through buying low and selling high; they may not focus on sports NFTs long-term but seek to link NFTs with the long-term economic relationship with sports. In fact, it is the sports fans, the more direct group, who are the long-term, loyal paying users.

Sports and enthusiasts provide the foundation for forming a fan economy, as evidenced by the memorabilia derived from sports clubs, such as player cards and jerseys. They also leverage the influence of players on fans to operate their business models through fan effects. Although this fan economy model is more commonly seen in traditional celebrities, where fans purchase albums, concert tickets, or products endorsed by stars, and vote for them,

Can this fan economy operation model leverage blockchain technology to form a new way of connecting celebrities with fans? Chiliz, focused on fan economy, has been exploring this new approach for many years.

Chiliz originally focused on providing blockchain-related underlying infrastructure for the sports and entertainment sectors, hoping to use blockchain technology to create a new economic relationship between fans and entertainment. Its earliest product was the fan platform Socios.com, which provides a complete fan monetization solution for sports or esports organizations and has already matured significantly.

In March of this year, Chiliz officially announced the launch of the Chiliz Chain 2.0 (CC2) testnet, creating a blockchain network specifically for the sports and entertainment industry. The CC2 network will support sports and entertainment brands in creating NFTs, issuing fan tokens, building DeFi products, and P2E games, as well as developing Web3 products and services.

According to official sources, the CC2 network is compatible with the Ethereum Virtual Machine (EVM), allowing developers to quickly interact with smart contracts, with on-chain gas fees approximately 200 times cheaper than Ethereum. It is important to note that the CC2 is still in the testnet phase, and the specific launch date for the mainnet has not been announced.

Chiliz's most well-known product remains the fan platform Socios.com, which offers a customized fan token issuance mechanism—Fan Token Offering (FTO)—to help teams or organizations issue fan tokens, providing dedicated trading venues and fan operation platforms for fan token holders to participate in and make decisions about team affairs.

Fans on Socios.com can use the native Chiliz token CHZ to purchase fan tokens, and holders of each fan token can participate in voting activities corresponding to their teams, deciding on certain team matters, such as the amount of VIP club rewards, the wording on the armband worn by players during matches, and the team's celebration songs. Holders also have opportunities to meet players or receive match tickets, among other benefits.

Socios.com has created a win-win situation; for teams, it provides tools for fan operations, while for fans, it offers channels to invest in teams and a degree of decision-making power in certain matters.

Currently, Socios.com has issued over 50 types of fan tokens, such as Manchester City FC fan token CITY, Barcelona fan token BAR, and Paris Saint-Germain FC fan token PSG. On August 1, Socios.com announced that it had invested $100 million in the digital department of FC Barcelona to accelerate the club's layout and development in blockchain, NFT digital assets, and Web3.