Blockchain and sports

Blockchain is closely related to sports. Yes, this practice appeared not so long ago, but the heyday of cooperation occurred with the launch of the first NFT collections. The world of sports and cryptocurrency are connected for three reasons: the creation of sports tokens, the creation of sports NFT collections, and mutually beneficial sponsorships. We will talk about all of them below.
Introduction
Just recently, one of the most popular football players of our time was sued for cooperation with Binance exchange. The lawsuit is related to the fact that Cristiano Ronaldo, in collaboration with Binance, released a collection of NFT tokens with his images.

Users bought tokens from Ronaldo's collection at prices ranging from $77 to $10,000. Adding to the problems of this story was a lawsuit against Binance.

The Securities Exchange Commission (SEC) announced that cryptocurrencies and NFTs can be considered “securities,” meaning that the Binance exchange cannot provide services in the United States. Yes, the exchange has its own branch, Binance US, but the lawsuit was aimed at Binance, which illegally continued to operate in the United States.

As a result, today, users who bought tokens from Ronaldo’s collection were left at a huge disadvantage. They failed to recoup their investment. Now the prices of tokens have dropped to $1, leaving fans without profit.

The complaint against Ronaldo is that:
Cristiano misled his multimillion-dollar public. He made them believe that the crypto assets stored on the Binance platform were safe. There was no information in his advertising publications that there might be unregistered “securities” on the exchange. Source.
As a result of this information, our team wanted to tell how the world of sports and blockchain technologies are connected. In this article we provide examples of the most popular NFT collections from sports, popular FAN tokens and major sponsorship deals. We will try to explain why sports is so closely connected with the blockchain and what pitfalls there might be in this interaction.
FAN tokens


But there are also utility tokens. A utilitarian token means that the owner receives some (not always material) benefit. For example, access to something that is not available to everyone else. An example would be a fan club token.
A Fan Club Token is a digital asset that empowers fans by allowing them to interact with their favorite teams based on pre-defined conditions. Fan club tokens appeared in 2019.

They were launched by the Juventus and Paris Saint-Germain teams. Since then, several football clubs in Europe and other parts of the world have also started using such tokens. Clubs benefit from fan tokens by using them as tools to manage fan interactions on the blockchain. The benefits for fans are endless, which is why sports teams are developing fan tokens with specific purposes in mind.
Here are examples of Fan tokens:
1
Paris Saint-Germain Fan Token
This club was one of the first to start using tokens back in 2019. Paris Saint-Germain mines the PSG token on the Ethereum blockchain. PSG tokens allow their holders to participate in the process of choosing the message that will be written on the captain's armband. They also get access to some of the club's VIP features and can use tokens to purchase official football club merchandise.

Coinmarketcap link
2
Santos FC Fan Token
The SANTOS token is based on the Binance Smart Chain under the BEP-20 standard. SANTOS holders can participate in all Santos team events and voting. Fans can vote on Binance's fan token platform for things like the team's warm-up song for a football game.

Coinmarketcap link
3
FC Barcelona Fan Token
BAR runs on Ethereum and can be accessed on the Socios fan token platform. BAR holders can enjoy numerous types of rewards, such as voting on various decisions affecting the club, including the inscription on the captain's armband.

Coinmarketcap link

And dozens of such examples can be given. Each owner receives priority over users who do not own tokens (for some fans, this may be important).
NFT collections
Typically, NFT tokens for athletes are cards with the main moments in their career (video, photo, GIF, cartoon or drawing), which are produced in limited quantities. Cards that are not quickly sold on the primary market are burned or left in free circulation.

Here are examples of popular NFT fan collections:
1
NBA Top Shot
Considered the gold standard of sports NFTs, the collection is a wildly successful project created by Dapper Labs in partnership with the National Basketball League (NBA). NBA Top Shot also serves as a sports NFT marketplace that combines a collection process similar to traditional sports trading cards with the blockchain technology used in other NFT platforms.

NBA Top Shot collection sales from inception to December 2023

Despite the fact that today the chart seems to be at zero, sales of the collection continue to impress. Sales peaked on February 22, 2021, at over $47 million in one day.

NBA Top Shot Collection Statistics for September-December 2023

2
NFL all day
Similar to NBA Top-Shot but based on American football, NFL All Day tries to create the same buzz with each new collection.

While the prices aren't as high as NBA Top Shot and the players aren't as well-known internationally, it connects the sports community to Web 3. The NFL's greatest moments have been officially licensed, and fans can save and trade them as they see fit.
Sponsorship
The biggest boom in sponsorship of sports by cryptocurrency companies occurred in the period of 2021-2022. One of the most striking example was the sponsorship of 8 crypto companies of 8 different Formula 1 teams at once.

Formula 1 sponsors 2022

Of the three aspects of interaction between the world of cryptocurrencies and sports, sponsorship occupies a leading position. Today, cryptocurrency exchanges from all over the world support the sport. In March 2022, one of the largest exchanges, OKX, became an official partner of the Manchester City football club.
By the way, Socios.com (a blockchain-based fan engagement platform) is also an official partner of the Manchester City football club
Cryptocurrency exchange Crypto.com has entered into a sponsorship deal with the UFC. According to the publication's sources, the site will pay the UFC $175 million over 10 years. As part of the agreement, the Crypto.com logo will be placed on items of combat equipment, including the clothing athletes wear in tournaments, as well as staff clothing
And the AC Milan football club is sponsored by the BitMEX cryptocurrency exchange.
E-sports has not been left out either. For example, one of the main championships in Counter Strike: Go (currently Counter Strike 2) is sponsored by Coinbase, and Coinbase is the second exchange in the world in terms of trading volume after Binance.
What could be wrong with this?
Despite the decline in capitalization and activity of the NFT market, fan tokens are becoming more popular and useful, it is clear that we will continue to see crypto companies sponsoring sports teams.

These partnerships could lead to a future in which fans have more influence over their teams' minor decisions. It could also free up significantly more funds for sports teams and athletes. Unfortunately, such partnerships, collections and tokens also have a downside.

In December 2021, the MUFC token was released. This was a token fan of the English football club Manchester United. Thanks to aggressive online marketing, which included an airdrop, the token's fan base grew in a short time. The token was released on the Binance Smart Chain network.

If Sir Alex Ferguson found out the MUFC token was fake.

Following the token airdrop, the price of MUFC increased by over 600% in one week after the airdrop. However, it was unable to sustain its enormous run and collapsed within a few days. What really happened?

The truth about the coin was revealed a few days after the distribution. A quick search of the MUFC token on social media reveals a long list of scammed customers.

According to one Twitter user, the official brand protection team of the iconic English club has allegedly confirmed that the project is in no way connected with Manchester United.

The CoinCodex exchange had to get out, declaring that the token was fraudulent. As a result, it was removed from the CoinCodex exchange. CoinBase also released an official statement that the token is a scam.

All users who used the token became victims of major fraud. In order to avoid this situation, we recommend that you check the token’s smart contract through our Btrace tool.

Result of checking an untrusted address using the Btrace tool

Sometimes, problems also result in cryptocurrency instability. In 2022, one of the largest crypto exchanges, FTX, collapsed. Due to the collapse of the stock exchange, many investors suspended transactions in cryptocurrency, which led to fear and mistrust in cryptocurrency. Because of the collapse of such a large exchange, everything went like a huge snowball, for example:

Cryptocurrency exchange WhaleFin wants to terminate the contract with Atlético Madrid due to a sharp drop in revenue.
WhaleFin belongs to the famous Amber Group platform - it provides a full range of services in the field of digital assets, including investing and trading. And Amber Group suffered heavy losses, with approximately 10% of its trading capital held on FTX.

Atlético signed with WhaleFin in the summer of 2022 - a 5-year contract, the club receives 42 million euros per year. Chelsea also collaborated with this company, but the WhaleFin logo was visible only on the sleeve (Atlético is the title sponsor). The contract with the Londoners for 23 million has already been terminated.

And in the case of our example about Formula 1, everything also did not work out in the best way with all the teams. For example, the racing division of Scuderia Ferrari terminated its contract with crypto sponsor Velas. The partnership lasted from 2021 and was valued at $30 million per year. The parties planned to involve racing fans through NFTs and other joint projects.
The official reason for the termination of the partnership was “failure to comply with the terms of the contract.” Insiders say Ferrari allegedly violated copyright provisions by allowing Velas to issue NFTs with their images. And the crypto company was found to have financial violations. The parties are facing legal action over the matter, the sources added.
Conclusion
Sports clubs and sports organizations need to be more careful about partnerships. The cryptocurrency world is too unstable; cryptocurrency rates can fall in an instant and then soar. Because of this, contracts with major sports companies may be called into question. Often, such interactions between sports and blockchain result in a huge number of users on both sides. Only, unfortunately, in cases where contracts are not fulfilled, not only the parties, but also ordinary users lose funds.

The problem of fraud with cryptocurrency, in particular with fake FAN tokens, requires special attention and accuracy. Here are some strategies to help you avoid these pitfalls:
1
Education and Research: First of all, it is important to learn the basics of cryptocurrency and blockchain technology. Studying official sources such as blogs, podcasts, and educational platforms will increase your awareness of how this market works.
2
Check Source: Make sure you are purchasing tokens from a reputable and trusted exchange. Avoid dubious platforms or offers that seem too good to be true.
3
Official Communication: Follow the official communication channels of the FAN token project. Legitimate projects usually have a social media presence, an official website, and frequently update their followers about new developments and partnerships.
4
Blockchain Analysis: Use blockchain explorers to verify addresses and transactions. If the blockchain explorer could not help you recognize a fake token, be sure to use the Btrace tool. This can help ensure the legitimacy of the tokens.
5
Be careful with Unknown Links and Attachments: Do not click on unknown links or open attachments from unverified sources. Fraudsters often use phishing attacks to steal cryptocurrencies.
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