Oracle Red Bull Racing Launch NFT Collection: Velocity Series 2.0

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Introduction

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Formula 1 has one of the most mature and varied Web3 ecosystems in sports. The level of innovation we’ve seen from Formula 1 teams in Web3 is only comparable to that of the NBA and even that is at the league level, rather than individual teams.

On Sporting Crypto, we’ve covered at length the strategies of McLaren Racing, Alpine, Red Bull Racing and more — and in this edition we are back analysing Red Bull Racing’s latest NFT launch: Velocity Series 2.

Discussed in this edition of Sporting Crypto:

1. Overview of Velocity Series 2 🏎️a) Velocity Series 1 Overviewb) Velocity Series 2.0 Overviewc) What is DN-404?

2. Niche Superfans or hyperscale? 🤔a) Sponsorship & Revenue in Web3 Sport Propositionsb) State of the NFT Market

3. Concluding Thoughts & Analysis 🧠a) Is this a sustainable revenue stream for Red Bull?b) Will they look to broaden campaigns to more fans?c) Can you use cutting-edge innovation and find scale?

Overview of Velocity Series 2☕

Oracle Red Bull Racing have launched Series 2.0 of their successful Velocity NFT series.

Before we explore Series 2.0, Sporting Crypto covered Velocity Series 1 in August 2023 as part of a piece examining Formula 1’s Web3 Ecosystem.

For the uninitiated, here’s an overview of Velocity Series 1: 

• The Velocity Series Season 1 was a Web3 art project with leading digital artists; Rik Oostenbroek, Per Kristian Stoveland, and Erick Snowfro. The Velocity Pass was sold as a pass that granted access to digital art by the artists mentioned.

• It was a collaboration with the crypto exchange ByBit, Red Bull Racing and AOI; a foundation for emerging art and technology.

• The series consisted of four releases coinciding with races throughout the 2023 season.

The Velocity Pass was a limited edition of 𝟭,𝟬𝟬𝟬, and were dynamic works of art that evolved throughout the race season, reflecting key moments.

These sold out for 𝟬.𝟯 ETH each, ~$𝟱𝟬𝟬 at the time.

This has been followed up with the Velocity Series 2.0, which has a not-too-dissimilar format to Series 1.

Here’s a quick breakdown of Velocity 2.0:

• Series 2.0 has an additional 1000 passes, making the supply a total of 2000 in the Velocity series

• Owning a Velocity Pass 2.0 will give holders exclusive access and benefits such as access to three exclusive NFT artworks by world-renowned artists.

• 900 of the 1000 Velocity Pass 2.0 NFTs were auctioned, selling for 0.5 ETH each / ~$1.6k each — and are currently reselling at 0.64 ETH each, a little over the settled auction price (albeit very few have resold)

• It is once more a collaboration between ByBit, Red Bull Racing and AOI.

Perhaps the biggest differentiator for Velocity Series 2 passes is that they can be fractionalised and owned by multiple people through the DN-404 token standard.

Without getting too technical — NFTs are usually ERC-721 tokens. This is the ‘non-fungible token standard’.

ERC-20 tokens, on the other hand, are fungible.

DN-404 is a new standard known as the ‘divisible NFT’ — which allows for fractionalisation of NFTs. The use of this standard aims to democratise access to Velocity Series 2.0.

The new standard aims at combining the functionalities of ERC-20 and 721 token standards by creating a ‘semi-fungible token’ which will allow for more liquid NFT markets and more seamless fractionalisation of assets.

It is a smart way of creating further access points to Velocity whilst ensuring that there is still scarcity of the original asset.

Niche Superfans or hyperscale? 🤔

Most sports teams that have Web3 strategies are trying to achieve 1 of these 2 things, or ideally both.

1. Drive Revenue

2. Engage a large pool of fans and have direct connections to them on-chain 

Red Bull achieved (1) in their first Velocity Series activation, and whilst they have still driven (even more!) revenue with Series 2, they have started to take steps toward point (2), by allowing for fractionalised ownership of Series 2 passes.

When I wrote about Velocity Series 1, it was interesting to me that Red Bull and ByBit had pushed hard toward a more crypto-native, high-spending, hyperfocused audience:

Driving revenue using Web3 at any brand is incredibly difficult and especially true in the sports industry.

Sports fans are hypersensitive to authenticity and the moment they feel a team, league or federation is trying to be extractive in their Web3 campaigns. Crypto natives, on the other hand, are used to spending money on digital content and have jumped at the opportunity to be a part of the Velocity community.

Red Bull are now pushing, with ByBit to expand that audience more broadly with fractionalisation of the passes, attempting to address that balance. A core group supplemented by a larger audience, through an innovative approach. Against a backdrop of a turbulent NFT market, the Velocity Series - both 1 and 2 - have done very well.

The NFT volumes bottomed in Q3 2023, and have since regained (some) momentum, albeit a far cry from the euphoric highs this market saw in Q1 2022.

It’s impressive, therefore, that the Velocity Series 2 sold out, and at more than two times the price that Series 1 did.

Of course, revenue is not the most important indicator of a Web3 project in sports - because as we have seen - the longevity and sustainability of projects often don’t correlate with revenue.

Concluding Thoughts & Analysis 🧠

When I wrote about Velocity Series 1 last year, I thought it was high-level execution by a sports team in Web3. It also made Red Bull and the artists involved some money, which is not a bad place to be in as a rights holder, sponsor and creator respectively.

I’m interested to see where Red Bull and ByBit take this.

They have created a hyperfocused community of art collectors that now have at least some affinity to Red Bull. Some may also be big Red Bull Racing fans, although it’s unlikely all Velocity Pass holders are.

Scaling this to millions of Red Bull fans will be difficult, however. It will be interesting to see whether or not there are further derivatives of this campaign to involve the Red Bull fan, rather than crypto natives who may like Red Bull or the artists involved. They have taken a step toward that, through fractionalisation, but scaling beyond that is a challenge.

This innovation of fractionalisation itself is fascinating, but also fuels transactions and financialisation of digital assets, and in this case, digital assets associated with a sports team. At their core, NFTs are interesting because they’re unique. Fractionalising them perhaps waters down that magic, but on the other hand engages a wider audience and generates greater community. Again, Red Bull are trying their best with this balancing act. If this innovation broadens the audience from hundreds to thousands — then they will view that as a success. But going beyond that to hundreds of thousands and millions will most definitely need a layperson approach.

This brings in the bigger question of cutting-edge innovation, like using an experimental new token standard and bridging the consumer journey successfully. I’m intrigued to see how well that portion of the proposition is done. When something is new in crypto, it’s very rarely flawless so kudos to the team here if this is executed without fail.

Whether there is a desire to engage Red Bull Racing fans, and not just those that are crypto-native, remains to be seen. I would like to think that there is an appetite to do exactly that.

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