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Intro Notes, Plugs & Amendments 🔌🔧

The end of the year seems to mean a lot of announcements in Tech, and that’s no different in Web3.

Last year, the big news was RTKFT being acquired by Nike, which shook the world. It actually got announced after the last newsletter of 2021, forcing me to dust off my pen and get writing.

The last newsletter of this year will be on the 16th of December…PR people, please postpone anything for next year after that!

PSA - the last Sporting Crypto newsletter of the year will be on the 16th December and we will return in 2023 on the 6th January!

🔌 If you’d like to work together in a consultancy or workshop capacity, please respond to this email!

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This Week’s Deep Dive: The Casino and The Factory

This thread by Giancarlo Chaux is an awesome mental model for the future of NFTs. The Casino and the Factory.

The early era of mainstream NFTs has very much felt like a casino.

It’s basically a couple of million early crypto adopters, for the most part, and early NFT adopters - buying, collecting and trading these assets. This made sense considering most NFT projects were made by crypto people and bought by, predominantly, crypto people. In fact, the number of unique wallets that bought NFTs in 2021 was ~3 million, if you look at statistics sites like Nansen.  It means that the audience was small and their pockets were limited. The speculation was rife and the bubble was waiting to be popped. Many of these NFT projects will become incredibly valuable companies - like we're seeing with Yuga Labs, RTFKT and many more. But 99.99% of these projects will (some have already) trend to 0. What this part of every cycle does, however, is bring more eyes to the technology and what it is capable of unlocking.  As Giancarlo puts it "It was the trojan horse that brought attention to the tech"

This happened in 2018 with the ICO (initial coin offering) bubble, and it happened in 2021 with the NFT bubble. This leads to the second half of the mental model: The Factory. This is where people build infrastructure, products and propositions that consumers actually want or that make their lives easier. It's time for NFTs to find product market fit, and this down period of 2023 might very well be the year for it. Speculation will still always be a part of digital assets due to how liquid and 24/7 they are. But the underlying propositions have to find product market fit.When you see Starbucks and Polygon Technology partnering, Nike launching their Web3 platform Swoosh and Reddit, Inc. successfully opening 3 million customer wallets - it's clear we're beginning to see the factory work its magic.

The Sports Context

Instead of going on a long rant about why this next iteration of NFTs is important more broadly - let’s contextualise this for the sports industry.

After all, this is a newsletter called Sporting Crypto.

The sports industry has seen some pretty amazing things when it comes to Web3. If we look at Sorare and Top Shots, for example, two concepts and companies that started in 2019, they’re still largely the best examples the sports industry can point to when someone asks “Why Web3?”. 

Sorare’s sales volumes have more than tripled in the last year, despite the crypto industry losing ~60%+ of its market cap. That is incredibly impressive.

Top Shot and Sorare have done something simple; create something that actually has demand and that users actually want.

In Top Shot’s case, it was:

Instead of physical sports cards, they used videos in NFT form called moments. The affinity was there from the off - and millions of people have since owned moments NBA Top Shot, but also NFL All Day and various other spin-offs that parent company Dapper have helped launch.

In Sorare’s case it was:

Three years on from these two propositions, we’ve not seen anything *really* break the mould in the same way for sports & NFTs.

There have been plenty of interesting, more niche examples and experiments - but in terms of actually creating a product that has sufficient, sustainable demand - we’ve seen very few, to no, examples in sports.

We’ve also seen things like RTFKT that you could class as part of the sports NFT ecosystem, but more laterally toward fashion and lifestyle.

Nike has recently launched a Web3 platform called Swoosh where they plan to house all their virtual creations, so there will be more to come from the sports NFT world.

But the last two years at least have seen brands and creators, generate mostly ‘casino-like’ propositions that have limitations.

This isn’t to say that they’re completely speculative or not at all what consumers desire, they’re just not quite there in terms of really creating something that generates sustainable demand.

2023 could very well be a year where we’ve seen enough of what doesn’t work as an industry to try and start formulating what does.

I’ve never seen so much appetite from brands and rights holders as I have the last three months when it comes to Web3.

Those two things coinciding, the growing appetite and seeing all the things that have been done not-so-well, might well generate some really interesting, novel things that consumers will enjoy experiencing.

The TL/DR is - the sports industry has done extremely well in specific examples when it comes to Web3 propositions, but there’s not been enough product market fit. There have also been too many examples of forcing this technology to fit in ways it won’t, and it ways that sports fans simply don’t want.

More sports crypto stories & things to put on your radar

• Fitch Ratings wrote a piece here about the lack of impact the FTX fallout has had on US sports teams

• Coca-Cola have teamed up with Crypto . com to launch 10,000 unique FIFA World Cup NFTs

• RTFKT are close to launching Animus, the next phase of their world. 

• Check out the latest edition of READY Read, a detailed source for Web3 and Womens Sport. 

• Werder Bremen, the German football club, have created digital E-Sports jerseys and memorabilia. 

• Krause House, a DAO that aimed to own and govern an NBA team, has created its own media experiment called Gameday. 

• Nike are kicking off their co-creation digital asset journey with AF1s.

Great reads, great tweeting and more general ‘stuff’ that could impact you

• Technology seemingly knows no bounds. Things like this will become regularly used within 5 years by match-going fans.

• ChatGPT, an AI tool by Open.AI has taken over my timeline. Check out some amazing things you can do with it below.

• The NBA will allow sovereign wealth funds, pension funds and endowments to invest in teams. 

• Alibaba Cloud and Avalanche have partnered together. 

• Finance giant Stripe have created customisable and embeddable Fiat-to-crypto onramps. 

• Blackrock are still bullish on Web3 despite the drawdown in markets. 

• Reddit have added 1 million new NFT holders in the last 30 days…

Thank you!

Thanks for reading the latest edition of the Sporting Crypto newsletter. I’m happy to see so many people enjoying and sharing it with their networks. If you enjoyed this, please tell your friends who might be interested - and share it on social :)

This newsletter is for informational purposes only and is not financial or business advice.These are my thoughts & opinions and do not represent the opinions of any other person, business, entity or sponsor.

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The contents of this newsletter should not be used for any commercial activity, for example - research report or consultancy, without the express permission of the author.