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Intro Notes, Plugs & Amendments 🔌🔧

I’ve come away from writing this newsletter with the feeling: this is *the* next mainstreaming moment for crypto. I was fairly bullish on it coming from the sports world because we’ve had precedent with NBA Top Shot…and because of the audience that sports capture.

But it’s actually come from Reddit. The Social Media and discussion behemoth.

🔌 I’ll be speaking at NFT LDN next week! If you’re in London, email me back at this address so we can arrange to meet.

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This Week’s Deep Dive: Reddit’s Successful NFT Launch

In last week’s newsletter, I included this tweet by Ian, co-founder of syndicate, about creating Web3 products.

That first category (1/ Onboard millions of new users) - is something exceptionally difficult to do. There are so many factors to consider when designing a proposition that might onboard millions of new people into Web3, but there are also factors out of your control, which therefore makes it exceptionally difficult.

Since NBA Top Shot, there have been very few propositions that have made more people aware of NFTs or increased the number of people buying NFTs. Now, this isn’t the goal, of course. The goal is to create propositions that are 1) mass market but most importantly 2) actually better user experiences and drive consumer demand. 

Reddit, have launched what I think is the most successful mass-market NFT proposition since Top Shot, and the sports industry could learn a lot from what they’ve done.

What made Reddit’s NFT collectable avatars so compelling to its users?

Their idea:

• Introduce off-chain (Web2) avatars in October 2020, that are showcased on your profile. This was a move by Reddit to increase the customisation of their avatar system, to make profiles slightly more unique and vibrant. It also made users familiar with the user experience without ever involving crypto.

• Add a 'premium' avatar feature to Reddit Premium, that allowed users to select premium avatar attributes when users choose to customise. Reddit turned the tap on monetisation, testing demand for just how much customisation matters for their users.

• In July 2021, Reddit sold their first few NFTs - which were unique avatars. These sold for between $𝟱𝟰,𝟬𝟬𝟬 - $𝟮𝟮𝟴,𝟬𝟬𝟬 at the time. This was Reddit’s first foray into creating NFTs, and it was fairly successful, albeit not mass market. This was more a marketing tactic.

• Reddit then launched their 1st Generation NFT collectable avatars in July 2022. They took weeks to sell out. They functioned in the same way that the off-chain avatars did, but they were ownable and tradeable.

• On October 1st, Reddit launched their Generation 2 NFT collectables…these ones sold out in 24 hours.  

The Result

Over 𝟯 𝗺𝗶𝗹𝗹𝗶𝗼𝗻 people have created cryptocurrency wallets on Reddit.

Instead of wallet, they use the term ‘Reddit Vault’ — making the language less technical or financial, and more palatable. Reddit have 𝟱𝟮 𝗺𝗶𝗹𝗹𝗶𝗼𝗻 daily active users (DAUs) and 𝟰𝟯𝟬 𝗺𝗶𝗹𝗹𝗶𝗼𝗻 monthly active (MAUs).

The conversion here to people actually buying NFTs is fairly high. ~5.75% on DAUs and ~0.7% on MAUs. Freemium model conversion rates are typically 2-5%, and are definitely on the lower end the larger your free audience is. To convert that high a percentage when crypto is involved is pretty astounding.

So just how did a news aggregation and discussion platform become the Trojan Horse of NFTs onboarding millions of people into Web3?

Reddit’s first big drop, the 1st Gen NFT Avatars, were aimed at making as many people holders of NFTs on their platform as possible.

• They cost anywhere between $𝟭𝟬-𝟭𝟬𝟬

• They were in drops of 𝟭𝟬𝟬-𝟭𝟬𝟬𝟬 with different themes

• Minted on the polygon blockchain with no fees, and had 0 mentions of the word 'NFT' in any of the onboarding.

There have been ~𝟰𝟬,𝟬𝟬𝟬 of these NFTs sold to date and Reddit actually went on to airdrop further NFTs to some subreddit community leads. Some of these community leads absolutely hated the NFTs. Some, to the extent they burned them instead of selling them for $5000 — which is hilarious.

The price was a low barrier for entry, but so was the actual user journey.

NFTs are never mentioned and whilst the details of these assets on chain can be expanded upon, they’re not in your face or obtrusive. Users can also buy using fiat and don’t need crypto. The avatar displays hexagonal profile pictures similar to Twitter, and they display your edition and mint number.The magic sauce, however, is in the customisation of these 'base' NFT avatars. Users can add free or premium attributes on top of their NFT avatar for further customisation.The distribution of NFTs after edition 2 of their NFT collectable avatars is at ~99% in terms of individual wallets, which is crazy compared to any NFT collection, let alone one that has this many NFTs.

The best bit? There are hardly any crypto people who have bought these. Only 3.82% of Reddit NFT Avatars are owned by NFT whales (mega rich NFT people).

And looking at Reddit, some people on that platform who previously hated NFTs, have now pivoted their thoughts somewhat:

Reddit have NFT’d the Fortnite skin model for their social media and discussion platform. And they’ve done it with levels of success that pretty much no Web3 or Web2 company can compare to when it comes to the raw data.

• There’s a $100m+ marketcap

• There have been 3.7k sales in the last 24 hours at a sales volume of over $1.5m

• There are 2.9m avatars that have been minted so far

I’ve written in this newsletter for a while that NFTs needed another Top Shot moment.I think this might just be it. The Fortnite skins model inside a social media behemoth, but using permanent, tradeable and ownable digital assets, at this scale, is pretty incredible.

What can the Sports industry learn from this?

When it comes to Web3, the Sports industry has been very intent on doing one of the following:

1. Selling their rights to the highest bidder. Listen, why not, the rights are worth a lot of money and someone is willing to pay the price. It’s inevitable.

2. Copying something successful in the Web3 world. I see cartoon pictures…we should make cartoon pictures!

3. Creating something of mass market appeal for their fans. This one is very rare and maybe only relevant when we talk about Top Shots, but even then that is a way to leverage rights.

Above all though, most people in the Sports industry have not thought about this technology could in fact engage their fans in a better way.

There’s been a rather perplexing obsession with only doing something along the well-trodden path. 2-3 years on from Top Shot, we’re now seeing other sports launch their own ‘moments’ propositions.

I think that’s completely fine, and in some sports, this will work better than others. FIFA have already shown fairly decent numbers with FIFA+ Collect, for example.

But the copy-and-paste approach probably isn’t the right one for every single sporting brand, there’s definitely nuance.

This isn’t to say you should be going out and doing something totally crazy, forcing yourselves to be trailblazers for the sake of it or anything like that — but figuring out what your fanbase actually wants is the first step in this journey. I’m convinced that most strategy, research and product teams at sports brands are simply looking at what has been done outside of their brand rather than looking introspectively at what creates demand from their fanbase. What does product market fit actually look like for an NFL franchise? What does it look like for a collegiate basketball athlete? What does it look like for an ICC cricket tournament?

There won’t be a one size fits all answer to these questions across the board.

It’s going to take research, time and some smart experimentation like Reddit’s off-chain avatars.

And look, if you need some help finding a place to start — email me back at this address ;)

More sports crypto stories & things to put on your radar

• RTFKT have teamed up with RIMOWA, who are a LVMH owned fashion house, to unveil luxury phygital luggage collab.

• Azuki, one of the largest NFT projects, are auctioning golden skateboard NFTs

• Sorare’s NBA beta is now live, and it’s breaking their daily unique depositer numbers. Their opening day casual leagues had over 100k entrants.

• Ledger partnered with Balon D’or to create an NFT version of the award for each winner at their latest awards ceremony. 

• This is very scary. A World Cup France token was promoted by a ‘deep-fake’ version of Griezmann.

• Kaka, joined a BNB Chain ‘Future of Football’ panel to discuss the Metaverse and Web3. 

• Lucy and Ready Sport XYZ have released their second edition of READY Read.

• Draft Kings have collaborated with Deadfellaz, an NFT project, to create haloween special NFTs! 

• Multicoin has led a $7.5m seed round in Mercury, who are aiming to help collegiate athletes leverage their NIL rights using Web3 technology. 

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

• NFTs are just pictures, they said. 

• Interpol, have for some reason found it necessary to create their own Metaverse Probably the weirdest thing I’ve seen in 2022 so far…

• Mentions of the metaverse have started trending down in company earning calls.

• Warner Brothers are launching LOTR NFTs that tokengate exclusive footage. 

Thank you!

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

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