The relationship between blockchain and esports today
Blockchain and esports have seen exponential growth in recent years. So, what’s the relationship between the two? In this article we’ll review the existing intersections between them, keeping in mind that these areas are constantly growing as each industry evolves.
The blockchain itself has changed a lot over the years, and there are more and more options and possibilities with the continuous emergence of new technologies and products. Esports, for its part, has evolved from simply a competitive activity to one of today's world’s most flourishing industries.
Sponsorship as a gateway
In market studies on blockchain and cryptocurrency, esports is one of the most likely candidates to adopt the two technologies. The audience consists of young (but not too young) digital natives with purchasing power who love technology and have their fingers on the pulse of what’s new. As such, companies linked to blockchain and cryptocurrencies naturally chose to invest in esports sponsorships as part of their marketing efforts.
Undoubtedly, the partnership between the groundbreaking US-based Team SoloMid and the cryptocurrency exchange FTX is the most prominent example. The 10-year, $210 million agreement includes a naming sponsorship whereby the club now goes by TSM FTX, a name which can’t be used in some games due to developer restrictions, but that’s a topic for another article.
Among the world’s historic clubs, the UK-based Fnatic is surely in the top three. In addition to boasting impressive content creation and international business development strategies, Fnatic signed a 5-year, $15 million sponsorship deal with the Crypto.com exchange, a Singaporean company recently unveiled as an official sponsor of the 2022 FIFA World Cup. On top of that, the enterprise also sponsors, among many other events and organizations, Formula 1 and Paris Saint Germain, and has emblazoned its brand on the legendary home of the Los Angeles Lakers, baptized anew as Crypto.com Arena.
And the list goes on. Virtually every major club in the global esports scene today has a sponsor linked to blockchain. But it’s not just teams. More and more leagues and competition organizers have similar sponsorships. The American cryptocurrency exchange Coinbase sponsors not only teams, such as the US-based Evil Geniuses or Germany’s BIG, but also two of the world’s most prominent organizers: ESL and BLAST.
"TSM FTX, a great example of the relationship between esports and blockchain"
NFTs: an opportunity for everyone
The emergence of non-fungible tokens (NFTs) has been a real boom on several fronts. Whether it’s Beeple’s "The First 5000 Days" NFT fetching a cool $69 million, the bundle of 101 Bored Ape NFTs raking in $24.4 million, or esports, NFTs’ takeoff has reached meteoric heights, but they’ve also been garnering headlines because two thirds of them have fallen in value or are now worth nothing. But that’s to be expected—NFT fever triggered an onslaught of meaningless pieces.
At the organizational level, the NBA has probably had the most success with NFTs, working on them in-house and launching “Top Shot,” its own NFT marketplace. Moreover, the league gave NFT buyers a superior user experience in acquiring them. In esports, one of the pioneers was the European team G2 Esports, which in mid-2021 launched its own NFT line in collaboration with Bondy, though the companies are now mired in a legal dispute.
Many other clubs have lined up behind G2 to release their own non-fungible tokens. FTX TSX, of course, has its own tokens, developed by FTX itself, and blockchain giant Binance leveraged its Binance NFT brand to launch non-fungible tokens for the British team OG. Even ESL has launched its NFT on Counter-Strike: Global Offensive and is assembling a sizeable internal department to deal with NFTs and collectibles. Soon enough, all teams will market NFTs just as they do t-shirts and other merchandise.
Tokens as a new source of income
As a unit of value, tokens can quickly begin to generate revenue for a company and provide value to whoever acquires them, either because of the purchase/sale price itself or because of what it represents to that person. Socios.com was quick to understand this dynamic and together with Chiliz flooded the sports world with fan tokens for clubs and entities to trade. To top things off, they recently signed Lionel Messi as the brand's global ambassador. In the esports world, Socios.com and Chiliz were behind the release of $VIT, the fan token for France’s Team Vitality, and $TH for Spain's Team Heretics, among others.
G2 Esports and Fnatic, two pioneering clubs, went a step further and launched token and NFT-based partner programs. Through different membership tiers, G2 in collaboration with Metaplex and Fnatic working with Crypto.com offer their followers perks ranging from experiences such as trips and events, to autographed t-shirts and the acquisition of community-exclusive NFTs.
For a great example of tokens as a source of revenue, look no further than Spain’s Team Queso, which launched TQ Olympo in collaboration with Avalanche, a blockchain-based contract platform. TQ Olympo’s core concept is crowdfunding backed by security tokens, meaning that investors who want to acquire equity in the company (20% is up for sale) will be able to do so by purchasing its tokens. In addition, token buyers will also receive NFTs from the club.
This is just the beginning...
The blockchain and esports industries were quick to understand that the relationship between the two has amazing potential. That potential continues to grow hand in hand with the evolution of both blockchain-related technology and esports. It’s only a matter of time before every club and organization in the industry adopts blockchain and its derivatives to create greater value and further foster loyalty in an already extremely loyal community, made up of people who are expecting to reap the benefits that blockchain holds in store for them.
