Exploring Sports Tokenization and Contracts on Blockchain
The sports industry is particularly tailor-made for innovation through tokenization and contracts on blockchain technology. Read on to discover how emerging concepts can transform the sports space.
Tokenization is the process of creating digital tokens of real-world or intangible assets of value on Blockchain. These tokens (fungible and non-fungible) can range from cars and real estate to sports teams, sports club assets, in-game purchases, and more. Owners of these tokenized assets become entitled to gain benefits from various rights, including ownership, contractual events, profit participation, governance, and more. Essentially, tokenization and contracts unlock the value and utility of such previously illiquid assets while improving their accessibility globally with lower fees and friction. In the sports industry, they can drive significant developments for players, clubs, sponsors, and fans. They can propel inclusion and engagement globally while generating revenue.
How Tokenization and Contracts on Blockchain Benefit Sports Stakeholders
When we say tokenization and contract creation of anything of value on blockchain technology, it also includes a player’s, either professional or amateur, name, image, performance, or even likeness. Players can create blockchain contracts (ID) or tokenize themselves or these intangible assets. Further, clubs, fans, and sponsors can invest in their favorite players and achieve fractional ownership of tokenized assets. The value of these assets may appreciate or depreciate depending on various factors. On the other hand, it will enable players to join clubs, hire agents, sign endorsements and promotional deals, engage with fans, and do more globally in the most secure, efficient, and innovative way. Ultimately, it increases their chance of selection by a sports team and signing an attractive contract in a prominent league. They can also tokenize their (current and future) salary or revenue and exchange it with investors for instant liquidity and investment. NBA player Spencer Dinwiddie is one example of trying to achieve this.
Fans can opt for a fan engagement token or contract, which can be fungible or non-fungible (NFT). It provides them access and influence over decisions made by their sports team and players and their associated assets. For instance, it entitles them to vote on club matters like kit designs, training ground names, or even deciding charity initiatives. Also, they can benefit from the future success of athletes by investing and enabling them to participate in prominent sporting events.
Fans and investors can store and track their assets in a blockchain-powered wallet like AlphaWallet or MetaMask. Further, they can trade the appreciation in a token’s value if their players perform well. That’s how fans and investors can own and trade a previously illiquid asset.
Interesting Fact: The Spanish champion Barcelona, in June 2020, crowdfunded US$1.3 million in no time by crowd selling 600,000 fan tokens. With these tokens, each token owner gets exclusive rights in the club, such as voting in polls and future rewards.
Tokenization of your team, club, or sports assets means providing democratized access to alternative asset class benefits. Essentially, it means creating liquidity for global investors by enabling them to invest and trade team tokens. Fans, sponsors, and other investors can buy and trade NFT tokens or contracts issued by a club, representing securities like bonds or assets or assets like memorabilia, sports cards, or more. On the other hand, clubs can offer loyal supporters rewards with tokens, which have a value that they can turn into cash, discounts, merchandise, or digital collectibles. They can even grant limited governance rights to holders as well. Last but not least, they can also enable athletes to receive incentives for loyalty and performance. Altogether, club tokenization can reduce friction among clubs, players, and fans globally.
Need to know more about tokenization, NFT, smart contracts, DeFi, and more in the sports industry? Visit blocsport.one and connect with the experts.