FAQ: Sports NFTs 101 by Abhay Agarwal, CEO of Colexion
Sports Non-Fungible Tokens (NFTs) have become incredibly popular over the past year, with new NFT-based marketplaces popping up all over the cryptocurrency community. A Deloitte report predicts that sports NFTs could generate more than $2 billion in transactions in 2022 alone.
NFT is a type of digital asset that runs on a blockchain and is often referred to as a crypto collectible. Each NFT is a unique asset that can either be entirely digital or represent a tokenized version of a real-world item.
In the future, NFT marketplaces could become fairly common, allowing decentralized, trustless trading limited only by creators' imaginations. Sports NFTs give fans new ways to support their favorite teams, and sports organizations can generate revenue by issuing digital collectibles. Hence, it is no surprise that NFTs have been gaining popularity in sports.
Understanding sports NFTs with Abhay Agarwal
Abhay Agarwal is a serial entrepreneur with over 12 years of experience in mineral processing, real estate, and the tech industry. His passion for innovation, technology, and entrepreneurship helped him build Colexion, an NFT marketplace that aims to link sellers (typically digital artists) with buyers who can choose from a range of digital creatives to purchase. Additionally, they enable digital creators to protect and sell their creations to fans and collectors.
Abhay has also invested in startups from Europe, India, and the Middle East due to his keen interest in technology, and is also expanding his portfolio in various regions of Dubai, where he established his head office.
In an exclusive chat with Sportskeeda, Abhay Agarwal answered the most frequently asked questions about Sports NFTs:
Q. What is an NFT for sports and how does it work?
A: NFTs as digital assets have been immensely popular in recent times, with celebrities, brands, creators, influencers, and sports teams minting their own unique collectibles for fans and NFT enthusiasts. Backed by blockchain, they are transforming the way we perceive digital asset ownership.
Sports NFTs are exclusive collectibles from sporting stars and teams, and they gather huge traction from fans. Backed by blockchain technology, Colexion’s platform curated digital tokens from cricketing legends such as Yuvraj Singh and Dwayne Johnson. They sold out within hours, and are currently amidst a secondary sale in the marketplace.
Photos, posters, and trading cards have always been fan favorites, and in a way, NFTs emulate these online for multiple fans from across the world to own and trade. Sports NFTs are sold as digital assets encapsulating particular moments of the player’s career.
Their value fluctuates according to sales volumes and associated players. These tokens drive fan engagement while creating a differentiation aspect, helping gather proprietary data on fans and providing new products, services, and experiences that help boost revenue generation.
Q. How does one get into the sports NFT game?
A: The move towards Web 3.0 ushered in the advent of the metaverse, which provided an opportunity for play-to-earn (P2E) games to emerge where members engage in exciting leagues and tournaments to earn crypto.
P2E games have introduced the use of NFTs within the game, and they can be bought in the marketplace. These tokens provide utility to gamers and grant them extra benefits, even with real money prizes dispersed upon winning.
NFTs are created or minted by users on the platform to be traded and sold. The blockchain technology ensures a secure ledger that records all transactions and maintains the credibility of NFTs released by a particular creator.
NFT-based games, also known as play-to-earn games, offer lucrative opportunities for gamers. NFTs also come with smart contracts that can be leveraged by creators to earn royalties from secondary sales. These are just some of the ways that sports NFTs can generate income for the owner.
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Colexion is Asia’s largest blockchain-based NFT marketplace for buying exclusive digital collectibles from megastars, teams, and brands, curated by top crypto artists. It can be a one-stop destination for fans and enthusiasts to choose from a wide range of unique collectibles.
Another popular global leader of sports NFTs currently is Sorare, a football fantasy gaming platform where users can buy, sell, trade, and manage virtual teams with digital player cards.
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Q. Can NFTs be used for ticketing?
A: NFTs pose the potential to digitize tickets and provide added benefits to fans in the form of access to special content in the real world or around the stadium experience. They can transform traditional ticketing into sports for single use and as seasonal passes, clearing waitlists and solving problems of ticketing inefficacy.
Q. How are NFTs impacting the sports industry?
A: NFTs directly affect fan engagement by providing exclusive ownership statuses to them, while also generating new audiences across Web 3.0 platforms and helping sports athletes and teams scale revenue streams through primary and secondary sales, royalties, and more. They also provide a passive income to sporting stars through the trading and selling of unique NFTs.
Q. “Sports NFTs are a movement, not a meme.” What are your views on this statement?
A: NFTs have transformed digital asset ownership by making it more accessible to users across the world. Sports NFTs are surely a movement that harbors the potential to change the entire spectrum of sports and Web 3.0.
NFTs also provide owners and traders the opportunity to generate income from sales, simplifying the addition of value to the sports industry by creating a new channel for revenue generation with soaring fan engagement on the Web 3.0 platform.
With the interest in NFTs gathering pace in the country, India has become one of the biggest emerging markets for digital collectables.
A home to a total of 11 NFT companies, India ranks 3rd among the emerging NFT markets globally.
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Q. What is the position for sports NFTs in the foreseeable future?
A: Sports NFTs can create new avenues for fans to get closer to their favorite teams and players, heralding a new phase in fan engagement and forming meaningful, long-lasting connections. They provide a new channel for value and revenue generation through trade and sales, which can be beneficial for larger teams.
Digital tokens can also be used for ticketing, NFT media rights, and sponsorship of digital and metaverse events, proliferating the sources of income for a particular sports team or athlete. Digital asset sales could become one of the largest revenue streams for many teams and leagues in the foreseeable future.
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Q. What's next for Sports NFTs?
A: The current trends suggest a shift in the focus of NFTs to penetrate the emerging market in Web 3.0 around P2E games, which allows users and members to engage with each other through a cooperative yet competitive model, and the anticipation around NFT-based games gaining traction in the metaverse is also something to look forward to.