The UFC continues to invest heavily in cryptocurrencies despite market declines

The Ultimate Fighting Championships are no stranger when it comes to cryptocurrencies and companies that use blockchain technology.

Last month, the leading mixed martial arts organization announced a marketing partnership with VeChain, the public network used across different supply chains. The deal, which recruits VeChain as the UFC’s “Official Layer 1 Blockchain Partner,” is reportedly valued at nearly $ 100 million.

As part of the agreement, VeChain, which has international offices in nine countries, including the United States, Singapore, Ireland, Italy and France, will be prominently featured and integrated into UFC live events and broadcasts, as well as promoted in original content across social media. . media. VeChain will also be shown at the official fighter rankings, as well as at the Performance Institute and APEX.

“VeChain is a globally recognized leader in blockchain technology, and we could not be happier to welcome them as an official UFC marketing partner,” said Paul Asencio, UFC Senior Vice President of Global Partnerships, in the official press release.

“VeChain’s expertise in using real-world blockchain applications to help the public and private sectors achieve their carbon-neutral goals is an effort we are proud to support. We look forward to working with VeChain to leverage the UFC’s worldwide popularity to promote a positive message that blockchain technology can be used to protect our environment for future generations. ”

VeChain debuted in the Octagon at UFC 275 in Singapore, one of the first numbered Pay-Per-View events to take place in Southeast Asia, and has since been featured on subsequent shows.

Nevertheless, the UFC’s newfound partnership with VeChain – a partnership that was announced during a significant decline in the crypto market that led to the industry losing more than $ 2 trillion in value – marks the latest agreement between the MMA organization and a cryptocurrency or blockchain related company. The crypto sector has been a huge blow for the UFC, which has managed to secure several lucrative deals and opportunities in what is fast becoming the hottest category across sports sponsors.

NFTs, fan tokens and blockchains

The UFC first entered the blockchain industry in 2020 when it partnered with Dapper Labs to create non-fungible tokens (NFT) of video moments. The project was launched in January under the name UFC Strike, a series of collectibles that has reached $ 8.5 million in sales volume in the six months since its launch.

The UFC continued to dig into the crypto area in 2021, allegedly submitting several trademark applications indicating plans to launch a UFC-branded cryptocurrency, as well as an app for users to manage NFTs and other digital assets.

The MMA organization then partnered with Chiliz, a leading digital currency and blockchain provider for the sports and entertainment industry, in May 2021, and announced plans to launch a $ UFC Fan Token on the fan engagement and rewards platform Socios.com. Those who purchase tokens will receive exclusive content on Socios.com, including fan voting, VIP rewards, exclusive promotions, AR-enabled features, chat forums, games and contests.

“We’re constantly looking for ways to increase fan engagement,” said Tracey Bleczinski, Senior Vice President, UFC Global Consumer Products. “The UFC has more than 625 million fans worldwide, and Fan Tokens are a unique way to connect with them through a compelling, authentic product that brings them closer to the UFC and gives them influence, while rewarding their passion for the sport. ”

Photo illustration by Jakub Porzycki / NurPhoto via Getty Images

In July 2021, the UFC announced a long-term partnership with Crypto.com, one of the fastest growing crypto exchanges in the world. Worth $ 175 million over 10 years, the agreement lifted Crypto.com up to the UFC’s ever “global official combat kit partner”, allowing the crypto platform to adorn their brand of UFC combat kit worn by fighter jets and their cornerbacks during competitions.

Crypto.com’s investment in the UFC marked its latest entry into the sports industry. The platform spent more than $ 1.4 billion on sports sponsorship deals across Formula 1, hockey, basketball, football, MMA and esports, including a $ 700 million fee to rename the Staples Center – home of the LA Lakers – to Crypto.com- arena.

Crypto.com has also expanded its partnership with the UFC to include a “fan bonus” for cryptocurrencies for its pay-per-view events. The crypto exchange will distribute 60,000 dollars in bitcoin to the fighters who the fans voted the most deserving of the prize. The top vote gets bitcoin worth $ 30,000, with $ 20,000 for second place and $ 10,000 for third place.

The Bitcoin bonuses join the two $ 50,000 performance bonuses that the UFC releases at each event, plus the two $ 50,000 “Fight of the Night” bonuses awarded to each athlete in the fight.

Photo by Chris Unger / Zuffa LLC

Most recently, the UFC and DraftKing announced plans to launch “gamified digital collectibles” focusing on the UFC. According to the official press release, “DraftKings Marketplace will have access to fighter IPs from over 500 different athletes on the active UFC list from which they can choose to create Reignmakers’ UFC collection” under the new agreement.

The NFT-based game is expected to go live later this year.

With the UFC’s now comprehensive list of blockchain assets and sponsorships, it’s clear that the organization is investing heavily in crypto. However, the influx of sponsor dollars comes with various concerns, including the potential exploitation of gullible fans through digital assets and tokenization, especially in the midst of the ongoing market downturn.

Crypto carnage

Last month, Bitcoin and other cryptocurrencies fell sharply as investors dumped risk assets in the wake of rising inflation, higher interest rates and other macroeconomic factors.

Bitcoin plunged more than 50 percent this year and is currently hovering around $ 20,000. The world’s most popular cryptocurrency has lost more than 75 percent of its value since reaching an all-time high of around $ 69,000 in November 2021.

The cryptocurrency collapse has since shaken the rest of the market, with the total market value of cryptocurrencies falling to less than $ 1 trillion from the peak in November 2021 of $ 3 trillion.

Photo by Umit Turhan Coskun / NurPhoto via Getty Images

The current bear market has also affected NFTs, as sales reached a 12-month low level after cryptocurrency. Sales of NFTs totaled just over $ 1 billion in June, which is significantly deflated from the peak of $ 12.6 billion in January. Even an attempt to sell an NFT of the first tweet by Twitter co-founder Jack Dorsey, first bought for $ 2.9 million, was abandoned after bids peaked at $ 14,000.

Given the millions that were poured in to market crypto – often with celebrities – legal action after the crash was inevitable. Boxer Floyd Mayweather Jr. is among those being sued for alleged false statements promoting the smaller cryptocurrency EthereumMax.

Mayweather is hardly the only celebrity who promotes cryptocurrencies in exchange for hefty payments. Matt Damon appeared on a Crypto.com ad that told viewers that “wealth favors the brave” when investing in crypto. Those who listened to the A-list actor at the time would probably have lost a significant portion of the investment.

Photo by James Gilbert / Getty Images

This brings us back to the UFC, the device that encourages its fans to invest in NFTs, fan tokens, while advertising for crypto exchanges like Crypto.com. For the UFC, the alliance of cryptocurrencies has helped the organization increase profits through sponsorship and fan spending, while limiting costs. This probably includes the recent revelation that the UFC now earns more than $ 1 billion in revenue a year.

Nevertheless, while the UFC remains focused on the bottom line, the decision to market cryptocurrencies and blockchain technologies during a market crash raises a number of concerns. At best, it is an easy money grab; in the worst case, the exploitative marketing practices are aimed at the organization’s own gullible audience.