Deeply analyze how cryptocurrency and e-sports develop together?

Original title: How Crypto and Esports Are Fueling Each Other's Growth 

Original author: Andrew Hayward

Original compilation: Diamond, WhoKnows DAO


Andy Dinh, CEO of TSM (left) and Sam Bankman Fried, CEO of FTX: TSM/FTX has played a leading role in cryptocurrency/sports trading& nbsp;

From top sponsorship to NFT, fan tokens and Web3 game championships, the industry gradually intersects.


  • Cryptocurrency and E-sports industry companies have participated in transactions, NFT and game project cooperation, etc.

  • Interviewed leaders from our encryption company and famous E-sports team to discuss the reasons for the gradual integration of industries and future development.

In June 2021, the cryptocurrency exchange FTX announced that it had signed a 10-year sponsorship and naming rights agreement with SoloMid (TSM), a leading e-sports team, worth 210 million dollars, which caused a sensation in both the cryptocurrency and e-sports industries.

But this is not the first major measure of the alliance between the two industries. A few years ago, popular teams such as OG and Team Vitality launched encrypted fan tokens through the Socios platform, which allowed fans to participate in and vote on team decisions while generating income.

Then, Coinbase, FTX, Uniswap and other cryptocurrency companies cooperated with mainstream teams, championships and leagues, and a large number of sponsorship transactions broke out in 2021. This trend will continue until 2022, when NFT and Web3 plans for teams and leagues are emerging, and NFT driven game tournaments are also increasing.

What is driving the continuous integration of E-sports and cryptocurrency? We interviewed leaders of these two industries to discuss the opportunities they saw. How the E-sports team and the league pursue a deeper Web3 plan, and how E-sports help promote and attract more attention to the potential of NFT driven games.

From DM to TSM FTX

There is an obvious overlap between the participants of e-sports and cryptocurrency: both are male dominated industries, composed of young and skilled adults who deal with video and game industries. They attach importance to digital products and see that E-sports and cryptocurrency have developed from the fun of a few people to the mainstream industry.

The transaction between FTX and TSM is not only the largest cooperation between cryptocurrency and E-sports companies in US dollars, but also an ideal research case. Believe it or not, let the team change its name to FTX TSM to facilitate thisUS $210 millionThe conversation started with Twitter's private message.

According to Walter Wang, vice president of TSM operations, Andy Dinh, CEO and founder of the team, suddenly sent a private letter to Sam Bankman Fried, CEO and founder of FTX, when he was sinking deeper and deeper into the rabbit hole of cryptocurrency.

Bankman Fried is a famous League of Heroes fan, and TSM is one of the most famous teams participating in the North American League of Heroes Championship Series (LCS). They obviously got to know each other because of their common interests, and then things happened one after another.

"They began to communicate. After several private messages and phone calls, they had the idea of cooperation. From that moment on, we began to go all out." Wang explained that sorting out the terms, shooting marketing videos and publishing announcements were completed within two months. This is one of the craziest moments in Wang's working life.

Bankman Fried's image of wearing the TSM team uniform has been widely circulated in the past year. Of course, he is richer and more famous than most target audiences, but in addition, he is also a model of proficient encryption industry, plug-in game players, and a model that TSM and FTX want to replicate on a large scale.


The cooperation tweet between the League of Heroes LCS league and FTX official announcement

FTX doubled its investment in e-sports in August 2018, when it announced that it would sponsor the LCS League of Heroes, a fist game, for seven years (undisclosed terms). In April of the same year, the Brazilian team Furia disclosed to Esports Insider that FTX signed a one-year contract with the team worth about 3.2 million dollars.

At the time of such transactions, FTX also invested heavily in traditional American sports. Previously, FTX signed contracts with Major League Baseball, the Golden State Warriors of the NBA and the Miami Heat. At the same time, stars such as Tom Brady and Steph Curry have also become investors and ambassadors. In January, Bankman Fried appeared on the gm podcast of Decrypt to talk about the impact of his initiatives in the e-sports industry.

"The brand influence of e-sports is far greater than that of traditional sports." Bankman Fried said.

"This is a different audience. For some audiences, not most, but some, this is like the most influential thing in the world." He continued, "Try a more targeted thing to target specific audiences that we think have high overlap."

Bankman Fried explained that some of their indicators around encryption and e-auction tracking are "absurdly high", but FTX does not believe that indicators are the "panacea and endpoint" to defend such investment. He added: "In some aspects, this is hardly driven by indicators. “

Interestingly, there are also several high-profile e-sports industry leaders who occupy important positions in the field of encryption. Ryan Watt, CEO of Polygon Studios, once worked in Major League Baseball (MLG), and then led Youtube Gaming in the E-sports Championship. At the same time, Benoit Pagotto was the brand marketing director of the FNatic team before he co founded RTFKT Studios, an NFT startup, which was later acquired by Nike.

"Not for timid people"

Companies in the encryption industry want the audience of E-sports, while E-sports start-ups need cash. For a long time, the E-sports team has consumed a lot of cash in the short term, hoping to attract more attention and finally get a return with the development of the industry, which is an open secret. Countless teams and leagues gradually disintegrated in this process.

With the listing of E-sports teams, including Guild Esports supported by David Beckham, the funds of the teams have become more strained. For example, Guild announced a loss of nearly 6 million US dollars in the recent half year, and was forced to lay off employees. Battalion Astralis will lose $7.9 million in 2020 and a net loss of $5.2 million in 2021.

FaZe Clan was listed on NASDAQ through SPAC merger in July, with a valuation of $725 million. The company disclosed revenue of $52.9 million and loss of $36.9 million in 2021. On the other hand, Copenhagen Flames, a Danish E-sports club, celebrated its profit of 6351 dollars in 2021. According to Hitmaker, this is the only team sharing positive financial details of the year.

"Running an E-sports team is to generate electricity for love, and promises to make great achievements one day." Mark Donovan, co-founder and CEO of Kolex, a Web3 startup that provides NFT of the E-sports team, said. "Even if it is an organization that runs an E-sports competition, many of them are the same, and they have been for 20 years. This is not suitable for timid people, which is for sure."

Even the most successful E-sports team is not immune from the recent economic recession. In July, Forbes called them the two most valuable teams in the field of e-sports, TSM FTX and 100 Thieves, just like many cryptocurrency companies, cut jobs.

Although the number one industry has seen its ratings explode under the influence of the epidemic, the E-sports league has not attracted cash or mainstream attention as the leading traditional sports league. However, for an audience with a large potential overlap with cryptocurrencies, as suggested by Bankman Fried, e-sports sponsorship can provide greater value.

Donovan said: "Relatively speaking, in terms of the size of the audience and its fit with these companies, it does not cost much to sponsor these leagues at present. It is much more expensive to sponsor traditional sports leagues, and it may not be cost-effective“

Sponsorship accounts for the majority of the team's funds. Since the beginning of last year, such encryption transactions have remained stable. Coinbase sponsored such famous clubs as Team Liquid, Evil Geniuses and BIG. The last one was the "multi million dollar transaction" of each team. Uniswap supported Team Secret in the transactions voted by the DAO.

Coinbase signed contracts with mainstream championship operators ESL and BLAST. Earlier this year, Team Vitality was sponsored by the blockchain platform Tezos, while the exchange Bitstamp sponsored the teams Immortals and Guild. Bitstamp lost about $5.5 million due to Guild's three-year sponsorship terms, which were not disclosed by Immortals.

This is just the tip of the iceberg in the field of encryption and e-sports transactions. These transactions are exposing the names of encryption exchanges and blockchain platforms in team uniforms, Twitch streaming media, Twitter feeds, and widely watched championship broadcasts.

Backward force of blockchain

However, this partnership has not been smooth, mainly becauseSome game players are against cryptocurrencies, especially NFT.Common complaints include the impact of some blockchains on the environment, the prevalence of cryptocurrency scams, and many people believe that game publishers use NFT as another way to steal money from players.

NFT is a blockchain token, which can be used as proof of ownership of items. In addition to items such as PFP and sports collections, they can also represent available video game items, such as avatars, weapons or digital land, which can be developed and monetized in the meta universe game.

Supporters of NFT games believe that this technology will shake up the distribution mode of traditional games, provide more benefits for players by reselling items in the secondary market, generate reward tokens through the game earning mode, have a say in management, and may use interoperable NFT items in multiple games.

Wang of TSM said: "We really believe that over time, people will create a lot of basic value through NFT, cryptocurrency and blockchain." He suggested that the key to the perceived advantages of Web3 technology be taught to players through long-term and continuous cryptocurrency education. TSM FTX also conducted an NFT air drop activity last fall in cooperation with the Solana project Aurory.

The NFT cards sold by Epics are inspired by the anti-terrorism elite: players and teams in the global offensive (CS: GO) and PUBG mobile games. After seeing the demand for rare weapon skins in CS: GO games, Donovan realized the potential of NFT ownership. These weapon skins have sold for hundreds of thousands of dollars.

He said, "In E-sports, some leaders especially like NFT because they are game players and technology leaders. But if you look at the Discord, a large group of players also despise NFT. "Donovan also said that players need to be educated to know that NFT is not just an expensive PFP.

Chris Hana, vice president of business development of Kolex and former CEO of E-sports business publication E-sports Observer, said,Like CS: GO skin, NFT uses people's desire for digital status symbols.He believes that there are other similarities, including that cryptocurrencies are facing a similar counterattack from E-sports.

He said, "This is the same resistance. There are always people who love it and burn for it. There are also people who think that this is bullshit, it doesn't work at all, it's all a hoax. There are always many skeptics“

But Hana also sawWeb3 as a buzzword is used by startupsAccepted, just like previous e-sports, this is a trend. Enterprises will try to raise funds in order to look high-tech. Words like "encryption", "blockchain" and "meta universe" areNew terms that must be put forwardLet others think it is the most advanced and cutting-edge thing.

Blockchain technology has brought tangible benefits to the operation of the e-sports industry. However, the league and the team were closed because they claimed that they did not pay the players and staff, the financial division was unfair and the overall lack of transparency.

Community Gaming, a start-up company that raised 16 million dollars last spring, is developing a championship platform that uses blockchain technology to provide this transparency on the public ledger, ensure that participants receive effective payment and less fees, ensure the distribution of revenue shares, and allow token ownership of league concessions.

Web3 Team

Even in the midst of skepticism, E-sports companies are building Web3. The popular team G2 Esports announced a Solana based NFT collection in January as a ticket to enter the private "Samurai Legion" fan community. The agreement between G2 Esport and Bondly, the cryptocurrency platform, has broken because of the lawsuit received from the E-sports organization.

Although SolanaIt is called an environment-friendly blockchain platformAnd uses much less energy than blockchains like Ethereum, but G2 Esports still faces attacks from fans. Ivana Brecek, director of digital innovation at G2, once again pointed out that,Cryptocurrency education needs to be strengthened.

"At G2, we believe that NFT and blockchain are future technologies that will fundamentally change the way we interact with digital goods. We hope to be at the forefront of this technological revolution." Brecek told Decrypt.

Another popular team, 100 Thieves, launched a free mint of NFT through the Ethereum expansion solution Polygon, and delivered 300000 such collections within 24 hours (avoiding the use of NFT terminology). At the same time, Team Vitality plans to release NFT through Tezos, and ESL has also launched an NFT platform on the Ethereum extension platform Immutable X.

However, for E-sports organizations, competition is just a business model.The team has its own live anchor and online celebrity. They are developing life content and fashion products.For example, TSM has technical services such as e-commerce analysis and training application Blitz, while 100 Thieves is even developing its own games.

Creating a Web3 platform and experience is a potential next step for the team.

Misfits Gaming is a typical example. The organization operates the franchise team in League of Heroes and Call of Duty, and announced that it plans to launch a new Tezos based platform, called Block Born, which will release NFT games and launch championships and other content around them. The purpose of Block Born is to highlight the games that are ready for the championship.

Will Pazos, senior vice president of Block Born, said when announcing the platform in March: "We want to find an opportunity to do something. We like the idea of blockchain, but we think we need to focus more on competitive games."

At the same time, the popular FaZe Clan, its founder and online celebrity have become network celebrities, and have announced major initiatives in the field of Web3.

In a recent interview with GQ magazine, FaZe CEO Lee Trink said,He would not be surprised if 80% of the team's income in ten years came from Web3.In the same article, Tarek Mustapha, the Web3 director of the company, appeared in the digital enhanced photos as Mynt, a digital avatar he created in the meta universe.

Kai Henry, the chief strategic officer of FaZe Clan, participated in a panel discussion held by The Sandbox, the Ethereum Metauniverse game in NFT NYC in June. He and Sandbox's co-founder Authur Madrid previewed an undisclosed FaZe game activation code. Henry also talked about the construction method of FaZe Clan in Web3.

Henry said: "We are taking the time to ensure that we are aligned with those who remember the best interests of the community, rather than forcing us to do what they think we should do. In the next year or so, you will see us taking a big step in this regard“

Even the E-sports league is trying to change the way fans watch and experience professional games with the meta universe. In July, Activision Blizzard's Call of Duty league and the New York team Subliners cooperated with Mountain Dew to hold a live party to watch an e-sports game in Decentraland (a meta universe game based on Ethereum).

"Just to participate, right?"

Cryptocurrency and E-sports are growing and integrating, and now they have entered a complete cycle. We have seen that the modified CS: GO can provide Bitcoin rewards for players through Lightning Network. Now NFT game manufacturers are holding their own tournaments, and there is a large prize pool.

Axie Infinity, an NFT game inspired by Pokemon, became famous at one stroke, but recently got into trouble in the economic recession and devastating hacker attacks. Recently, it announced that it planned to hold an official world championship at AxieCon in Barcelona in September. In total, these three competitions will provide AXS token rewards worth 1 million dollars.


Axie Infinity  Activity Tweets

Community Gaming is the official event operator of the developer Sky Mavis, responsible for the Axie Infinity championship. The company cooperates with other Web3 game developers to hold tournaments with prize pools and famous e-sports commentators to help raise awareness and create a competition community around such games.

Chris Gonsalves, CEO of Lianchuang, told Decrypt: "It's about participation, right? It's boring for people to play matching games all day long, and they want to have more social experiences. When you gather people together to participate in an organized event, it's a very important and valuable thing for the community."

Immutable's card game Gods Unchained is another NFT game that has been running for a long time. Over the years, it has revealed the ambition of e-sports, but no large-scale competition has been held.

The website of the game points out that it has accumulated 570000 dollars of bonus so far, but Immutable recently announced that it will start from a small, community managed tournament. Justin Hulog, the chief studio director of Immune Games Studio and a former fist game player, told Decrypt that the initial championship has attracted hundreds of players, and there are more proposals in the future.

Hulog said: "E-sports is an internal part of Gods Unchained, because skills and strategy are its core. We are challenging the misunderstanding that Web3 games are not fun, and believe that E-sports can show the aspects that players like, such as competition."

In the field of Web3 games, it is easy to ignore the fun. Last year's speculation on NFT and token prices contributed to the soaring of Axis Infinity and accelerated its demise. Some early NFT games felt more like DeFi applications dressed as games than powerful games with NFT and token elements around a convincing core.

Gonsalves believes that with the entry of senior developers in the traditional game industry, the Web3 game market is evolving, and creators and players are learning from the boom and bust of Axie driven games.


ev. Io activity tweets

He suggested that the next wave of games could make NFT a dispensable but desirable thing, stimulate the demand of players for digital status, but at the same time ultimately seek to provide the public with an interesting free game to enjoy. He emphasized EV IO, BR1, Undead Blocks and other online shooting games, each of which is based onThe NFT is enhanced based on the real types that have been tried.

Community Gaming cooperates with Fractal, the NFT game market. In the spring of this year, EV IO held a $10000 competition. Justin Kan, a co-founder of Fractal and also of Twitch, said that he believed thatSuch activities are not only interesting marketing, but also beneficial reconstruction of NFT games, from which fun and competition can be obtained, rather than putting speculation in the first place.

"We see that more Web3 games use E-sports as a market strategy, which is a good cultural change, because it puts games first. Players like fun and competition. In order to obtain players, blockchain games should provide excellent game experience, and good games are the best way to achieve this goal." Justin told Decrypt this way.

He finally added, "After all, the game is about having fun!"