SBF's Universe: Completing 7 Integration Cases in Two Months, Spanning Sports, Esports, ESG - How is FTX preparing for the next wave?

This article is provided by FTX

"Work in a bear market, harvest in a bull market" is the entrepreneurial principle of the crypto industry. With the post-pandemic era approaching and countries beginning to tighten monetary policies, although it is uncertain if the bear market has arrived, trading volume in the crypto market has dropped sharply, indicating that it is time for exchanges to expand. However, major exchanges such as Binance, OKEx, and Huobi seem to be deeply embroiled in regulatory issues, while FTX is actively expanding and attracting more attention from traditional investors.

It is easy to notice that the crypto market is increasingly expanding towards traditional investors. Therefore, since Q1 of this year, the FTX exchange has been actively expanding its territory, from sponsoring the NBA Miami Heat's home stadium, Major League Baseball, to integrating the institutional asset custody platform Copper.

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While the three major exchanges are mired in regulatory issues, FTX has been standing out, completing a $900 million Series B financing.

At the end of July, FTX completed a $900 million financing, with a current valuation of $18 billion, a 140-fold increase from the $1.2 billion valuation after the last round of financing.

It is worth noting that not only crypto capital but also traditional investment institutions such as the renowned hedge fund under Paul Jones, Millennium Management managing billions of dollars, and Thoma Bravo are investors.

It is evident that FTX has paved the way for traditional investors and institutional investors to enter the crypto investment space, which has yielded results.

FTX's expansion is roughly divided into several directions: seeking exposure in world-renowned sports events, integrating FTX Pay payment and deposit/withdrawal systems, and preparing for ESG and enhancing brand image.

Collaborations Arranged (By Date)

Here are recent collaborations by FTX:

1. Acquisition of Naming Rights for NBA Miami Heat Arena: On April 7th this year, the NBA's Miami Heat officiallyannounced a long-term partnership with FTX, making FTX the official exclusive "exchange partner" of the Miami Heat, acquiring naming rights to the Heat's arena as "FTX Arena," and is expected to assist the Heat in promoting a series of cryptocurrency-related activities.
   
   
2. Signing NFL Top Rookie: On April 26th, FTX's asset management app Blockfolio signed this year's NFL draft top pick, Trevor Lawrence, as a brand ambassador.

3. Becoming Official Payment Partner of "KAWS: HOLIDAY": On May 16th, international artist KAWS announced a collaboration with AllRightsReserved, partnering with FTX Pay for a hot air balloon project, where fans can soar through the sky on a hot air balloon in the shape of KAWS' famous artwork. Notably, this event accepts cryptocurrency payments.

4. Launching Crypto Cup with Publicly Traded Chess Company: Following the announcement of the collaboration with KAWS (5/17), FTX announced a partnership with Meltwater as the official cryptocurrency exchange partner of the Meltwater Champions Chess Tour, launching the FTX Crypto Cup and becoming the title sponsor of the tournament.

5. Securing Exclusive Naming Rights with TSM: On June 4th, FTX signed a $210 million contract with the globally renowned esports team TSM. Following the partnership, TSM will be renamed to "TSM FTX" and will allocate resources over the next five years to invest in esports and gaming, bringing many popular games to mobile platforms and promoting gaming and esports on a large scale.
   
   

   

6. Partnership with Major League Baseball (MLB): On June 23rd, Major League Baseball (MLB) reached a collaboration agreement with FTX. MLB will have "FTX.US" trademarked on all umpire uniforms. Umpires will wear these uniforms to officiate all games, including opening games, regular season games, postseason games, and All-Star games. In addition to umpire uniforms, MLB will feature FTX's brand in game broadcasts, including on MLB.com, MLB Network broadcasts, MLB.TV, and embedded in social media.

7. NFL Hall of Famer, Brazilian Supermodel Invest in FTX: NFL legendary quarterback Tom Brady and Brazilian supermodel Gisele Bündchen have entered into a long-term partnership with FTX. Both will acquire shares in the FTX company and receive a "cryptocurrency signing bonus." Brady will serve as an FTX ambassador, while Gisele will act as an advisor for FTX's environmental and social initiatives.

From April to June, within just two months, FTX completed seven collaboration agreements, with four related to the four major North American sports events, and FTX also expanded into the realm of esports events.

FTX Founder and CEO Sam Bankman-Fried, when securing the MLB naming rights, stated to Bloomberg:

"FTX's next goal is to take our name out of the crypto circle and make the world know us because both our product and user experience are top-notch."

Indeed, since last year, cryptocurrencies have gradually entered the mainstream, but most traditional investors still purchase and trade cryptocurrencies through platforms like Robinhood and eToro. This can be verified by Robinhood's IPO filing. According to Robinhood's IPO filing, cryptocurrency trading accounted for 17% of the platform's total revenue, contributing approximately $88 million in revenue in Q1, a 400% increase from the previous year.

Therefore, as cryptocurrencies enter the mainstream spotlight, attracting more traditional investors or potential users has become a major challenge for exchanges. How much impact will collaborations with these world-renowned professional sports events bring?

Billions of Viewers, Younger Audience, Multi-Billion Dollar Value

Currently, the four major North American professional sports leagues are NFL, NBA, MLB, and NHL (National Hockey League).

According to data from Statista, the combined revenue of the four major professional sports leagues reached $711 billion in 2018 and is estimated to reach $738 billion in 2021. Three out of the four major leagues have now directly or indirectly partnered with FTX.

The audience flow for sports events is also remarkable. The FTX Arena, home of the NBA's Miami Heat, can accommodate 19,600 spectators per game, with 82 regular-season games. Calculated at 80%, the annual in-person audience reaches 1.28 million, while online viewership exceeded 7 million during this year's Heat vs. Lakers postseason game.

The MLB consists of 30 teams, each playing 162 games per year. The total annual in-person audience is approximately 80 million, with impressive online viewership numbers as well. Last year's championship game had about 10 million simultaneous online viewers.

The NFL is considered the most popular, with three out of every four males being NFL fans on average. The online viewership for the Super Bowl is 98 million. Notably, the 2021 championship team was the Patriots, with star quarterback Brady, who has a partnership agreement with FTX.

In addition to the impressive audience numbers, sports event fans align well with the cryptocurrency market's customer base.

According to "The Shelf," the average age of NBA viewers is 37, with an average household income of $96,000. MLB's audience has an average age of 53, but approximately 30% of viewers fall in the 18-34 age range, with an average household income of $96,200; NFL viewers have an average age of 47, with about 32% of fans aged 18-34.

Furthermore, esports event viewers are also the target audience for FTX. Research firm Newzoo reports that the global esports market was around $9.5 billion in 2020, expected to grow to $15.9 billion by 2023. Seventy-three percent of esports viewers belong to the millennial or Gen Z generation, aged between 10-35. As the spending power of millennials and Gen Z grows, the market value is expected to increase significantly.

It is well-known that the age group of cryptocurrency investors is relatively young. A survey by JPMorgan found that among young investors aged 18-37, 51% have owned or traded cryptocurrencies, compared to only 25% who purchase stocks.

With rough estimates, collaborations with these professional sports events or players are expected to bring FTX over a billion viewers annually. It is evident that FTX is expanding towards traditional investors while also establishing a brand image for the cryptocurrency exchange clientele.

Integrating Payment Companies to Reduce Entry Barriers for Traditional Investors

FTX is also integrating payment companies to lower the entry barriers for investors.

Traditionally, users have had several options for deposits and withdrawals: OTC (over-the-counter) and exchanges that collaborate with banks for purchases/sales. For international exchanges like FTX, partnering with a single bank is impractical. Starting this year, many exchanges have enabled credit card purchases of cryptocurrencies, but withdrawals remain a challenge.

On May 11th, FTX founder SBF tweeted that users can now transfer fiat currency between FTX and Revolut. Founded in 2015, Revolut is currently Europe's largest digital bank, with over 19 million users and over 100 million transactions per month. Initially providing remittance and currency exchange services supporting transfers in 31 fiat currencies, their financial card services support withdrawals and spending in over 150 different fiat currencies.

This means that besides enhancing the deposits and withdrawals for users on the exchange itself, traditional investors can now use Revolt for deposits and withdrawals. Additionally, businesses and users of FTX Pay can now perform deposits and withdrawals through third-party payment support, further enhancing the FTX Pay process.

Conclusion: Innovation is the Only Way Forward

The cryptocurrency industry is ever-evolving. Since 2017, many once-promising startups or industry giants have been gradually phased out due to changing user trading patterns and habits.

FTX's rise itself proves the saying "Innovation is the only way forward." At the time, SBF believed that existing exchanges had poor user experiences, such as BitMEX's declining matching engine efficiency and OKEx's handling during the 2017 Bitcoin fork.

Therefore, when FTX started, it incorporated many features that were "trader-friendly," including three-tier liquidation, sub-accounts, and subsequently introduced innovative products like leveraged tokens, volatility contracts, equity tokens, Pre-IPO, Trump contracts, and other prediction products.

A Baidu VP has a new startup formula:

User Value = (New Experience - Old Experience) - Replacement Cost.

Currently, through multiple collaborations, FTX is increasing brand exposure, attracting traditional investors, improving deposit and withdrawal experiences, reducing entry barriers, and introducing innovative products like equity tokens and prediction contracts, providing a "new experience" for investors.

It's not just traditional investors; FTX is also strategizing for institutional investors.

FTX recently announced an integration with the renowned digital asset custodian Copper.co. Now, over 300 institutional clients of Copper can trade FTX products through the ClearLoop network, including cryptocurrency spot, futures, equity tokens, prediction contracts, with their funds securely stored on the Copper custody platform.

The cryptocurrency market is the battleground for innovators, where innovation speed is everything. In the future, the boundaries between traditional finance and the cryptocurrency market will gradually blur. It's evident that FTX is positioning itself for massive cryptocurrency investments ahead, expanding its reach while reorganizing existing products and services to create a "new positioning" for the cryptocurrency exchange.

While the outcome remains uncertain, especially facing upcoming monetary tightening and regulatory risks, innovation itself carries risks. However, it is certain that FTX is diversifying in multiple directions to ensure its competitiveness.