During F1 Monaco Grand Prix 2022, Oracle Red Bull Racing’s defending Formula 1 Drivers’ Championship team announced signing a huge multi-year partnership with Bybit - the world leading assets platform, in what is said to be the “largest annual crypto tie-up” in international sports thus far.

Bybit is a crypto trading platform established in 2018 that provides crypto traders with the ultra-fast matching engine, high-quality customer service, and multilingual community support. In addition, the business offers cutting-edge online systems of spot and derivatives trading services for crypto assets, marketplace for non-fungible tokens, as well as mining and staking solutions.

The partnership looks to boost fan engagement with scope for digital asset creation and social tokens in future, which play a crucial role with regard to the promotion of crypto literacy around the globe. The deal dictates that ORBR’s 2022 non-fungible tokens collection will be minted on the Tezos blockchain and that the NFTs will be available through an auction that will provide participants a way to collect digital collectibles that demonstrate Red Bull’s past, present, and future.

Untapped Potential

Formula 1 is an incredibly rich sport, mixing many elements, including technology, human interest, heroism and glamour into a really exciting package. According to the official stats, Formula 1 was the fastest growing major sport league on the planet in terms of follower growth in 2021. Last year, followers on social and digital platforms were up 40% to 49.1 million, video views up 50% to 7 billion and total engagement up 74% to 1.5 billion. Additionally, total video views across F1.com, the F1 app and social media were up 44% vs 2020 to 7.04 billion.

Due to the Covid 19, along with its worldwide lockdowns, changed the way we interact and live. It also forced many industries to adapt to completely unexpected circumstances. Communication-based on digital solutions has become a new reality for many companies and institutions. The F1 industry is no exception. With a lot of races being cancelled, the racing teams are lacking activity and communication with their loyal fans. So, it’s also understandable to have a large number of fans changing their ways of communicating and interacting with its favourite sports club. According to ESPN, the Formula 1 season last year established a record as the most watched on US television with an average of 934,000 people each race. Meanwhile, the results of aforementioned numbers mean that F1 is outperforming other major sports in the digital arena.

Formula One’s large fan base has garnered sponsorship from some of the biggest names in the crypto business. Crypto.com has agreed to a nine-year contract to name the Miami Grand Prix and collaborated with the Aston Martin Racing team to create a line of NFTs. Not to be outdone, FTX - the crypto derivatives trading platform has signed a business agreement with Mercedes-Benz Formula One Racing Team. In addition, Binance - the largest crypto exchange by trading volume has collaborated with the Alpine F1 team to create fan tokens.

On the other side, more and more football clubs are turning to the crypto industry to boost revenues and obtain new fans by issuing a new sort of digital asset called Fan Token. The fan tokens are an attempt by soccer clubs to increase their fans' loyalty. The token gives owners additional privileges and special offers and allows them to participate in voting. They get something very unique and special that sets them apart from regular ticket buyers.

According to FanMarketCap, $238.8 in dollars is the number for total market cap of total fan token sectors. This figure is quite modest when compared to the commercial revenues of football clubs from the retail, merchandising and mainly income from sponsorships. However, the number is quite large in the market as the issuance of fan tokens seems to be relatively new for teams and other sports, so we shouldn't be too surprised by those statistics.

Source: Statista.

What is a fan token?

A fan token is a digital asset that enables sports and e-sports teams, music clubs and other organizations and individuals to connect with enthusiasts from around the globe, build fan engagement, and open up a whole new world of interaction within their industry. It is built on a system of digital record called a blockchain.

The benefits of a particular fan token vary depending on the organization that issues it. Fan tokens could give fans access to membership perks such as exclusive promotions, merchandise or events in sports and entertainment circles. Additionally,they give fans a chance to vote on minor club decisions, VIP rewards including a meet and greet with your favourite players/athletes. The more tokens you hold, the greater your access and shot at team governance. Essentially, fan tokens provide an unorthodox form of fan engagement akin to a club membership.

For sports teams, this is a new way to raise money without making any change to their corporate structure or taking substantial financial risk. Also, fan tokens give sports teams a more international appeal that supersedes merchandise and a digital media presence. Moreover, the convergence between crypto and sports is interesting given the demographic overlap between fans of both industries.

What Does It Mean For This Partnership?

According to the Reuters, the value of the contract is around $150 million and will be paid in a combination of cash and cryptocurrency. The three-year deal is currently the largest per annum of all the sports deals sealed by crypto firms date. The deal is expected to have a positive push on both parties. Red Bull is looking to increase its exposure in the cryptocurrency community. It will tap into a new market of fans who are passionate about crypto and eager to learn more about blockchain technology. This could help to increase their fan base and bring in new followers worldwide. This means that the exchange will help the team distribute its digital assets collections and support its other initiatives.

For Bybit, this partnership represents an opportunity to build on its recent success. The exchange has been growing rapidly over the past year and this deal will give it a chance to leverage Red Bull’s brand and fan base to reach even more customers, further rapid growth and cement their position as one of the top cryptocurrency exchanges in the industry. Bybit will act as an issuer of fan tokens and as a tech incubator for Red Bull Racing as part of the deal with a sophisticated and possibly game-changing new concept of vehicles heading to the track.

This move comes as Red Bull continues its push for greater diversity at the top of motorsport’s commercial ladder. Its partnership with Bybit is the latest in a series of deals that have seen the company team up with blockchain startups and other crypto-related firms. The cryptocurrency industry is growing, and many companies are looking for new ways to tap into this emerging market. For Bybit, partnering with an established brand like Red Bull could be the perfect way of doing just that.

Bybit is a relatively new exchange, but it has seen immense growth thanks to its user-friendly interface and low fees and slippage. Red Bull is one of the most popular energy drinks globally, so this partnership could help raise awareness of crypto among mainstream consumers. This move could have a big impact on the future of cryptocurrency and Formula 1 industry.