Before the 2023 Formula One season, Ferrari severes relations with their cryptocurrency sponsor

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The racing unit of premium automaker Ferrari, Scuderia Ferrari, has joined the rising number of Formula One racing teams who have ended their relationships with their cryptocurrency sponsors. Prior to the 2023 season, Ferrari ended their multi-year collaboration agreements with Velas Blockchain and the world’s largest chip manufacturer, Snapdragon, incurring a combined $55 million loss for the Italian team.

The Ferrari-Velas agreement, which was slated to start in 2021 and cost $30 million annually, aimed to boost fan involvement through nonfungible tokens (NFTs) and other joint projects. RacingNews365 claims that the team violated the provisions that allowed Velas to produce NFT photos.

Mercedes also suffered a $15 million loss in November when it decided to sever ties with FTX when the latter filed for Chapter 11 bankruptcy. Similar fate befell Red Bull Racing’s alliance with the Tezos Foundation when the blockchain platform apparently decided not to extend its contract due to strategy misalignment.

The CEO and team principal of the Mercedes-AMG Petronas F1 Team, Toto Wolff, forewarned that similar circumstances might arise for other teams. However, there are more than just agreements between F1 and the crypto community. As it unveiled plans to launch an online marketplace for cryptocurrencies, meta tokens, digital collectibles, crypto-collectibles, and NFTs in October, Formula One filed trademark applications for the “F1” moniker.

Web3 initiatives have taken the lead in boosting fan engagement with sports leagues during a weak market.

In addition to rising markets for NFTs and immersive technologies, Deloitte’s “2022 Sports Industry Outlook” research predicted an acceleration in the merging of the physical and digital worlds. According to Cointelegraph, the largest obstacle to widespread adoption is the absence of user-friendly platforms.

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