Ferrari cuts ties with crypto sponsor ahead of 2023 Formula 1 season

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Scuderia Ferrari, the racing division of luxury carmaker Ferrari, has joined the growing list of Formula 1 racing teams to end partnerships with their cryptocurrency sponsors. Ferrari has terminated its multi-year partnership deals with Velas Blockchain and chip-making giant Snapdragon, resulting in a cumulative loss of $55 million for the Italian team ahead of the 2023 season.

The 2021 Ferrari-Velas partnership – set at $30 million per year – aimed to increase fan engagement through non-fungible tokens (NFTs) and other shared initiatives. However, the team did not comply with the clauses that allow Velas to create NFT images, according to at RacingNews365.

In November 2022, Mercedes also suffered a loss of $15 million after suspending its partnership with FTX as the crypto exchange filed for Chapter 11 bankruptcy. Red Bull Racing’s partnership with the Tezos Foundation has suffered the same fate as the blockchain company would have decided not to renew its agreement, citing a strategic misalignment.

Toto Wolff, Team Principal and CEO of the Mercedes-AMG Petronas F1 Team, has warned that other teams may encounter a similar situation. However, the relationship between F1 and the crypto ecosystem extends beyond partnerships. In October 2022, Formula 1 filed ‘F1’ trademarks revealing its intention to create an online marketplace for cryptocurrency, meta-tokens, digital collectibles, crypto collectibles and NFTs .

Related: Argentina soccer league signs metaverse partnership after World Cup triumph

Amid a bear market, Web3 projects have taken the lead in building engagement between fans and sports leagues.

Deloitte’s 2022 Sports Industry Outlook report predicted an accelerating blending of the real and digital worlds, as well as growing markets for NFTs and immersive technologies. As Cointelegraph reported, the lack of easy-to-use platforms is the biggest challenge for mainstream adoption.