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On May 12, 2022, Major League Baseball (“MLB”) announced a partnership with Sorare, the operator of a fantasy soccer game featuring NFTs, to launch an NFT-based baseball game. “The purpose of Sorare’s MLB Game is for fans to create the best team of NFTs representing Major League Players and connect with athletes, clubs and the league further during the live experience of baseball games.” MLB, MLBPA partner with Sorare to launch exclusive NFT game, https://www.mlb.com/news/sorare-to-launch-nft-game-for-mlb-mlbpa. Sorare previously created a collectible card game where users can purchase NFT cards of soccer players and then use those cards to build a team and compete against others. Although details will be revealed closer to the game’s release this summer, MLB has suggested that it will be structured similarly to Sorare’s soccer game.

NFTs Well-suited to Fantasy Sports

Fantasy sports is a logical market for NFTs. The popularity of fantasy sports has been skyrocketing, expanding not only within traditional sports like football and baseball, but to other forms of entertainment, including Reality TV leagues covering shows like the Bachelor, and even specialized leagues for popular shows like the Game of Thrones league I joined. In all these leagues, participants acquire a group of league members (e.g. sports stars, reality TV personalities, Arya Stark), using funds (real or fake) or a draft process, and the participants can then trade league members they have acquired or deploy them into matches against one another; all characteristics that can be handled using NFTs on the blockchain. Moreover, these types of leagues readily lend themselves to a collectible card format, since that is an easy way to display and organize the league members each participant has purchased. The success of Sorare’s soccer game demonstrates the viability of this format for fantasy sports, and the success of other NFT-based collectible card games, such as Gods Unchained and Splinterlands, confirms that further.

Sorare will be looking to carve its place in an increasingly crowded market for digital assets and sports betting. MLB already has a relationship with DraftKings for daily sports betting, and a relationship with Candy Digital (owner of TOPPS, the physical baseball card seller) for releasing MLB NFTs. Sorare steps a foot into both camps. Using the soccer NFTs as an example, we can expect Sorare to issue a set number of MLB NFT cards for each player, and that the collectible MLB NFTs will show an image of the player in question, with their team and number, much like baseball cards always have (although it remains to be seen whether certain stats will be included on the images as they were with traditional print baseball cards). Users can deploy those same cards to compete in fantasy sports, and, since users own the NFTs they buy, the cards can serve as collectibles both in their own right and in commemoration of a (hopefully) successful fantasy season. Overall, Sorare has good reason to expect a fantasy sports collectible card game is distinct enough to generate user interest notwithstanding some amount of overlap with other MLB products, and I expect it will expand to other sports in the future.

Addressing Concerns about Value and Persistence of Digital Collectibles

People understandably worry that their collectibles, whose value derives in part from age, may be lost or destroyed in the future, dissipating whatever financial and sentimental value it had accrued. Some collectors fear that purchasing digital collectibles may be riskier than purchasing a physical collectible they can hold and safeguard, whereas other collectors may appreciate not needing to buy hundreds of sleeves to keep their cards in mint condition. For an NFT-based game like Sorare’s, many users’ concerns about the collectible cards fit into two buckets: (1) loss of the NFTs’ value due to the game collapsing and (2) loss of access to the image associated with the NFT. Everyone obviously needs to determine their own risk-appetite; it is crucial to understand what you purchase when you purchase an NFT and what drives the NFT’s value before writing them off.

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Loss of value of the NFTs, particularly from a collapse of the game itself may be at the top of some people’s minds given that there have recently been high-profile collapses of NFT-based games. The most obvious parallel is MLB Champions, MLB’s first foray into NFT-based fantasy baseball, where users could purchase NFT bobble-heads of players. MLB Champions shut down in 2020 without ever gaining a substantial fan base. More recently, the Formula 1 racing NFT game shut down in March 16, 2022, after the game’s owners were unable to renew their license with Formula 1. NFTs of some specialty cars had sold for over $100,000 before the shutdown rendered the game’s NFTs largely worthless.

If the Sorare game collapses, NFTs purchased to play that game will undoubtedly lose a portion of their value. But that applies to any purchase of in-game assets: that purchase is not worth much if you cannot play the game. However, Sorare raised $680 million in its Series B on a valuation of $4.3 billion in late 2021, so there is no reason to suspect it will close its doors any time soon. And even without the game, the NFTs may retain some value. MLB Champions NFT bobble-heads are still bought and sold as collectors’ items.

But to many collectors, loss of access to the image associated with their NFT may be an even bigger concern. I and many of my friends still have books of baseball cards from growing up for which we have never checked the value and have no plans to sell. Such a potential loss can be a risk for certain NFTs, and it is critical to evaluate the persistence of any NFT you are considering buying.

At a basic level, buying an NFT gives the purchaser ownership of a unique digital record on a specific blockchain. When you buy an NFT of a picture or other representation, like a baseball card, you generally just get a small file that indicates ownership; the image you own is stored elsewhere. The manner in which that image is stored can have a tremendous impact on the persistence of the NFT: if the file is stored only on the producer’s servers or website, and the producer fails, the file your NFT points to may be lost forever. On the other hand, if that file is stored in a manner that can survive the producer’s collapse, such as on a decentralized system like the InterPlanetary File System (IPFS) or Arweave, it becomes more likely the referent for your NFT will exist indefinitely.

Collectors have a few reasons to be comfortable that cards purchased on Sorare will be available to them indefinitely. 

First, Sorare stores an IPFS hash of the metadata for each of its cards (e.g. https://ravencoinipfs-gateway.com/ipfs/QmQwEVprxkk5UYNiMwrkYzRAkkJDppXyGjoEqx6HH5Vv8f), which includes the picture IPFS hash (e.g. https://ravencoinipfs-gateway.com/ipfs/QmQXQdMR58ygLLQ6nm5AbZZyzCt32ZoUc9kXgpeRKfLXNS). 

Second, we have seen NFT images survive the demise of NFT-based games. Owners of MLB Champions NFTs can still view the bobble-heads that were minted to the Ethereum blockchain (instructions are carefully given on the website). There is no indication that Sorare’s more traditional baseball card images will not have the same staying power.