Legendary Formula One Team Ferrari has broken its ties with the Crypto Sponsor Velas. The move indicates decreasing interest of Formula one world in Crypto.
Ferrari-Vela Partnership
The Italian squad announced their partnership with Velas at the end of 2021, at a time when F1 teams seemed enthusiastic about reaching agreements with crypto companies. The landscape has changed significantly in the last twelve months, with cryptocurrency and blockchains losing their value at a substantial rate. Mercedes’ official crypto partner, FTX, filed for bankruptcy at the end of 2022 – serving as the most obvious example of the volatility and insecurity of cryptocurrency sponsors in Formula.
The partnership between Ferrari and Velas from 2021 – set at $30 million per year – aimed to increase fan engagement through non-fungible tokens (NFTs) and other joint initiatives. However, according to RacingNews365, the team did not comply with the clauses allowing Velas to create NFT imagery.
In November 2022, Mercedes also suffered a $15 million loss after suspending its partnership with FTX when the crypto exchange filed for Chapter 11 bankruptcy. Red Bull Racing’s partnership with the Tezos Foundation suffered a similar fate when the blockchain company reportedly decided not to renew its agreement, citing a misalignment of strategy.
Toto Wolff, Team Principal and CEO of the Mercedes-AMG Petronas F1 Team, warned that other teams could find themselves in a similar situation. However, the relationship between F1 and the crypto ecosystem goes beyond partnerships. In October 2022, Formula 1 submitted “F1” tokens when it unveiled plans to create an online marketplace for cryptocurrency, meta tokens, digital collectibles, crypto collectibles and NFTs.
Wave of Crypto Resistance
The decision to end the partnership with Velas might be part of the wave of crypto resistance in F1. After Mercedes cut off its ties with FTX a few months back following a major slump, Ferrari may have considered taking a similar step. It seems no team wants to be associated with the decreasing hold of crypto in the market.
The long-term deal announced at the end of 2021 has thus lasted only one season. Besides Velas, smartphone chip manufacturer Snapdragon has also fallen by the wayside. It has not been confirmed whether the breaking of deal has to do with the uncertain crypto market, but it would be a logical reason.
The landscape has changed significantly in the last twelve months, with cryptocurrency and blockchains losing their value at a substantial rate. Mercedes’ official crypto partner, FTX, filed for bankruptcy at the end of 2022 – serving as the most obvious example of the volatility and insecurity of cryptocurrency sponsors in Formula.
