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Velas: From Formula 1 sponsor to crypto drama – what happened?
Velas, once a Formula 1 sponsor, is in financial difficulties. Ferrari ends partnerships with crypto sponsors.
Velas: From Formula 1 sponsor to crypto drama – what happened?
The Zug-based crypto start-up Velas, once a proud sponsor of Formula 1, is in deep financial difficulties. The price of the Velas cryptocurrency has fallen sharply, putting the company in a precarious position. Those responsible have already left Switzerland to possibly consider their next steps outside the country. Despite these adverse circumstances, Velas has successfully defended itself against bankruptcy, which represents a small ray of hope in the current crisis situation. Lucerne newspaper reports on the difficult situation of the company.
Amid this turmoil, Scuderia Ferrari has ended its $30 million-a-year partnership with Velas, which began in 2021. This decision comes as part of a major upheaval in Formula 1, in which Ferrari also ended its cooperation with technology partner Snapdragon. These losses add up to a total of $55 million ahead of the 2023 season. The original goals of the Velas partnership, which focused on increasing fan engagement through Non-Fungible Tokens (NFTs) and collaborative initiatives, could not be met due to Ferrari's non-compliance with the agreements that allowed Velas to create NFT images. Cointelegraph has covered the background of this partnership.
A shift in crypto engagement
The problems are not just limited to Velas. Team Mercedes-AMG Petronas suffered a loss of $15 million after terminating its partnership with FTX, which filed for bankruptcy. Red Bull Racing also ended its collaboration with the Tezos Foundation due to strategic differences. Toto Wolff, Mercedes team boss, warned of similar situations for other Formula 1 teams, which further increases the uncertainty in this area.
However, the relationship between Formula 1 and the crypto ecosystem goes beyond mere sponsorship contracts. In October 2022, Formula 1 filed trademark applications to create an online marketplace for cryptocurrencies, digital collectibles and NFTs. According to a report from Deloitte, the merging of real and digital worlds is predicted to accelerate, as well as growing markets for NFTs and immersive technologies. However, the lack of user-friendly platforms is seen as the biggest challenge to widespread adoption, making the future of these integrations uncertain.