How a $2 trillion crypto crash is affecting the Warriors

It’s a “crown jewel,” the Golden State Warriors wrote last month. A truly one-of-one item “paired with priceless utilities and once-in-a-lifetime benefits … sure to shatter [bidding] records” due to anticipated “high demand.”

The Dubs weren’t selling off a signed Wilt Chamberlain jersey or even an opportunity to personally meet any one of the team’s stars. Nope: their April 2022 press release was referring to an NFT.

As it turns out, there hasn’t been significant interest in the advertised “crown jewel.” Just a handful of weeks later, the one-of-a-kind NFT’s value has already plummeted. The rest of the Warriors’ NFT rollout doesn’t seem to have gone much better — a far cry from the team’s first foray into the world of crypto, and the latest example of how a nearly $2 trillion cryptocurrency market collapse has caused digital currencies to either lose their respective values significantor almost entirely

The Warriors first entered the crypto space a full year ago in April 2021. They released a line of NFTs (non-fungible tokens), which are essentially receipts of ownership for digital items. The items celebrated famous periods of the franchise’s history via digital tickets, digital championship rings and digital banners from different eras. Die-hard fans could purchase digital relics from the 1956 title-winning team, or the 2007 We Believe Warriors, or any one of the championships in the Steve Kerr era.

Pro sports and NFTs had already collided by the time the Warriors dove into crypto; well-known athletes were already changing social media profile pictures to avatars of colorful monkeyseight-bit faces and other strange, apparently exclusive, cartoon digital artwork† The NBA had turned player highlights into collectible NFTs as well.

But Golden State was the first American pro sports team to launch an NFT collection, as breathless articles doubling as press releases reiterated. The Dubs collection was celebrated as a momentous event that came at the perfect time: Ethereum (the world’s second-largest cryptocurrency) was on its way to an all-time-high valuation, and interest in crypto was on its way up as well. Warriors chief revenue officer Brandon Schneider was bullish on the future of the NFTs market.

“This is just the beginning and NFTs, it’s not a flash in the pan. … We think you’re going to see a ton more applications for this moving forward in terms of what we’re going to do,” he told in 2021.

The 2021 drop’s rarest item, a “1-of-1 World Championship Ring NFT” that combined all six franchise titles into one single design, soon sold for 285.1111ETH, or $967,727.78, according to ether scan‘s calculated value of Ethereum on the day of sale.

A dip in Ethereum value in June 2021 — due to a combination of extremely online billionaire Elon Musk saying Tesla would no longer accept Bitcoin (hey later walked back his decision) and stricter Chinese regulations against cryptocurrency — didn’t really vaporize enthusiasm or expectations for the NFT market. Nor did it seem endless headlines showing the many ways that the unregulated market behind NFTs is rife with scams and crimes that harm unsuspecting investors/enthusiasts.

“In general, crypto and NFTs are a get-rich-quick scheme, and I’m not saying that even pejoratively. People have seen astronomic gains in some cases,” Jacob Silverman, a journalist who is writing a book on cryptocurrency and fraud, told SFGATE. “The appeal for sellers and for companies, or for a sports team, is that this seems like an easy revenue stream.”

Fans walk outside of the Chase Center before Game 3 of an NBA basketball second-round playoff series between the Golden State Warriors and the Memphis Grizzlies in San Francisco, Saturday, May 7, 2022.

Fans walk outside of the Chase Center before Game 3 of an NBA basketball second-round playoff series between the Golden State Warriors and the Memphis Grizzlies in San Francisco, Saturday, May 7, 2022.

Jeff Chiu/AP

So in April 2022, the Warriors returned for round two of NFT drops† The focus of this series was on the future, rather than the past. The value of the new NFTs was supposed to be connected, in part, to how the Warriors do this postseason. NFT buyers receive “additional utilities and benefits” for every round the team advances. This includes coveted fan prizes, like autographed jerseys and a seat on a championship parade float (plus more NFTs).

There was an additional twist to the second drop: buyers didn’t have to put their money into crypto to purchase almost any of the 2,999 minted NFTs, each originally valued at $499.99. The lone exception to the rule was the aforementioned prized jewel of the collection, a one-of-one NFT called a “Gold Bar All Access Pass,” only available through Ethereum bid. In addition to the NFT, the winning bidder is supposed to receive a physical gold bar (which we estimated is worth about $9,800) and two tickets to every Warriors playoff game.

But it’s safe to say Warriors fans are not dying to acquire the team’s 2022 one-of-one NFT. The highest bid on the item ended up at 10 Ethereum, valued at the time of the bid at $30,287.70, now valued at $19,638.80 after the latest crypto dip. That’s 3.5% of what the 2021 one-of-one item sold for (285.1111 Ethereum, or $967,727.78, now worth $559,356.62). It’s also not even close to the 25 Ethereum buy-now price the Warriors set, and hardly “shattering records,” as the team predicted. The physical gold bar itself that’s included with the NFT is worth, as far as we can tell, about half of the total value of the one-of-one package.

And interestingly enough, the special one-of-one NFT now belongs to the wallet of a user who has 115 NFTs to their name, 113 of which are part of the FTX US NFT collection. These include multiple FTX US Hoodies, FTX US Socks, Forbes Virtual Billionaires, and an NFT that allows its owner to set up an in-person lunch, or 30-minute Zoom call, with FTX’s CEO, Sam Bankman-Fried.

As for the rest of the nearly 3,000 NFTs originally valued at $499.99 apiece? Things aren’t going much better. A glance at the lower end of the sale offers on the team’s 2022 Playoff NFT Collection page shows that at least 49 NFTs are already being resold at “buy now” prices below the value they were purchased for just a month ago. Thousands of other NFTs on the page have been made available for bidding without the option to “buy now,” but only two have received actual bids, and neither are serious. For instance, after selling for $499.99 on April 15, a GSW 2015 Championship Ring #18 NFT’s highest bid sits at $21.00, placed on May 11.

SFGATE reached out to a Warriors spokesperson with a variety of clarifying questions about the NFT drop, but the Warriors replied via email that they “do not disclose financial information.” They also declined to confirm our best estimate of how much the physical gold bar in the one-of-one package is worth. Here’s what they did offer up: “Our April NFT Drop was the second-largest grossing drop in North American team sports history, with our 2021 Legacy Drop being the first, by the way.”

Lumping in the success of the Dubs’ 2021 NFTs line with this year’s seemingly far less successful line is like comparing Golden State to the Sacramento Kings. In fairness, the Warriors aren’t the only sports entity to experience a notable decline in NFT interest. Manchester United midfielder and French football star Paul Pogba created a partnership with an NFT called Cryptodragons that sold for as much as 35 Ethereum, or $160,000, back in November, but recent sales have seen its value plummet 99.9%† The Warriors don’t appear to be doing that poorly, but the obvious question remains: How long are they going to posture as though their crypto endeavor is still going swimmingly?

“A lot of the irrational enthusiasm has exited the industry,” Silverman told SFGATE. “I think more and more companies will see NFT projects start out generating some excitement or raising some initial funds, and then the next time they try to go back to their customers or their fans to sell to them again, there’s far less interest. I think that’s what’s happening with the Warriors.”

Silverman pointed to a swath of everyday people leaving the crypto space because they’ve been burned, as well as macroeconomic deterrents like rising interest as crypto has declined. In his eyes, a long-term rebound isn’t likely, and there’s simply not enough interest to maintain the prices that made headlines just a year ago.

The Warriors may have tried to dress up this NFT drop with bells and whistles like fan experiences and additional perks. But the reality is that most of its utility, like that of any other NFT, is in speculation. With that being the case, it’s reliant on crypto markets, and with those markets in the toilet, its value has gone down accordingly.

Nicholas Weaver, a senior staff researcher at the International Computer Science Institute and lecturer in the computer science department at UC Berkeley, has studied cryptocurrency for years and shares a similar viewpoint as Silverman.

“Inherently, the entire space is a self-assembled Ponzi scheme with a real world value of $0,” he wrote via email. “Every dollar ‘made’ is at the expense of someone else, and then there are aspects of the system that turn it into deeply negative. I think in the end there will be no more recovery, because it requires a new batch of suckers, suckers who are not a renewable resource.”

And Weaver is equally pessimistic about the Warriors’ attempt at offering a friendly NFT alternative through purchases in US dollars instead of crypto.

“NFTs are really, at best, digital baseball cards,” Weaver said. “The only reason they are so hyped is because of the current overall cryptocurrency hype. When that goes away, so goes the NFT ‘market.’”

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