Bringing Sports Markets to Blockchains Using Smart Contracts and Chainlink Oracles
The sports industry is on track to surpass $600 billion in value by 2022. One of the emerging trends for the sector is sports markets running on top of blockchains using hybrid smart contracts—tamper-proof blockchain applications that automate processes using traditional API data. These hybrid smart contracts bring many new opportunities to athletes, teams, leagues, and fans from around the world. Most notably, athletes, leagues, and teams can better monetize their time, memorabilia, and rewards programs while fans can create and access both worldwide and customized local sports markets that are provably fair, globally accessible, and efficiently settled.
In this blog, we showcase the many sports applications possible through hybrid smart contracts, as well as how traditional API providers are using Chainlink oracles to access and sell data in these new blockchain-based sports markets.
The Benefits of Blockchain Technology and Smart Contracts for the Sports Industry
Blockchains can track the ownership of various digital assets in an immutable ledger. These digital assets—fungible or non-fungible tokens (NFTs)—can represent ownership of many types of assets, such as cryptocurrency, physical memorabilia, digital fan rewards, or even tokenized equity in a player’s career earnings.
Developers can use smart contracts to assign rights to tokens, as well as write specific logic that must be satisfied before these digital assets are transferred on the blockchain. For example, a fan reward token can give the holder special access to an athlete’s VIP community. Additionally, a smart contract can hold both Alice and Bob’s assets in escrow, where the release of these assets is dependent on the following logic: if sports team A wins, pay Alice; if sports team B wins, pay Bob.
Smart contracts can substantially expand the reach of existing sports markets while introducing completely novel value streams for the sports industry such as being able to easily launch your own market. Some of the initial use cases include:
- Prediction Markets — smart contracts can represent various two-sided prediction markets where users take positions on different sports-related outcomes with or without odds. Sports data from global or local leagues can be used to settle prediction markets based on match results, individual player stats, team standings, the coin toss, etc.
- Sports Collectibles — blockchain ledgers can track limited-edition digital or physical memorabilia to verify provenance, document ownership, and note any upgrades. For example, NBA Top Shot has tokenized popular digital NBA highlights, which users can purchase knowing that they have sole ownership over the original moment.
- Blockchain Gaming — fantasy sports and trading card games can be facilitated through smart contracts, creating tamper-proof rules where winners and card values are determined by sports data feeds regarding match outcomes and record player statistics.
- Fan Rewards — athletes or sports teams can issue fan rewards as NFTs when certain milestones are achieved, giving holders exclusive access to limited edition memorabilia, special backstage privileges, or even one-on-one time with a famous athlete.
- Career/Team Investment — athletes or whole sports teams can tokenize equity ownership of their career prize money or team revenue, giving them access to immediate working capital while allowing holders to earn a portion of future profits.
- Benchmark Trading — sports memorabilia can be traded on-chain as synthetic assets priced against trusted benchmarks, driving better price discovery of rare assets.
- Parametric Insurance — new forms of smart-contract based parametric insurance can be created around the risk of event cancellations, providing sports teams, organizers, and fans the ability to hedge against unforeseen situations.
- Game Ticketing — high-demand events can use verifiable randomness to fairly distribute tickets, where not even the event organizers have special access.
Bringing Sports Data On-Chain With Chainlink Oracles
For the sports industry to realize the benefits of blockchains and smart contracts, they require external data feeds to verify the outcomes of real-world events. However, blockchains are isolated networks, meaning they do not generate sports data nor do they have built-in capabilities to call external APIs. This real-world connectivity issue is commonly referred to as the blockchain oracle problem.
Bridging external APIs and blockchain environments requires the use of secure blockchain middleware known as a decentralized oracle network (DON). DONs are used to fetch data for smart contracts, validate data correctness, and deliver it into the blockchain so the smart contract can consume it. DONs can also perform various computations for the smart contract that are not possible on-chain, such as achieving scalability, generating privacy, and connecting the smart contract to off-chain settlement networks. Importantly, DONs perform these functions in a highly secure and reliable manner, ultimately enabling automation thanks to end-to-end decentralization of the smart contract.
Chainlink is the most widely used and fully functional decentralized oracle network, providing smart contracts access to external data feeds and off-chain computations. Chainlink offers a suite of decentralized services that already secure tens of billions of dollars for smart contract applications. Chainlink is also blockchain and API agnostic, meaning it can make any API available to any blockchain or layer-2 solution.
Chainlink currently empowers smart contract developers by bridging critical sports information on-chain from premium data providers, including:
- TheRundown — Offers real-time odds, scores, statistics, and insights into the sports industry.
- SportsMonks — Provides odds, statistics, and match results for soccer, F1 racing, and cricket.
- SportsDataIO — Gives game scores, player statistics, pregame futures, trivia, and more for several sports leagues.
- Bookmaker Ratings — Supplies sports odds and match results for soccer, ice hockey, basketball, and many other major sports.
Developers can leverage the Chainlink documentation to use these data feeds in their applications, as well as combine these sources to create multi-source data feeds. These Chainlink-powered data feeds enable many on-chain functions like settling prediction markets, determining the value of trading cards, triggering the distribution of fan rewards, pricing sports memorabilia on-chain, and much more.
Developers can also use Chainlink VRF (Verifiable Random Function) to access a tamper-proof source of randomness on-chain, which users can verify is provably fair and unbiased. Using Chainlink VRF, smart contracts can support many applications dependent on randomness, like distributing fan giveaways with predefined odds or selecting ticket recipients from sold-out queues. Developers can also leverage other Chainlink services, such as Chainlink Price Feeds to support multi-currency payment solutions, weather data to process insurance claims, or player revenue data to automate dividend payouts to equity token holders.
As the blockchain industry grows, decentralized applications will need an increasing amount of real-world data on-chain to provide users with the functionality, experience, and products they are accustomed to in the Web 2.0 space—but with the added benefits of tamper-proof and reliable decentralized infrastructure. Existing data providers can take advantage of this opportunity to expand their addressable market by simply selling their data on-chain through the Chainlink Network. Chainlink provides a seamless experience for data providers, abstracting away the technical complexity of blockchain integration and minimizing modifications to existing API infrastructure.
If you’re a smart contract developer and want to start using Chainlink to build on-chain sports markets, visit the official Chainlink developer documentation, join the technical discussion on Discord, and/or reach out to us here.
If you are an existing data provider and you want to sell data on blockchains using Chainlink, visit: https://chain.link/ecosystem/data-providers.