Velas (VLX) has been in a strong downward trend in the past few months as the network lost traction among developers. On Wednesday, the VLX token was trading at $0.00719, down by over 82% from its highest point this year. It has retreated by almost 100% from its all-time high.
Velas Blockchain woes
VLX’s downfall has been sad, especially for a company that sponsored Ferrari, one of the most popular Formula 1 teams. While the sponsorship size was not made public, it is estimated to be millions of dollars.
Recent data shows Ferrari’s sponsorship revenue across 36 brands in the 2023 season was over $236 million. Its biggest sponsor is Santander, which replaced Velas’ sponsorship spot and is paying $60 million a year.
According to CoinMarketCap, the Velas token market capitalization is now worth just $18 million, down from an all-time high of $1.8 billion.
For starters, Velas is a blockchain company that aims to become a better substitute for popular chains like Ethereum, Solana, Avalanche, and Near Protocol. It is a carbon-neutral blockchain known for fast transaction speed and a low cost of just a $0.00001 transaction fee. Unlike Ethereum, it claims to be able to handle over 50,000 transactions per second.
Velas did not gain traction among developers despite its Formula 1 sponsorship. Data by DeFi Llama shows that it only attracted 14 DeFi developers, and its total value locked has dropped from over $50 million in 2021 to just $1.2 million. Its stablecoin market cap is just $7,000, while its 24-hour volume was $9. Meanwhile, newer blockchains like Sui and Sei have passed it.
Sports sponsorship in crypto
Velas’ performance raises concerns about the growing trend of sports sponsorship among blockchains. To some extent, many blockchain companies that spend a fortune on marketing do not have a bigger edge than those who don’t.
For instance, despite partnerships with Red Bull and Manchester United, Tezos, a blockchain network, has struggled to make an impact in the DeFi and Non-Fungible Token (NFT) space.
Perhaps the biggest spender is Crypto.com, which took over Staples Center and renamed it Crypto.com Arena. It is also one of the top sponsors in Formula 1.
While the company has attracted millions of companies, it is still a smaller brand than companies like Binance, Bybit, and OKX, which spend less. Bybit and OKX sponsor Red Bull and McLaren Racing, respectively.
