In the last couple of days, I’ve seen various tweets again indicating yet more discontent amongst the community. We’re one month on from Nicolas’ rousing “no BS” post on X/Twitter which sparked an element of positivity back into the atmosphere, but as quickly as it comes it can go. It can sometimes feel like one step forward, two steps back.
I’ve referenced before about how we, as humans today, are instant gratification-seeking, and how one month in the world of Sorare can feel like a long time. Users expect same/next-day delivery when they order products online, instant score updates and notifications of decisive actions, and ultimately instant improvement and changes to the platform we so dearly love. Some things can be done quickly, others cannot. We need to give the Sorare team time to make the necessary changes and adjustments. Rome wasn’t built in a day.
However, Ruv’s recent X/Twitter post is quite telling, over 50% saying they don’t plan to invest further in the next six months. Albeit only 1,400 responses, but I’d hazard a guess that it’s a fairly accurate view across a broad range of active users on the platform. SorareDelBoy’s thread is an interesting read along with the comments from various users as to why things are the way they are. I tend to agree on the too niche and too complicated angles.
But today, let’s talk about the secondary market. More precisely, trading volumes. After all, it was one of the main points from Nicolas’ tweet:
Stimulating vs Stifling Activity
Here we see the average trading volumes ($) per month on the secondary market (all sports). We can start to see some level of seasonality trend, spiking in July/August and Jan/Feb each year, however a pinch of salt advised here as so many other factors could be impacting this — ETH/USD price, new sports, new leagues onboarded etc.
It’s interesting to compare this to primary market volumes over the same time period. Notice we don’t see the same seasonality, and that November has been the best performing month for Sorare on this front since February 2023 (English Premier League launch).
Regardless of that, we see November 2023 has been the lowest average secondary volume in two years.
For me, this is the largest area of discontent for users, there is simply less money to go around. As a result, there is less cash circulating and too much stagnation setting in. Sorare should aim to be stimulating activity, not stifling it.
If we layer on top user growth during this time, users on average now earn only 5–6% of what they used to get two years ago (from $18 to <$1 per month per 1+ card owner, if we consider 10+ card owners as “active” it goes from $47 to $2.60 per month). Data extrapolated from soraredata.com
I’d love to know how much of the overall volume involves the market-makers and bots — Pawel, Basilbot, Sir Hiss, Ruv and co. Whatever percentage it is, it’s certainly a disproportionately large figure for a very small handful of users.
List-or-play, secondary fees, collection bonuses are all contributing factors to these trends we see, however in actual fact they may be doing more harm than good when everything else is equal. I’m not saying to remove them, they are necessary measures each with their own benefits, however other changes to the product and model are required to complement them.
So what can be done to instill trust and spending again from users? We’ve all heard the macro-economic reasons as to why users are investing less and growth may not be where Sorare want it to be. But if Sorare was still considered as having a positive opportunity cost (this can be financially or otherwise: fun, enjoyment, experiential factors) — then the money and users would still be coming in.
Burn, baby, burn?
Burning has been mentioned by many before with seemingly a lot of conflicting viewpoints. Admittedly I’ve never given the concept a lot of time or thought, but I’d like to consider it now. Primarily, it’s a deflationary measure, but the goal would be to stimulate the market and start a healthy circulation of money and cards again.
The average price level of limited football cards has fallen by 66% so far in 2023. That sounds alarming, but the rare scarcity has actually seen a slightly larger drop at 73%. Super rare “only” at a 50% drop, likely due to the introduction of thresholds at this level — which could also be a contributing factor to Rare falling further, as some users aim to graduate up scarcity.
Limiteds, due to their later introduction, today make up about 80% of all football cards minted. This will gradually climb each year towards the 1000/1111 figure of 90% if minting rates remain consistent.
About 2.2m new limited football cards and 390k rare football cards will have surfaced in 2023. That’s a lot of cards versus active users. The above data is gathered from Soraretools.com.
So how could burning work?
I haven’t gone deep into valuations of various tiers here so a more scientific approach is required to set the right levels, but as a starter, here’s an example below. The card you would be awarded would be taken from the primary market allocation and based on the week’s prize pools of what tier a certain card is in. It would be a random draw, anywhere from the “best” to the “worst” of that specific tier. You could go further and specify that if you are burning a collection from La Liga for example, the card you would receive would come from La Liga (potentially to adhere to any league agreements), however going down to the club level would likely not be feasible due to the low number of T1/T0s potentially available.
Again, take the below numbers with a pinch of salt — likely some adjustments required.
Benefits
In a sentence, I’d say it contributes to 1. stimulating and 2. stabilising the in-game economy.
In some more detailed bullet-point form:
- Winning T3-T5 rewards becomes more valuable as users can see a use for them. Knock-on effect to both primary and secondary market activity. There’s an element of “progression” here too, where a user might see value in winning multiple T4/T5 rewards over a few months.
- Removal of cards from ecosystem, addressing supply, while allowing Sorare to control minting rate via auction and instant-buy. (Currently, the limited rate is at about 44% of total potential supply — Sorare has plenty of wiggle room here).
- Stimulates the secondary market as users look to trade towards fuller collections to burn.
- Encourages progression up scarcities.
- Gives old season cards some level of value, where numerous competitions today are focused around the need for new season cards.
- Could reduce seasonality as users may see opportunities to collect during off-season.
- Allows for distribution of DNP, injured players (announced by Sorare last week) and off season cards.
- Gives users strategic decisions to make, large collections come with strong collection bonuses which can be vital, but is that upgraded scarcity piece potentially a better option? It gives more power to the user to “own their club” — I know Sorare likes to compare the product to being the owner/manager of a football club.
The argument against
Sure, off the bat you’ll have opportunists — users spotting opportunities where collections are cheap to build. Fair play to them for being the fastest off the mark. But this will quickly become naturally regulated by the market.
Of course, there is a risk involved here too and some users may be left disappointed with the card they receive in return for burning a whole collection. This can of course lead to a poor user experience, but is it any worse than the current bitter taste users currently have with rewards today? Perhaps offering two cards as options on-screen that the user can choose from would help significantly to address this. For the burning mechanism to work effectively, a portion of users should feel like they are “winning” or “beating the system”.
One other drawback I see is if the average price levels rise, it raises the barrier to entry for new users. But, the barrier to entry has been low enough for long enough now and it hasn’t really had the desired effect thus far. Plus, a stable and/or upwards trending market appeals a lot more than a downwards trending one.
But if Sorare take these cards from their auction supply, they’re just losing money, right? Why would they do this? Well it’s a risk for sure, but as previously mentioned they’re only at 44% of potential supply today. This allows for significant headroom at auction, instant-buy and reward (prizepool expansion) level. And remember, a circulating economy is far better than a stagnant economy. This complements the other deflationary measures Sorare have put in place up to this point. (remember — deflationary is good — we can get more ETH/$ for our cards).
Finally, clubs and/or leagues may not warm to the idea of their player cards being “burnt” at the expense of users receiving other clubs/leagues cards in their place. But at the end of the day, it’s a business, right? As far as we understand, clubs/leagues earn a revenue share on their cards sold and so if there is more demand for those cards, even if they are to be burnt, it’s good business.
Very keen to hear other user’s thoughts on this, like I say, I hadn’t given it much attention to this point but I am warming to the idea. What other pros or cons do you see?
