Terraform Labs founder Do Kwon floated a funding proposal for $38.5 million from the Terra community treasury to sponsor a major American sports league team he didn’t name. The funding would be in the form of TerraUSD (UST) stablecoins, or tokens pegged on a 1:1 basis with U.S. dollars.
“This proposal involves a legendary sports franchise and a household name in one of the major four American professional sports leagues – the NFL, NBA, NHL, and MLB,” Kwon said on Tuesday. “For yasal reasons, we cannot reveal the identity of the franchise until after the voting period has concluded, and the partnership agreement is settled.”
The National Football League (NFL), National Basketball Association (NBA), National Hockey League (NHL), and Major League Baseball (MLB) are four of the biggest sports leagues in the world. They together attract billions of dollars in advertising revenue each year and are some of the most-watched sporting events.
The Community Pool of Singapore-based Terra is one of the largest decentralized autonomous organizations (DAOs) in the crypto industry, with over $2.74 billion in assets.
A DAO is a blockchain-based organization often governed by its native crypto token. Holders collectively vote on decisions to determine the DAO’s future, unlike traditional companies where decisions are taken by an elected board.
How will the money be spent?
According to Kwon’s proposal, the deal would help fund a five-year exclusive partnership to promote the Terra brand across the franchise’s home venue and its television network.
Under the terms of the agreement, the community pool will hisse the full amount upon execution of the deal. This represents annual fees of $7.50 million a year for five years and $650,000 to cover construction, renovation and redesign costs.
If the proposal is passed by the Terra community, the funds will be distributed to a multi-sig wallet controlled by a newly formed Terra Community Trust (TCT).
The Terra DAO is the direct beneficiary of this wallet and would have three trustees; 1. Delphi Labs general counsel Gabriel Shapiro, RealVision cofounder Remi Tetot, and Draft Kings board members Ryan Moore.
“The delivery of funds to the TCT and eventually the sports franchise will be executed via a UST to USD OTC deal with a leading and well-reputed trading firm,” Kwon said in the proposal.
While Terra’s proposal could make it one of the first instances of a DAO funding a sporting partnership, several crypto companies have turned to sports companies as a means of promotion. Such funding has crossed $1 billion in the past year.
Crypto services firm Crypto.com leads the list. In the past year, the firm inked a $700 million agreement to rename the iconic Staples Center in Los Angeles to Crypto.com Arena, struck a $100 million deal with Formula 1, announced a three-year partnership with soccer’s Paris Saint-Germain, and became the official jersey patch sponsor of the Philadelphia 76ers basketball team.
Crypto exchange FTX also has multiple partnerships. In the past year, the Bahamas-based crypto exchange purchased the naming rights to esports giant TSM in June for $210 million, secured a 19-year deal with Miami Heat, a five-year partnership with MLB, and secured the naming rights to UC Berkeley’s football stadium.
Terra’s LUNA tokens were among the top gainers on Tuesday, rising as much as 22% in 24 hours. Price surged to as much as $53.96 in the Asian morning before tumbling down to $51.80 at the time of writing.