Estimated read time: 7-8 minutes
PROVO — Jon Cheney understands much of the skepticism over NFTs and the Web3 marketplace.
Truthfully, last year when the co-founder and CEO of Lehi-based Ocavu set to launch the business with his co-founders, the marketplace wasn’t in a very good position. Heck, even earlier this year, the unregulated market was — at times — out of control.
If you thought the collegiate realm of name, image and likeness was the wild, wild west, just wait until you hear about blockchain, Web3 and non-fungible tokens (NFTs).
"If you look at the entire NFT marketplace, it was pretty bloody the last six months, even three months," Cheney said. "There’s no way a picture was worth $1,000, $10,000 or JPEGs worth $50 million. But they were going for it, because it was an NFT — and nobody knew what that was.
"But I saw that there’s a fundamental shift with the way we can interact with the world in the blockchain. It revolves around ownership and allowing the right people to get paid for the work they do, as opposed to a centralized social network making all the money."
It hardly seemed like a market ripe for BYU, a school owned and operated by The Church of Jesus Christ of Latter-day Saints. So when Cheney began talks with associate athletic director for corporate sponsorships Casey Stauffer and his team, the first thing they wanted to figure out was how to curb the highly speculative market and tame it into something that might appeal to BYU fans — and help launch Cougar athletes into the familiar territory of NIL.
Ten months since after that first meeting, the launch was deemed a success — or at least, enough of one to put out a beta website at cougsrise.com to begin buying, selling and exchanging NFTs in collaboration with Ocavu, the BYU athletic department and most of the BYU football team, as well as close to 200 athletes on campus.
"I was on there this morning and have bought nine so far," Stauffer said Tuesday during a press conference announcing the new initiative.
With each purchase of an NFT from the marketplace, Ocavu will receive an undisclosed portion of the proceeds, as well as BYU athletics and a separate agreements with each athlete via an individual NIL agreement.
So what exactly is an NFT? To borrow the phraseology used by Cheney, it’s essentially a digital trading card of a player, item, moment or highlight from the upcoming football season — the full unveiling is expected to be done in time for the season opener Sept. 3 at South Florida — as well as owned by BYU as part of the athletic department’s historical archive.
Some tokens, like a specially designed CougarTail maple bar redeemable for five of the famous desserts at various games and events on campus, will be redeemable for real-world gifts and experiences. A field pass to the home opener against Baylor, access to VIP loges and parking, and the chance to light off the BYU ROTC’s sideline cannon, George Q., after the Cougars score a touchdown were among the early benefits cited.
Previous iterations of the NFT marketplace have been less-than-lucrative for all but the heaviest investors in the new venture. Some companies, including a few partnering with college athletes, have set up shop haphazardly, launched ill-fated versions of NFTs to the public, and departed with thousands to millions of dollars raised — and very little for the players who partnered with them.
Cheney and Ocavu hope that isn’t the case at BYU. He’s a proud graduate of the university, and when the athletic department approached him about setting up the venture, he jumped at it — even at a heavy up-front cost.
Details of the five-year agreement weren’t available under a nondisclosure agreement between the sides. But Cheney candidly admitted that the company will be taking a necessary cut to cover its overhead production costs, including a roughly $2 million investment over the past 10 months to build, maintain and operate the marketplace. Additional NFTs won’t be cheap to create, either.
"It’s not a small number; it’s very expensive to develop," said Cheney, whose company has raised $11.4 million in three rounds of funding. "It’s not an easy technology to use, either, so we have to expensive group of developers, a huge number of design teams, coordination that has to happen with photo, video, athletic department, so many teams down to the bakery.
"But ultimately, I’m a BYU grad and when this opportunity came to me, I decided we were doing it. I didn’t care what it cost. Of course, we’re working as hard as we can to make sure we’re making money with it. But that’s not how I will judge it as successful. I will judge it successful if the players make money and the fans enjoy it."
Players sign a personalized NIL deal with Ocavu — non-NCAA teams like the Cougarettes’ dance company have already signed a team-wide deal, as well — and are automatically attached to highlights, photos or other tokens displayed in the marketplace that people can buy in limited quantities.
For each purchase, the athlete who opted into the deal will receive a share of the proceeds, in addition to BYU and Ocavu.
But the price of token won’t change in the marketplace; it’s a closed system designed exclusively by Ocave, with its own purse and collection that won’t transfer to other NFT platforms even.
Part of that is by design, as Cheney explained to KSL.com. The marketplace is built on its own engine, designed from the ground up, using horizontal architecture where each subsystem is independent of the next to improve security. Passwords are also stored in a proprietary system owned by Ocavu, to help improve security and try to prevent data breaches.
Cheney says try, of course, because he knows that security is only as tight as those who try to infiltrate the system. Nothing is perfect, but the co-founder of Ocavu believes his team has built a platform that is as resistant to breaching as any other.
BYU’s NFT marketplace won’t be completely immune to speculation — that’s the market at work, Cheney says. But it will be as contained as possible within the closed network.
"I think that you can’t avoid speculation," Cheney said. "It’s a free market, and that’s how we want it to be: just do what it does, instead of trying to force it any way. And you’re going to have (some speculation). But ultimately, the primary focus is a way for fans to support players in a way that isn’t possible through any other platform."
Stauffer added the platform is "as close as we can get" to avoiding the runs of speculation.
"It is a platform for buying and selling," he said, "but from a speculation standpoint, this is as close as we can get because our focus is on experiences and building — as opposed to just throwing stuff out there and hoping that it becomes really inflated."
The website went live Tuesday morning, and will be available to begin adding additional tokens with each BYU home football game. The hope, too, is to add other sports — the company is currently working on signing athletes from fall sports, including the popular women’s soccer and volleyball teams on campus.
Redshirt freshman kicker Cash Peterman envisions the project only getting bigger, too. Beyond the highlights and photos provided BYU’s in-house media team that will be sold as tokens on the marketplace, players can launch additional NFTs — and experiences to go with them — for sale among the BYU fanbase.
For example, instead of auctioning off a pair of game-worn cleats to fans, Peterman can work with an Ocavu designer to create a digital replica of his signed cleats and attach a special visit, hangout or clinic to go along with them.
"I think the sky’s the limit," said Peterman, a former Ocavu intern who helped the effort launch the effort among the team. "As much effort as we put into it, we’ll get out of it. If the players latch on like they already have in the locker room, they know that as soon as moments like Tyler Allgeier’s punch from last game will benefit him — but also the team, as well."
Early reports stated that the marketplace could earn as much as $200 million, which has been a number thrown out by previous NFT retailers that was rarely — if ever — accomplished. For obvious reasons, doubters balked at the notion.
Cheney wouldn’t back down from the assertion, though he admits the actual monetary value of the marketplace and how much each player will receive could be significantly lower. It all depends on how much each individual puts into it.
So no, he won’t back down from the notion; he’ll just add that caveat.
And one more, from BYU.
"However the players want to engage with the NFTs on this platform," Stauffer said, "they’re welcome to do that."
