Building Better Fantasy Markets for Today’s Always-on Fan Culture
Eleanor Roosevelt once said that great minds discuss ideas, average minds discuss events and small minds discuss people. Odds are you are like me and you don’t let your interest in ideas stop you from also being highly interested in events and people. If your areas of interest fall under sports, politics or entertainment, there’s a decent chance you are pretty obsessive about them. The Internet has sharpened the intensity of fandom and enthusiast subcultures, with twenty four hour rumor mills and meticulous examinations of every event. You and I probably spend good chunks of our days making Eleanor Roosevelt weep. It’s time to take all this energy and gamify it in a way that recognizes the sophistication and intensity of modern fan culture.
Fan culture has escalated
I’m really into soccer and Formula One racing and I mean really deeply into them. I don’t just watch the games and races, I spend a lot of time following transfer rumors, injury updates, changes in corporate structure, etc. Even in the off season I spend almost as much time following these sports as I do during the active seasons. In fact, I am half-ashamed to say, thanks to the Internet, the actual sporting events only provide a scaffolding for the fan culture which drives my obsession. You could almost say people like me constantly study a field deeply and gain a lot of expertise in it. Yet, there is no way for us to act on this expertise that is commensurate with our levels of obsession.
It’s not just sports that’s missing something important. Before things got really wacky, I used to obsess over politics as well. If an important election or referendum were coming up, I’d be pretty immersed in the events leading up to it for months. For many elections, it wasn’t just the final results themselves that were interesting but all the milestones leading up to it. Many who followed the recent US presidential elections will readily confess to not just following the overall results but also the outcomes by state and the contests for hundreds of congressional seats. As events in the preceding months passed by, their impact on multiple candidates was studied, dissected and speculated upon. There’s as much obsession attached to politics and entertainment as there is to sports. There is a shift away from kayfabe thanks to the Internet and fans across domains demand more immediacy and involvement from the things they care about.
The incumbents have not kept up
Fan culture has been around for a long time and there are many incumbents that cater to it even if they don’t quite scratch the specific itch I am talking about. Sports betting is, of course, available throughout the world in slightly different forms but it doesn’t have a social aspect and is generally good for a few discrete actions per week at best. Many people also have moral compunctions against sports betting. Traditional fantasy sports such as Fantasy Premier League have a social aspect but are still highly static and have prices set by the organizers. More recent entrants into the space like daily fantasy providers DraftKings and FanDuel are more dynamic but constrain the number of types of actions fans can perform. They, too, suffer from moral and medical disapproval. To truly move with the times, fantasy sports need to move away from these static, discreet and episodic models.
Building better fantasy markets
I’ve always thought a market model works much better for fantasy sports. Players, teams, people, companies and entities are akin to stocks. Dividends or points are tied to outcomes like results, transfers, sales and the like. People can compete for either the overall value of their stock portfolio or points earned over some fixed period. People can also compete globally or in dedicated pools of their friends, family, coworkers and the like. Pick a domain and you can adapt the framework exactly to it and create a compelling fantasy market. But there are some essential properties that these markets need to have to truly fill unmet needs.
Fantasy markets should always be live. People track news, rumors, updates and scores around the clock and they should be able to update their beliefs accordingly. Collectively, when something big happens, the fan community should see the corresponding price impacts in real time. If the markets ever end up being liquid enough, prices could sway in real time as a game or a debate unfolds live before millions of people. Users should therefore be able to continuously act on their holdings, in concert with all the existing acts of fandom that they already perform, e.g. listening to podcasts, going through tweets and arguing around the watercooler. In fact, market prices should be constant parts of ongoing conversations as events are discussed in conjunction with their market impacts, as is the case with conventional markets.
Fantasy markets should span seasons or, in other words, run with an indefinite horizon. The current Formula One season isn’t even over yet but the silly season is in full effect and motorsport fans are going a bit nuts right now figuring out whether Red Bull will stick with Alex Albon or replace him with Checo Perez or whether George Russell will replace Valtteri Bottas in one of the coveted Mercedes seats. On the business side, there’s some speculation that the dominant Mercedes team might pull out of the sport. All these speculations are meaningful to a lot of people and they would love to track their communities’ sentiments as these stories develop and progress even though there won’t be any official outcomes affected for months to come. People don’t just obsess over the short term and they should therefore be allowed to engage with medium term and long term affairs.
As I said before, actual games in sports only offer a scaffolding for the overall structure of my obsessive interest. I suspect many people are the same way. Sure, the results of the recent presidential elections were very important, but all the intervening moments were dissected to absurd lengths. To reflect this, fantasy markets should be based on more than actual games and the dividends / points should be given out for all kinds of ancillary events the community obsesses over. For soccer, this means handing out points by transfer amounts. For elections, there could be points for debate performance or primary results. This has the added advantage of keeping interest in weekly and monthly points leaderboards in order to amortize interest through the entire duration of seasons or events.
If you buy everything I have said so far, you should not be surprised to read that I think it’s important for fantasy markets to support derivatives. Think there’s a chance a recently-retired player might make a quick comeback? Buy an option. Think female Republicans might do well in the upcoming elections? Create a basket and sell it at a premium. Want to sell a team but not just yet? Sell a future. If actively engaged communities take to fantasy markets, they will want to adopt more ‘macro’ positions on types of entities clustered by qualitative or quantitative features. Similarly, people with fine-grained and subtle outlooks in the domains of their interest will want to take positions that reflect the nuances in their thought. Like any mature and well-developed market, successful fantasy markets will organically create a need for fantasy derivatives.
In the next section, I’ll talk about why it makes sense to build these markets on blockchains. If you are ideologically opposed to blockchains or just uninterested, skip to the end.
Stick it on a blockchain!
The recent early successes of DeFi have shown the value of permissionless innovation with markets and synthetic assets. Adopting a decentralized, blockchain-based approach instead of a centralized database-oriented one could bring the same energy and creativity to fantasy markets. Each fantasy market can introduce numerous, highly-active synthetic tokens corresponding to teams, players, etc to the blockchain, which others can then build on top of them to create innovative new applications. Just the market data itself being open and live on chain opens up numerous possibilities for visualization, data analysis and sentiment mining. Once there are numerical signals attached to community sentiment, perhaps more innovative ways to tap this sentiment can be found. By the way, composable contracts are the ideal framework for building fantasy markets!
The openness of this blockchain based approach also increases the possibilities for anonymity and privacy. When I talk about always-on markets and feeding peoples’ obsessions, it’s really easy to imagine yet another dystopian Silicon Valley project where people’s natural interests are exploited to keep them on the dopamine cycle as yet more facets of their personalities are mined and traded. However, blockchain-based consumer applications could make it possible to invert the usual business model, where users pay for the resources used by the app with a cryptocurrency. Since there is no centralized party subsidizing the operations by trading free access for personal data, the economic incentives sway strongly in favor of privacy and data ownership by individual users.
Taking it one step further, DAOs lend themselves nicely to managing fantasy markets. While a lot of real life events are pretty objective, there can be a significant amount of subjectivity for things like sporting transfers or outcomes in entertainment and politics. There are also governance issues around the types of instruments, especially derivatives, that should be added to particular markets. Markets could have meta-DAOs to decide which sub-markets to create or retire. As these markets are built around fan cultures and are community driven to a large degree, direct community participation in the governance of markets might increase engagement from the users. In certain cases, some legal and regulatory issues around fantasy markets can also be eased using DAOs and meta-DAOs.
Wrapping Up
I’ve long believed that always-on sophisticated fantasy markets fulfill a great unmet need for obsessives of all types. The increased use of social media and the increased intimacy between everyday fans and teams, players, politicians and journalists have made this unmet need even more acute. At this point, I don’t even care who builds it. I just want to see it working in all its glory for the things I enjoy. I hope some of the readers here feel the same way and some might even go on to build some proofs of concepts or go all out and build a fully fledged fantasy market. If I am right about the urgency of this need, most likely someone who hasn’t even read this piece will go on to build something that I will like having in my life very much. Apologies to Eleanor Roosevelt!
