Jun 15, 2022 - Business

Scoop: Only Gems brings trading cards to the crypto world

a graphic of trading cards
Graphic courtesy of Only Gems

Matt Mudano used to beg his mother to buy him Pokémon cards. Two decades later, he stands in a flood- and fireproof vault guarded with two layers of retinal-scan and heat-map technology — surrounded by half a million dollars' worth of trading cards.

Driving the news: Mudano's company Only Gems launched today, bringing old-school card trading to the world of cryptocurrency, non-fungible tokens (NFTs) and blockchain.

  • That vault in Tampa (he couldn't disclose the exact location) is expected to fill up with $3 million worth of trading cards in the next 90 days, stored there for Only Gems' customers.

The big picture: While the world of sports trading cards is dominated by crypto-averse older folks, a new generation is taking over the market.

  • And just as those seniors saw the value of their trading cards when they were kids, the younger ones see that value in NFTs.

How it works: Each card is graded by the Professional Sports Authenticator (PSA). Once certified, the card is backed by a NFT that Only Gems creates for its clients to sell the cards on their marketplace.

  • Once the card is sold, the new owner can choose to either keep it in the vault and receive the NFT, or have the physical card moved to another location and the NFT burned.
  • Only Gems also accepts other collectible cards like Pokémon, Yugioh and Magic: the Gathering.

The vaulting service is free, since Only Gems makes money from royalties attached to the NFTs.

  • Mudano and his co-founder Anthony Varrell will also pick up a card valued at $50,000 or more from any location and hand-deliver it to the vault.
  • For those worth less, it's up to sellers to get their cards to Tampa.

Of note: The vault will be audited twice a year by a third-party auditor to ensure its assets are valued correctly.

Details: Only Gems — which raised $900,000 in its seed investment round — is launching its own GemToken on the Ethereum blockchain that will be fully integrated into its platform to access future drops and raffles, and avoid platform fees by keeping a balance in your "wallet."

  • "Think of the Only Gems platform as a carnival and the gem coin like ride tickets," Mudano said. "Except the ride tickets is a cryptocurrency that can be bought and sold on an exchange for other crypto currencies."
  • The public sale of that coin will generate about $5 million of non-dilutive capital to use for growth initiatives, per Mudano.

If you didn't understand any of that: You can also pay by credit card.

But, but, but: While NFTs can be chaotic, Varrell assures skeptics that their NFTs can't lose value because they're backed by the value of the real-life cards.

  • He points to the chaos of the trading card world, where people conduct unverified sales on social media and pay high fees to sell through sites like eBay.
  • At trading conventions, millions of dollars in cards sit unguarded in hotel ballrooms and kids run around with stacks of $100 bills, Varrell and Mudano said.

What they're saying: "The liability and the risk you're taking to reach your consumer is crazy, that someone was willing to do that," Varrell told Axios. "You don't see that in any other marketplace."

  • Scott Braun, of the NHL and MLB networks, joined the company as a spokesperson. "As a collector of sports and Pokémon cards growing up tracking those cards through family moves and other nightmarish situations, when I was put in touch with Only Gems it felt meant to be," Braun said during a Twitter Spaces with Wolf Financial earlier this month,

Between the lines: While the name is similar to the infamous OnlyFans, the only thing they have in common is exclusive content.

  • Buying their "legend card" NFTs will unlock exclusive raffles, rewards and content for fan communities.
  • For example, if you buy one of 2,000 Chevy Chase legend cards, you'll get access to Q&As with the actor and a chance to win one of the 144 autographed pages of his personal "Caddyshack" script and 100 signed Bushwick Country Club flags and posters.
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