Following the NFT boom, brands from different industries have started shifting their focus towards digital innovations geared at engaging their supporters in the form of fan tokens.
The sports industry is not left out of this new venture. Many sports teams are already exploring unique collectibles and digital products they can offer to their fans by leveraging cryptocurrency and blockchain technology.
Today, sports fan tokens are making waves and their popularity is increasing at a breakneck pace, which leaves many to wonder “what are sports fan tokens used for?”
This guide provides a clear and concise overview of what sports tokens are, how they work, what benefits holders stand to get, how to purchase them, and what the future holds.
What are Sports Fan Tokens?
Sports fan tokens are a type of cryptocurrency tokens that give holders access to various fan-related membership benefits made available by a particular sports club, mainly in the field of football/soccer.
Fan tokens are different from conventional crypto assets like Bitcoin and Ethereum because they do not serve the same financial purposes, as a means of payment or as a store of value. They are typically used as part of a sports club and designed to be more of a fun, rewards-based token.
Sports fan tokens can be used to create different opportunities for bringing fans closer to their favorite sports stars, including organizing fun experiences such as meet-and-greets and many more.
The concept of fan tokens is the brainwork of blockchain fintech provider for sports and entertainment, Chiliz. The firm is currently the largest and most popular fan token platform in the world.
Chiliz is also the owner of Socios, an entertainment platform that allows fans to engage and interact with their favorite sports teams.
The company has partnered with several top sports clubs to help them launch fan tokens. Usually, before these tokens are officially listed on crypto exchanges such as Binance, the clubs host a Fan Token Offering (FTO), which is a period where prices of the tokens are set and made available to fans at a cheaper rate. FTOs are just like IDOs and IEOs, but for sports teams that want to launch a fan token.
Partner clubs also use the Socios platform to increase the global reach of their brands while creating additional streams of revenue.
Currently, several other exchanges, both centralized and decentralized, including Binance, have joined the fan token indusry. However, Chiliz remains the most significant player in this field, at least for now.
How Do Fan Tokens Work? What affects their price?
Sports fan tokens are usually traded like other cryptocurrencies. Their prices are generally determined by the basic law of supply and demand (how many units are available in circulation vs. how much people are interested in buying them), alongside other fundamentals like positive news and development.
They are typically purchased from crypto trading platforms that offer them or the sports clubs that issue them.
As soon as the holders gain access to a standard amount of fan tokens, they are immediately granted full access to several offers and benefits attached to their favorite clubs, including the clubs’ merch design, the right to vote on certain decisions, and many more.
The benefits provided by the sports fan tokens allow fans to feel more motivated and involved in the club they already support, adding an extra level of prestige and pride, which will help boost the growth of the club and the price of the fan tokens.
Sports fan tokens build an exclusive community of dedicated sports fans from across the globe. The more fan tokens a user holds, the more opportunities will be opened to them, showing more loyalty to their favorite sports clubs.
Additionally, sports tokens give holders the chance to win special prizes, including a one-on-one meet-and-greet with their favorite sports stars, VIP tours, and many other benefits.
Fan Tokens Vs NFTs: What is the Difference?
Some have argued that fan tokens are similar to non-fungible tokens, possessing similar characteristics. In a sense, they are identical since they are built on the blockchain, but they have some key differences.
First, unlike NFTs, which are unique digital collectibles that are non-fungible, non-divisible, and give holders digital ownership rights. On the other hand, fan tokens are fungible, divisible, and interchangeable.
This means that fan tokens, just like fiat and physical cash, can easily be exchanged for any available products or services provided by the entities that issued them, in this case, sports clubs.
One fan token can be exchanged for another without any difference and used to gain access to sports club merchandise, different fan perks, including VIP experience, and more.
They help holders build an identity, gathering millions of people from different parts of the world in a close-knit community of sports lovers.
Second, fan tokens are not necessarily backed by the underlying value principles of any existing cryptocurrency, such as Bitcoin or Ethereum.
Their value is usually determined by the number of people that want them and how the fans value their unique access to participate in the club and receive other benefits.
Therefore, if the demand for these fan tokens increases, their prices will simultaneously increase. On the other hand, if the demand declines, the price drops.
Although a team that has issued their fan tokens can also mint NFTs, it is important to note that fan tokens are simply fungible utility tokens.
Depending on the design of the fan token and the entity that issued it, some fan tokens allow holders to collect certain club-related NFTs using them.
Benefits Fans Gain from Team-Based Fan Tokens
Sports fan tokens are designed to provide team fans with several benefits geared toward improving interaction and the relationship between a sports club and its supporters from around the globe.
Here are some of the benefits that fans receive from sports fan tokens:
- Involvement in Certain Club Decisions
The fan tokens issued by some of these top sports clubs allow their supporters to become actively involved in some of the decisions that will affect the club’s growth.
Holders of the club’s fan tokens can vote on those decisions via the governance mechanism. Some of the decisions may include choosing the team’s jersey designs, the merchandise a team offers, players’ taking part on a match, charity events and matches that the team holds, and many other team-related issues.
- VIP Rewards
Fans can show their support for their favorite teams by purchasing the fan tokens they issue. Some of these tokens allow fans to unlock several VIP or exclusive experiences with the sports club.
Fans can unlock exclusive experiences such as luxury box seats at a club’s game, an invitation to certain special events, meet and greet with the team or any of their favorite players, and more exclusive perks.
A fan’s chances of getting access to these exclusive benefits depend on the number of tokens they have in their portfolio; the more tokens they have, the more opportunities to get VIP benefits.
- Access to Exclusive Club Memorabilia
Sports fan token holders gain access to the clubs’ exclusive memorabilia, which they can purchase using the fan tokens they have in their wallet.
Clubs can decide to mint unique and limited edition NFTs that fans can purchase with their tokens or even stand a chance of winning them.
These rare and one-of-a-kind digital collectibles can be worth a lot of money, especially with the recent explosion of the NFTs markets, and can be worth even more if demand increases.
In that case, only the club’s fans who have access to the memorabilia can hold and profit from it.
Which Top Football Clubs Currently Offer Fan Tokens?
With the explosive growth of the crypto and blockchain space, several football clubs and sports teams from other niches have decided to tap into their potential.
So far, several world’s top-class sports clubs have launched fan tokens to improve their interactions with their loyal fans. Some of these teams include:
● FC Barcelona
FC Barcelona Fan Token (BAR) is the utility token of the Spanish football giant. It has a supply cap of 40 million BAR tokens, with about 600,000 BAR distributed to fans during the club’s Fan Token Offering (FTO).
BAR has a circulating supply of over 3.5 million tokens, and its price is sitting at almost $10 per unit. BAR tokens are mainly used to reward fans as well as for staking and governance.
It is available for purchase on several top crypto exchanges, including Binance, FTX, VCC Exchange, and more.
● Paris Saint Germain (PSG)
The PSG fan token offers holders many benefits, including officially signed merchandise, meet-and-greet, an invitation to special events, and many others.
The token has a total supply of 20 million, with over 3.1 million tokens currently in circulation. It has a market cap of $52.5 million and a price of $16.8 per token.
PSG is available for purchase on different online exchanges, including Binance, Upbit, FTX, Gate.io, and more.
● Manchester City
English football giant Manchester City is also not left out of the fan token issuing trend. Its utility token, dubbed CITY, enables holders to become part of a community of passionate fans from across the globe, enjoy exclusive discounts on official merchandise, and several other benefits.
CITY has a supply limit of 20 million tokens, with over 3.5 million tokens currently in circulation. It also has a market cap of $32.9 million and is available on several top crypto exchanges, including FTX, Binance, Pionex, and Hotbit.
● AC Milan
The popular Italian football club, AC Milan, also launched its official fan token known as ACM. It offers holders multiple benefits, including free match tickets to Serie A, Champions League home matches, governance rights and more.
It has a total supply of 20 million ACM tokens, with a current circulating supply of over 3.1 million tokens. Fans can purchase ACMs from Binance, Chiliz, Paribu, Pionex, and others.
What do I Get if I Buy and Hold Fan Tokens?
More people are getting interested in sports fan tokens, but one primary concern is what investors stand to gain when they purchase and hold these fan tokens.
Unlike stocks, fan token holders do not receive any monthly or annual dividends. However, they receive several sports-related benefits, including special voting, meet and greets, exclusive merchandise and discounts on fan stores, and more.
Additionally, since the tokens are typically bought and traded against other cryptocurrencies, holders can subsequently convert the fan token to other crypto assets whenever there’s a surge in price.
How to Buy Fan Tokens?
The easiest method to buy sports fan tokens is on Binance Exchnage. All the above top tier clubs tokens and even more clubs are traded on Binance against BTC and USDT.
Another method will be to use the Chilliz marketplace. If you choose this option, you must first purchase CHZ, the utility token that powers the activities of the Chiliz and Socios.com platforms.
CHZ is used for fan tokens that exist on the Chiliz network. Other fan tokens are built outside of Chiliz and Socios and they can be purchased using the native currency of the underlying network.
Once fans buy CHZ, they use it to purchase the fan tokens they wish via Chiliz.net, which is the in-house exchange and trading platform of the Chiliz network.
Some fan tokens are also available for trading or swapping on several top decentralized exchanges (DEXs) such as PancakeSwap and others. Here, fans can use the network’s native cryptocurrency – in this case BNB -to trade for or swap whichever fan tokens they wish to purchase.
Fan tokens are also available for purchase on several top centralized exchanges (CEXs) including Binance, Coinbase, Huobi, Bithumb, and many more.
The Future of Sports Fan Tokens
Sports fan tokens have become a new and innovative way for sports clubs to monetize engagement while providing an avenue for fans also to gain certain exclusive perks and earn profits from supporting their favorite sports clubs.
There are several criticisms of the concept of sports fan tokens, including a recent survey conducted by BBC. The survey found some criticisms that fans and regulators have regarding fan tokens, including exploitation by the clubs, the likelihood of pumping and dumping, insufficient protection for investors concerning the lack of regulation within the crypto space, and the possibility of a bubble.
But, despite all these arguments, the perks that fans get cannot be overemphasized. Most fans even admit that the benefits they stand to gain are what gives them the most satisfaction.
The volatility in the prices of these tokens, which is driven by the emotions and engagements of the fans, has made some sports fans perceive them as a way of showing their support and loyalty to their favorite clubs rather than a long-term investment.
Therefore, although there are a few reservations about sports fan tokens, considering the amount of attention these blockchain-based tokens are getting, it might not be too long before they dominate the entire sports industry.