What are fan tokens? Crypto assets that give fans a voice
by Arthur · September 3, 2022
The relationship between fans and the object of their affection – be it a sports team or a band – has traditionally been something of a one-way street. The fans buy tickets and merchandise, the team or band raises money.
Now a new type cryptocurrencythe fantoken, promises to change the dynamics of the relationship.
What are fan tokens?
Fan tokens are a type of cryptocurrency designed to provide membership benefits to fandoms of sports teams, bands, and other groups. Holders of fan tokens are often entitled to membership benefits, such as access to exclusive content, prizes, experiences and the right to vote on club decisions.
Fan tokens provide a little something for everyone. For fans, it’s the chance to decide, in some (often trivial and legally non-binding) way, the future of their favorite sports team or pop star, and speculate on their success in the web3 markets. For the sports team or the pop star, it’s free money, baby!
These symbols are everywhere, across sports ranging from football to NFL to cricket. Bands like Portugal. The man experiments with them too.
The economics of fan tokens are as bizarre as they are volatile, but for some famous people or organizations it has proven to be a lucrative revenue stream that keeps fans in the fold.
Did you know?
According to Be[In]Crypto Research, football tokens generated $3.5 billion in sales in March 2022 alone.
How do fan tokens work?
The basic idea is that an organization such as a sports team creates many fungible tokens (as opposed to non-fungible tokens, or NFTs), then sell or distribute them to fans or speculators. These tokens are often sold on secondary marketplaces, just like cryptocurrencies such as Bitcoin or Ethereumwhich means they are dependent on conventional market forces.
Fan tokens typically grant limited governance rights to holders. Paris St. Germain’s fan token, for example, allows holders to access exclusive VIP experiences and vote on the cover of the fan edition for soccer game FIFA 22. Fans also chose a message to be displayed in the team’s dressing room for a match in May 2021: “Together we can we, together we will! Let us take another step towards glory and victory.”
What is Socios?
A platform called Socios, created by a company called Chiliz, dominates the fan token market. That’s because most of them are based on football, a sport where the platform has secured deals with top teams, including:
- FC Barcelona. The fans have decided on a mural in the dressing room and a captain’s armband (it read “NO CHILDREN OFFSIDE”). In August 2022, Chiliz bought a $100 million stake in FC Barcelona’s digital studio.
- Inter Milan. Fans voted on the first new goal celebration song in 8 years, chose the official team bus and weighed in on the jersey design.
- Manchester City. Fans chose a picture hanging in the player’s area at Wembley Stadium and voted on an editorial about a memorable Man City season.
By participating in many of these polls, fans enter competitions to win prizes, such as VIP access to the teams, plus exclusive promotions.
Socios isn’t the only game in town; crypto exchange Binance launched its own fan tokens platform, imaginatively known as Binance Fan Tokens, in October 2021. It hosts tokens from Alpine F1 Team, SS Lazio, FC Porto and Santos FC.
The market value of fan tokens is modest. As of September 2022, SS Lazio had a market value of $66 million, Alpine F1 Team had a market value of $50 million; and PSG, a market value of $29 million. By comparison, Bitcoin’s market cap is over $380 billion, and Ethereum’s is $200 billion.
Fan tokens are not just limited to the world of sports. Platforms like Rally and Roll have long tried to popularize the idea of a social token, where fans of pop stars and influencers can influence their lives as well. They have yet to take off in a big way; the biggest is perhaps Rally’s governance token, which has a market cap of around $140 million.
That may be because the benefits they provide, such as voting on decisions related to a band or sports team, are relatively trivial. Governance tokens for decentralized finance (DeFi) projects, on the other hand, allow holders to play a leading role in the governance of their respective protocols.
Hold enough of these tokens of control and you can command billions of dollars in treasury – and use your control to exert influence that far extends the limited supply of fan tokens. That, in turn, provides value; UNI, the governing symbol for decentralized exchange (DEX) Uniswaphas a market value of $4.9 billion.
How to buy a fan token
Still wanting to weigh in on the inspirational motto to display in your favorite team’s locker room? To have a chance to do so, you must purchase a fan token.
The process of buying a fan token is similar to buying any other cryptocurrency. The easiest way to buy them is at one crypto exchange or brokerage, such as Binance.
On Binance, for example, you can buy PSG’s fan token with three currencies: USDT and BUSD stable coins, or Bitcoin. You need to create an account on the exchange and then place a “spot” order for the fan token using one of the token pairings supported by the platform. Other exchanges support different pairings.
You can also buy fan tokens in the Socios app using Chiliz (CHZ), the native token of Socios’ parent company. You can also buy CHZ in the app.
Once you have purchased your fan token, you will receive it in your Web3 wallet, just like any other cryptocurrency.
If your fan token comes from Socios, the market leader in sports fan tokens, you can go to the Socios website or app to put your tokens to work. For example, you can use these tokens to earn rewards on the platform or participate in polls. Or you can sell them on a cryptocurrency exchange, if their value goes up.
