Yahoo Finance Crypto token gives football fans right to vote on club decisions
Watch: Crypto token gives football fans right to vote on their club's decisions | The Crypto Mile
Crypto "fan tokens" give fans the right to vote on football club decisions. Can this blockchain-based monetisation of fan engagement give supporters more voice, or is it just a superficial side income for football clubs? Yahoo Finance UK investigates.
Coronavirus lockdowns caused an abrupt halt in ticket sales for physical attendance at sporting events. This led to football clubs identifying the need to engage more with fans through digital means.
As retail poured into the cryptocurrency sector during the height of the pandemic, cryptocurrency companies saw an opportunity to link the frustrated fans who were stranded in their houses, with the empty stadiums across the globe.
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One cryptocurrency that was well-placed to capture the need for sporting engagement was Chiliz (CHZ-USD), ranked 54th place in the crypto-market cap according to coingecko.
The Chiliz cryptocurrency and its fan engagement platform Socios.com were quick to capitalise on the fan fervour surrounding the football World Cup in Qatar.
Chiliz posted a 6.1% drop in value in the past seven days to $0.143.
On this week's episode of The Crypto Mile, we were joined by Alexandre Dreyfus, CEO of Socios.com, a platform that allows fans to invest in crypto tokens that offer voting rights on the decisions made by their favourite clubs.
Dreyfus said: "99% of sports fans are not in the stadium, not in the city and sometimes not in the country of the team that they are supporting.
"So what we created four and a half years ago was a new asset called a fan token.
"Fan tokens are a kind of digital membership that give fans a right to be recognised and have a voice and a vote in the decisions of the club they support."
Fans can vote on things such as "the music in the stadium when the team scores a goal or the design of the jersey for the next season".
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He said: "We created two products, one is Socios.com, which is the consumer facing app that you can download and where you can use the fan tokens, and then Chiliz, which is the blockchain that is actually carrying and being used to insure these digital asset."
"The first two teams we signed with were Paris St Germain and Juventus," said Dreyfus.
"We work with 170 teams all over the world, from Barcelona to Manchester City, Arsenal, we have 80 soccer/football teams and 20 NBA teams. We also have UFC, ruby and some Formula One teams."
How do fan tokens work?
Fan tokens incentivise and reward fan loyalty and engagement and are purchased using the Socios.com app or website.
Having fan tokens increases the influence a fan has over certain aspects of their team.
Although Dreyfus points out that buying a fan token is not the same as buying a share in the corporation that owns a football club, which could give direct rights to financial and sporting decisions.
The tokens can also be redeemed in the form of discounts or special rewards such as exclusive merchandise or VIP fan experiences.
Team Gold Checkmark. pic.twitter.com/KlUju6stce
— Socios.com (@socios) December 15, 2022
Dreyfus said: "For a fan that is in Korea or Brazil, Turkey, Japan or Thailand, acquiring a fan token is a way for them to feel different.
"Right now if you want to follow a team from a remote location you follow that team on Twitter, but this is a one way relationship, it is anonymous and there is no vested interest.
"But now you can spend $2 or $5 to have a voice and be recognised and have a digital asset that has scarcity and gives you utility as a fan.
"When you own a fan token, you don't own a share of a company, you own a share of influence.
"Everything that is not sports or business can be influenced by the fans."
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To get their hands on the new digital assets, fans must first fuel their accounts with Chiliz, the native cryptocurrency of the ecosystem, by using a Visa or Mastercard.
Why crypto?
The exclusive use of a cryptocurrency within specific web3 applications is confusing to the vast majority of consumers.
Why not pay direct with pounds or dollars for the desired digital asset, rather than exchange into a cryptocurrency that could be extremely volatile?
The cynic would say that the reason is because the more demand there is for a native cryptocurrency, the more gain for the issuer of that cryptocurrency, usually because they have the largest allocated share.
However, Dreyfus explained that Chiliz has been transparent in everything that it is doing, deployed on a blockchain that is a publicly distributed ledger.
He said: "We are working with some of the biggest teams and biggest brands in the world. We cannot afford to fail, we have to be regulated as much as we can.
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"With Chiliz blockchain 2.0, every club involved can become a node or a validator.
Yahoo Finance UK asked why there was a need for a protraction of trade with fans having to purchase Chiliz before they can purchase a fan token.
He said: "Actually you can purchase with stablecoins such as USDT or USDC. These fan tokens are traded on several exchanges such as Binance.
"However, on Socios.com it is a little bit different.
"Because we are an international platform, where we are actually going to have fans and users from all over the world, so we needed one currency so the fans could engage from anywhere in the world."
NFTs, sports and crypto combine on the Socios.com platform and this innovative blockchain-based market-place has made high-profile deals with the likes of Manchester City, Barcelona and the Aston Martin F1 Team.
Sport Memorabilia
The $26bn (£21.3bn) sports memorabilia market is growing, and this is partly fueled by the rise of NFTs. The market is expected to reach $227.2bn by 2032, according to Market Decipher.
Sport memorabilia is being tokenised as digital collectibles that can then be programmed to be provably unique or rare and verified on the blockchain, making counterfeits impossible.
Socios.com, utilising the Chiliz cryptocurrency, has invested in GameUsed, which takes the innovations of NFTs and tokenises sport memorabilia so that each item can become digital on the blockchain and usable within the metaverse. Socios.com will serve as the native marketplace for all NFTs minted by GameUsed.
Dreyfus explained that with GameUsed, the digitised version of a sport item can be verified on the blockchain so that "you can identify that that jersey was worn by a player".
Fan tokenisation via Socios.com has harnessed the innovation of DAO governance tokens and the incentivised passion of crypto communities and offered a new product to global sports fans who are eager for more online engagement post-COVID.
