Blockchain technology has a range of applications far beyond creating decentralized means of payment. One popular, and growing, use case is the ‘fan token’. In this blog, we’ll explain what this means and how you can get involved.

Introduction

COVID-19 hit the sports industry hard. Live events are the bread and butter of sports teams, and with those off the table, their profits took a nosedive. As a result, these organizations looked for new avenues of income and fan engagement – and they found cryptocurrency.

An empty stadium. Source: Pixabay

Specifically, many clubs launched their own cryptocurrencies in partnership with one platform or another. Their token sales brought in revenue – for example, FC Barcelona sold all of its BAR tokens within two hours back in June 2020, bringing in $1.3 million – and perhaps more importantly, the tokens provide an innovative way to keep their fans involved in the team.

Creating engagement

Holding fan tokens gives a fan the ability to take part in specially-designed activities. The specifics of the engagement vary depending on the sports club, but are generally in the voting format. Examples include allowing fans to vote on the song that is played in a stadium after a goal is scored, on images that are used on their teams’ social media profiles, and even on opponent selection for non-league matches. FC Barcelona let fans decide what artwork was to be hung in the team’s changing room, AS Roma (ASR) awarded token holders (ASR) with a direct question and answer session with its head coach, and Juventus FC let its token holders (JUV) vote on designs for the teams’ new kits.

Juventus away kit 2021/22. Source: youtube.com

Naturally, these decisions offered to fans are not at the executive level, which could cause regulatory issues, but many fans appreciate the chance to get involved more actively in their beloved teams. From the point of view of the club, cryptocurrency allows them to strengthen their relationships with their fans while monetizing these engagements.

Barcelona fans fanning their team. Source: Wikipedia commons

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New revenue streams

Apart from the right to participate in activities, fan tokens also act as an internal currency to buy goods and services from a sports club, such as merchandise, tickets, and so on. They also enable the clubs to collect information about their fans, which is useful for targeting marketing efforts and building loyalty programs. Loyalty rewards can be more of the fan token itself, VIP tickets, meeting players, appearing on the screen at a match, and more – the possibilities are endless.

Big deals

The sport/crypto connection received a big boost from the lockdown, but it isn’t a new thing, and there are plenty of examples of big-name clubs making interesting crypto deals.  The first deal between a major sports team and a cryptocurrency provider actually happened back in January 2018, when Arsenal FC signed a sponsorship deal with CashBet, just before the gaming platform launched a cryptocurrency and ran an initial coin offering. And to supply a few examples from this year alone – Watford FC announced that a sponsorship deal with betting platform Stake was to paid in cryptocurrency, part of Lionel Messi’s transfer deal from Barcelona to Paris Saint Germain was paid in PSG (the French team’s fan token), and Binance is to become the main jersey sponsor of SS Lazio.

Lionel Messi. Source: Ben Sutherland, flickr.com

And while the football industry is currently the biggest issuer of fan tokens, the concept is not exclusive to football. For example, there’s a UFC fan token, which gives fans voting rights on decisions like pre-fight press conference questions and report topics, a Davis Cup token that enables fans to participate in tennis-related online activities, and tokens for the Aston Martin and Alfa Romeo Formula One teams.

Source:  oseillo, flickr.com

Chiliz

One of the biggest names in the sport/crypto ecosystem is Chiliz. It’s the company behind Socios.com, a Malta-based platform providing fan tokens and all their related engagement and revenue opportunities to sports teams. The tokens themselves are minted on the Chiliz blockchain. Over the last couple of years, Socios has entered into partnerships with over 70 sports clubs worldwide – many of them household names – as well as the Argentinian national football team. The fan tokens it creates are no gimmick – PSG and JUV, for example, are listed on Binance, Paribu and Upbit and have considerable market caps. The company is currently focused on US expansion, partnering with teams like the Brooklyn Nets, the LA Clippers and the New Jersey Devils, although it should be noted that these are advertising deals in the classical sense – Socios hasn’t created fan tokens for any US teams yet due to regulatory constraints. At the time of writing, the Chiliz cryptocurrency (CHZ) has a market cap of $2.7 billion and daily trading volume of almost $600 million.

Source: chiliz.com

Seeing the current success and considerable potential of CHZ, Kirobo couldn’t fail to integrate the token into our platform. Now you can use our Undo Button and P2P Swap Button to safely transact and swap this token with other users. We’ll be keeping a close eye on the fan token market and adding more very soon, so stay tuned!