Sports teams and bands are making closer connections with their die-hard fans by using crypto tokens. Here is how they work.
The relationships between fans and the object of their affection— a sports team or a band—have traditionally been a one-way street. Fans buy tickets and merchandise, and the team or band rakes in the cash.
A new type of cryptocurrency, fan tokens, promises to alter the dynamics of that relationship.
What Are Fan Tokens?
A fan token is a type of cryptocurrency that is designed to provide membership benefits to fandoms of bands, sports teams, and other groups. Holders of these fan tokens are often entitled to membership perks, including access to experiences, exclusive content, prizes, and rights to vote on club decisions.
For fans, it is the chance to determine, in an often trivial and legally non-binding way, a part of the future of their favorite sports teams or pop stars and speculate on their success in web3 markets. For the sports teams or pop stars, it’s free money, baby!
The tokens are everywhere, across sports ranging from soccer to cricket to the NFL.
The economics of these tokens is as bizarre as it is volatile. However, for some famous people and organizations, it has proven to be a lucrative stream of income that can keep fans in the fold.
Soccer tokens generated $3.5 billion from sales in March 2022 alone, according to BeInCrypto’s research.
How Do Fan Tokens Work?
The basic idea is that organizations such as sports teams mint lots of fungible tokens (as opposed to NFTs or non-fungible tokens), then sell or distribute them to fans or speculators. The tokens often retail on secondary marketplaces and are beholden to conventional market forces.
Fan tokens generally confer limited governance rights to holders. For instance, PSG (Paris St. Germain) fan tokens allow holders access to exclusive VIP experiences and voting rights to who appears on the cover of the fan edition of the soccer game FIFA.
What Is Socios?
The platform Socios was created by a company called Chiliz, which dominates the market for fan tokens. That is because most of the tokens are based around soccer, one of the sports in which the company has secured deals with top clubs, including:
- FC Barcelona – Fans decided on the dressing room mural and the captain’s armband, which read “NO CHILD OFFSIDE.” Chiliz bought a $100 million stake in the club’s digital studio back in August 2022.
- Inter Milan – Fans were able to vote on the first new goal celebration song the team has had in eight years, chose the official team bus, and were able to weigh in on the jersey design.
- Manchester City – Fans chose a picture that was hung in the player’s area at Wembley Stadium and were able to vote on an editorial for a memorable Man City season.
Taking part in some of these polls automatically enters fans into sweepstakes to win prizes like VIP access to the teams and exclusive promotions.
Socios is not the only game in town; in October 2021, crypto exchange Binance launched the fan tokens platform Binance Fan Tokens. It plays host to tokens such as Alpine F1 Team, FC Porto, S.S. Lazio, and Santos FC.
Fan tokens are not just limited to sports. Platforms like Rally and Roll have long tried to popularize social tokens, allowing fans of pop stars and influencers to influence their lives. However, they have yet to take off in a big way. The biggest is perhaps Rally’s governance token, whose market cap stands at around $140 million.
That may be because the benefits they offer, such as voting on decisions relating to bands or sports teams, are relatively trivial. Governance tokens for DeFi (decentralized finance) projects, by contrast, allow the holder to have their say on the governance of their respective protocols.
With enough of these governance tokens, you can command treasury chests in the billions of dollars. You could also use this control to exert influence that far outstretches the limited offerings of fan tokens, which, in turn, commands value; the governance token of Uniswap, called UNI, has a market capitalization of $4.9 billion.
How To Buy A Fan Token
The process of buying fan tokens is similar to buying any other cryptocurrency. The most convenient way to buy them is on crypto exchanges or brokerages, such as Binance. You can buy PSG fan tokens, for instance, with three currencies: USDT and BUSD stablecoins or Bitcoin. You will have to create an account on the exchange and place a ‘spot’ order for a token using any of the pairings supported by the platform.
You can also buy fan tokens on the Socios app using the native token of Socios’s parent company Chiliz (CHZ).
Once you’ve bought fan tokens, you’ll receive them in your Web3 wallet.
If your token comes from Socios – the market leader for sports fan tokens – you can go to the Socios website or app and put those tokens to work, with the chance of earning rewards within the platform or entering polls. Or you could sell them on a cryptocurrency exchange if their value goes up.