By Ruchi Sharma
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. Now a new type of cryptocurrency, the fan token, promises to change the dynamics of that relationship. These crypto assets are still relatively new but are already establishing themselves as the future of the sports economy. It can prove to be a real game changer.
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 perks, such as access to exclusive content, prizes, experiences, and the right to vote on club decisions. These tokens are everywhere, across sports ranging from soccer to the NFL to cricket.
How They Work
The basic idea is that an organization like a sports team mints lots of fungible tokens as opposed to non-fungible tokens, or NFTs, then sells or distributes them to fans or speculators. These tokens often retail on secondary marketplaces, just like cryptocurrencies such as Bitcoin or Ethereum, meaning they are beholden to conventional market forces.
Fan tokens usually confer limited governance rights to holders. Paris St. Germain’s fan token, for instance, lets holders access exclusive VIP experiences and vote on the cover of the fan edition for soccer game FIFA 22.
Fan Tokens On Different Platforms
Socios, created by a company called Chiliz, dominates the market for fan tokens. That’s because most of them are based around soccer, a sport in which the platform has secured deals with top teams, including: FC Barcelona, Inter Milan and Manchester City.
Crypto exchange Binance launched its own fan tokens platform, imaginatively known as Binance Fan Tokens, in October 2021. It plays host to tokens from Alpine F1 Team, S.S. Lazio, FC Porto and Santos FC.
The market capitalization for fan tokens is modest. As of September 2022, S.S. Lazio had a market cap of $66 million, Alpine F1 Team had a market capitalization of $50 million; and PSG, a market cap of $29 million. By comparison, Bitcoin’s market cap is over $380 billion, and Ethereum’s is $200 billion.
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