A Dive Into Fan Tokens
Sports teams are using cryptocurrency as a way to engage their fans, creating a new genre of coins called fan tokens.
- Fan tokens are a game changer in terms of how sports organizations approach their fan base.
- Fan tokens make it easy to get new people into the cryptocurrency space.
- Phemex, a global cryptocurrency and derivatives exchange, has recognized the potential of this market and includes new fan tokens on its platform.
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Fan tokens are utility tokens that sports clubs issue and sell to further integrate fans into the club. These tokens, which run on the blockchain, are similar to other loyalty programs but now include a cryptocurrency component.
By collecting tokens, fans can enjoy a wide range of membership perks such as accessing discounted and exclusive merchandise and tickets, entering competitions, and engaging in VIP experiences.
Why Do Sports Teams Need Fan Tokens?
To give fans a voice and make them feel like they own part of their favorite sports club. Thanks to fan tokens, supporters can vote on club affairs.
In other words, sports clubs have found an opportunity to increase the level of outreach and engagement with followers, and have managed to create unique fan experiences through cryptocurrencies.
Through a mobile app, fans can now collect tokens and vote on significant team decisions (e.g., from the design of the team’s kits to what music the players will be listening during a pre-game warm-up or who was the player of the week).
The more tokens a fan holds, the higher the voting power he has on club decisions. That fan will also enjoy a greater clout rating, moving them up along different reward tiers.
These tokens primarily target sports fans. However, traders can use these tokens for speculative purposes. Let’s say your team has signed a world-class player; this could impact the token’s price to rise. Conversely, if the club is doing poorly, it could be a reason to sell the token.
Additionally, fan tokens still carry all the risks of traditional cryptocurrencies.
Before buying, one should bear in mind that they’re susceptible to hacks, regulatory restrictions, or overall crypto market volatility.
Where Can I Buy and Use My Favorite Fan Tokens?
Football clubs are the most visible example of using these tokens to measure and monetize fan loyalty.
Around 60 major football clubs have partnered with Socios, a platform that started by distributing fan tokens for free in the form of a GPS-based hunting game, similar to pokemon go.
The Socios app allows fans to interact with their favorite sports clubs and other supporters and participate in fan-led decisions.
In turn, the Socios platform runs on a network called Chiliz, which also offers its governance token, $CHZ.
Although anyone with software development skills can build a cryptocurrency from scratch, Chiliz pioneered the fan token space by issuing most of the official fan tokens in existence.
Through the Socios app the only way to have access to fan tokens is by exchanging them for $CHZ. Users can freely trade $CHZ and other fan tokens in exchanges like Phemex.
Over the last two years, many of these sports clubs have strongly promoted fan tokens on official merchandise and stadium banners to connect their mainstream audience with the world of crypto.
To mention some examples of influencing club decisions through fan tokens, football club Sevilla F.C ($SEVILLA) is voting to decide what charity to display on their shirts next season. And in F1 racing, team Aston Martin ($AM) had a vote to decide on Lance Stroll’s helmet design for the Austin Grand Prix.
In essence, the primary purpose of fan tokens is to create a strong connection between a sports entity and its supporters, allowing clubs to monetize that relationship.
Furthermore, the niche use case for these coins can impact demand, resulting in a volatile and risky asset to hold over the long term.
As a sports fan your best bet is to treat fan tokens as another way to enjoy your favorite sports teams. Win or lose. Up or down. They’ll always be your team. And your tokens.