A tiny but popular aspect of the cryptoverse is taking centre stage as excitement for major football tournaments in Europe and the Americas grows: fan tokens.
These are not your typical digital assets; rather, they are tokens that have been issued by national teams or specific clubs, promising fans a tradable means of interacting with their teams.
Ahead of this Friday's opening of the Euro 2024 European football championship and the Copa América in North and South America, which begins a week later, there has been a surge in activity in tokens associated with participating national teams.
According to CoinGecko data, the market value of the native coin of the Socios blockchain, Chiliz, which hosts most major fan tokens and is a broad proxy for the niche sector, has increased from roughly $687 million at the beginning of the year to more than $1.07 billion, approaching levels last seen around the 2022 World Cup.
According to data from Kaiko, trading volumes of fan tokens have also increased recently, hitting more over $170 million on May 24 compared to between $25 million and $57 million for the most of January. According to CoinGecko statistics, the mentioned fan tokens have a total market value of around $413 million.
This summer's sporting events might be a crucial test for the still-developing fan token industry, which usually offers benefits like lottery entries, early entry to events, product discounts, or the ability to vote on little matters like match tunes.
Supporters hail the tokens as an uncommon instance of practical use for cryptocurrencies, but detractors draw attention to the conflicts that exist between the team involvement goal and the speculative and hazardous character of exchangeable assets.
Chiliz's marketing made it very evident, according to a company representative, that "fan tokens are fan-engagement tools and should be used as such."
While Argentina's fan token momentarily reached its highest level since 2022 at $2.46, the price of Portugal's fan token has increased by almost 2% to $2.94 during the last 30 days. Despite this, both tokens are still trading below their peaks, which were reached around the 2022 World Cup.
"Trading volumes have increased significantly, but we anticipate that this trend will be temporary," Bitfinex head of derivatives Jag Kooner stated, referring to a decline in trade after the World Cup.
During the last cryptocurrency bubble in 2021, several elite football clubs and sports personalities encouraged their followers to purchase crypto assets, such as non-fungible tokens (NFTs) or fan tokens. This angered some opponents who said the purchases may incite speculative speculation.
Last year, British authorities issued a warning over the growing prevalence of NFTs in sports, stating that fans might face financial hardships and that clubs' reputations would be harmed. Fan token agreements, however, have been rejected by the Football Supporters' Association of England and Wales as "trying to monetize trivial matters" or "inserting financial barriers into genuine supporter engagement".
The price and volume changes of tokens don't necessarily reflect team success, said to research analyst Adam McCarthy of Kaiko.
"I don't see evidence that holders benefit from holding these tokens as a sort of bet on the respective teams success," he stated.
The "buy the rumour, sell the news" trend observed in traditional finance is frequently in line with fan token trading, according to a research that examined the activity around big sporting events. Before big tournaments, volumes and returns usually rise, and then they tend to decline right before crucial matches start.
Conversely, a different research (opens new tab) discovered that supporters who purchase tokens usually avail themselves of the advantages provided by voting on matters pertaining to the club.
"Fans engage substantively when they have the opportunity to impact club decisions," said Lennart Ante, CEO of the Blockchain Research Lab and co-author of both research.
"The dual nature of fan tokens as both engagement tools and speculative assets creates a dichotomy," Ante added. "The future of fan tokens could hinge on how this distribution between engagement-focused users and speculators evolves."
Tokens associated with club teams, as opposed to national teams, are still growing slowly.
In addition, Bitfinex's Kooner stated that the quantity of fan tokens has grown recently due to how simple it is to introduce tokens on blockchains like as Solana. According to Chiliz, four new fan tokens for clubs like Benfica and Tottenham Hotspur have been introduced in the last 12 months.
The massive French football team Paris Saint-Germain has opened a new tab with a fan token. Earlier this year, the team stated that it will administer and safeguard a portion of the Chiliz Chain blockchain as a network validator.
The English side Watford FC has opened a new tab and gave supporters and investors digital equity tokens worth 10% of the club.
Depending on the investment level, additional benefits outside the stock share can include exclusive training field visits and dinners with team players.
(Source:www.theprint.in)
These are not your typical digital assets; rather, they are tokens that have been issued by national teams or specific clubs, promising fans a tradable means of interacting with their teams.
Ahead of this Friday's opening of the Euro 2024 European football championship and the Copa América in North and South America, which begins a week later, there has been a surge in activity in tokens associated with participating national teams.
According to CoinGecko data, the market value of the native coin of the Socios blockchain, Chiliz, which hosts most major fan tokens and is a broad proxy for the niche sector, has increased from roughly $687 million at the beginning of the year to more than $1.07 billion, approaching levels last seen around the 2022 World Cup.
According to data from Kaiko, trading volumes of fan tokens have also increased recently, hitting more over $170 million on May 24 compared to between $25 million and $57 million for the most of January. According to CoinGecko statistics, the mentioned fan tokens have a total market value of around $413 million.
This summer's sporting events might be a crucial test for the still-developing fan token industry, which usually offers benefits like lottery entries, early entry to events, product discounts, or the ability to vote on little matters like match tunes.
Supporters hail the tokens as an uncommon instance of practical use for cryptocurrencies, but detractors draw attention to the conflicts that exist between the team involvement goal and the speculative and hazardous character of exchangeable assets.
Chiliz's marketing made it very evident, according to a company representative, that "fan tokens are fan-engagement tools and should be used as such."
While Argentina's fan token momentarily reached its highest level since 2022 at $2.46, the price of Portugal's fan token has increased by almost 2% to $2.94 during the last 30 days. Despite this, both tokens are still trading below their peaks, which were reached around the 2022 World Cup.
"Trading volumes have increased significantly, but we anticipate that this trend will be temporary," Bitfinex head of derivatives Jag Kooner stated, referring to a decline in trade after the World Cup.
During the last cryptocurrency bubble in 2021, several elite football clubs and sports personalities encouraged their followers to purchase crypto assets, such as non-fungible tokens (NFTs) or fan tokens. This angered some opponents who said the purchases may incite speculative speculation.
Last year, British authorities issued a warning over the growing prevalence of NFTs in sports, stating that fans might face financial hardships and that clubs' reputations would be harmed. Fan token agreements, however, have been rejected by the Football Supporters' Association of England and Wales as "trying to monetize trivial matters" or "inserting financial barriers into genuine supporter engagement".
The price and volume changes of tokens don't necessarily reflect team success, said to research analyst Adam McCarthy of Kaiko.
"I don't see evidence that holders benefit from holding these tokens as a sort of bet on the respective teams success," he stated.
The "buy the rumour, sell the news" trend observed in traditional finance is frequently in line with fan token trading, according to a research that examined the activity around big sporting events. Before big tournaments, volumes and returns usually rise, and then they tend to decline right before crucial matches start.
Conversely, a different research (opens new tab) discovered that supporters who purchase tokens usually avail themselves of the advantages provided by voting on matters pertaining to the club.
"Fans engage substantively when they have the opportunity to impact club decisions," said Lennart Ante, CEO of the Blockchain Research Lab and co-author of both research.
"The dual nature of fan tokens as both engagement tools and speculative assets creates a dichotomy," Ante added. "The future of fan tokens could hinge on how this distribution between engagement-focused users and speculators evolves."
Tokens associated with club teams, as opposed to national teams, are still growing slowly.
In addition, Bitfinex's Kooner stated that the quantity of fan tokens has grown recently due to how simple it is to introduce tokens on blockchains like as Solana. According to Chiliz, four new fan tokens for clubs like Benfica and Tottenham Hotspur have been introduced in the last 12 months.
The massive French football team Paris Saint-Germain has opened a new tab with a fan token. Earlier this year, the team stated that it will administer and safeguard a portion of the Chiliz Chain blockchain as a network validator.
The English side Watford FC has opened a new tab and gave supporters and investors digital equity tokens worth 10% of the club.
Depending on the investment level, additional benefits outside the stock share can include exclusive training field visits and dinners with team players.
(Source:www.theprint.in)
