Because we all need something that can get us excited these days… I decided to write about fan tokens.
Apparently, the world cup starts soon — I haven’t really followed — but I do follow the New Economy Podcast every morning. And nearly every morning, I hear an announcement about Financie having onboarded yet another club or creator.
I figured that’s a good enough reason to look into Fan tokens again. They seem to be trending in Japan, yet outside of it, barely anyone probably knows. 🤷♀️
Some background
While with how the Fifa organized the world cup, one could think that corruption is the lifeblood of sports; it’s, of course, the fans. Corrupt managers don’t make the atmosphere in a stadium, nor do they line up in queues for hours just to cheer on their favorite teams.
Unfortunately for the fans, sports have become super commercialized, leading to fears that clubs will lose their soul. Not an expert, but having your favorite club bought by some Saudi Prince probably doesn’t make an English fan boi feel very comfortable.
When the pandemic hit, the Saudi Prince owners probably were shaken that they couldn’t make money with ticket sales anymore — but surely this was offset by oil prices reaching new highs.
However, other clubs struggled financially to maintain themselves when match attendance was banned. Some of them started innovating and looking into fan tokens. When FC Barcelona launched a token on the Socios.com platform, it sold out within 2 hours, making $1.3 million in revenue.
What are fan tokens?
Fan tokens give holders access to various fan-related membership perks, such as voting on club decisions, rewards, merchandise, and unique experiences. They are issued by a club or league and can be purchased just like other cryptocurrencies.
There are a variety of platforms like Chilliz (developed by a company called Socios), or Financie dedicated to helping clubs and organizations launch and manage their tokens. Fan tokens allow clubs to democratize and organize experiences and involve fans more in decisions. And tokens also provided a different model to continue earning outside of ticket sales.
Unlike NFTs, which establish people’s membership in a community though, fan tokens are fungible. You can buy a bunch, and they are all somewhat the same.
What is their value — you might ask?
While cryptocurrencies get their value primarily from demand and how useful they are, fan tokens are tied to the popularity of a club and how much fans want to get involved with it. Rights attached to tokens include voting on:
- merch design
- tour bus design
- ticketing
- match locations
- MVP merch
and tokens might also unlock discounts, access to VIP areas, and skip the queue to get autographs. Fan tokens enable fans to be more involved in their clubs than previously possible without adding massive overhead to a club’s processes.
An added benefit is that fan tokens unlock a new audience who might otherwise never have touched web3. 🎊
Types of Fan tokens
You can be a fan of many things. I, for one, am a big fan of Gojo Cat recently (and Nanami cat). I mean, just look at their cuteness…
Without dwelling further on the power of kawaii, the following are more common types of fan tokens:
- Football: of course, it’s one of the most viewed sports, after all. Many football clubs are already using platforms like Chilliz to issue tokens to their fans.
- Gaming: e-sports teams use tokens to enhance engagement with their fans and give them ways to vote on in-game decisions.
- Fighting: MMA teams also benefit from fan tokens, where fans gain access to rewards, chat forums, and pools. And maybe spots so close to the ring that they can catch some falling-out teeth.
- Movies: Fan tokens, in combination with movie production, could give fans ways to be involved in the decision-making for a movie. Things like weird NetFlix adoptions of anime series might not have happened this way 😏
During the upcoming world cup, national teams will have their own tokens providing fans and gamblers with a different way to bet on the winners. In the lead-up to the event, the Argentinas token hit a record high of $7.28 in October.
Financie
What Socios.com and Chilliz are to the western world, Financie is to the world of the rising sun. I covered chilliz way back; you can check it out here.
Financie launched in 2019, providing blockchain and NFT-based crowdfunding services to any type of creator and fan-based organization. They’ve already created over 100 tokens for clubs, individuals, and projects. Their mission is to realize a creator economy that can support a billion challenges. The team started finance based on the belief that it’s time for individuals to shine, and they wanted to provide them with the tools to turn their fans into partners over time.
They are focused on entertainment and working with a variety of sports clubs. Advisors include well-known pro footballers like one of my childhood favorites: Keisuke Honda.
I just found it fascinating that these types of tokens seem to be very successful in Japan. I mean, nearly every day, they have a new project or individual onboarded. Maybe Otaku culture can further propel fan tokens' growth. Pretty confident that once Hatsune Miku launches a token — surely, there will be thousands willing to pay for exclusive access or pictures…
Going beyond token hodlers to contributors
Recently, when I was taking an Uber around Frankurt, my driver would go on about the questionable practices of their management to favor certain players that came from the city vs. those just from the region. He also detailed an amount of corruption on a smaller scale and an appalling lack of transparency. He went on to mention examples of players that, while in Frankfurt sitting just on the bench, quickly rose up to the national team once outside of it. Ultimately, he confided in me that this was the reason his children are now doing different sports.
Maybe such is the way as clubs become more commercialized and interests are misaligned. The decisions of club owners are final, and ownership can be bought. Doesn’t always mean that the owner has the best insights and ideas to manage the club.
What if tokens wouldn’t just give fans the right to vote on a very limited scope of less important decisions, such as merch design but actually put them in charge of managing an entire club?
DAOs bring together communities and let them do stuff without a central authority. They follow their north star mission and, along the way, make decisions based on a majority vote. Every member has a say in a DAO.
DAO x Fan organizations = better-aligned incentives and empowering fans of a club or creator to be more involved in their direction.
Illia, a co-founder of NEAR, recently came up with the term Foo for it. Probably referring to Sail GP’s team owned by fans.
To be honest, I think DAOs at the moment are still in the early stages. Token-based voting opens them up to Sybil attacks, where someone can just come in and buy a lot of the token to move a vote to a desired outcome. My favorite example of that is still the hacker of Mango Market, who then voted not to be persecuted using the tokens they stole earlier.
Fan Operated Organizations might suffer from the same if they decide to vote based on simple token holdings. Maybe the emergence of soulbound tokens can contribute to such organizations by enabling fairer votes tied to certain identities. Surely receiving a lot of SBTs to different wallets issued by the FOO is more hassle than clicking on the buy button for a governance token on Uniswap.
Btw, if you’re still confused about what Soulbound tokens are, TLDR they are a token type that cannot be transferred and is bound to a wallet (soul). 👻 I wrote an introduction to them for Ternoa the other day.
That aside, I do believe there is a lot of potential in distributing control for certain decisions while maybe retaining the ability of a core set of contributors to make fast decisions when required. I mean, football clubs, for example, might want to “buy” a certain player, which often requires very fast decisions. DAO voting can take quite some time ^^ Or maybe there is a way to pre-vote on such things. No idea. But that isn’t for me to figure out anyway.
I think the idea of giving fans more influence in the clubs and the activities of the creators they love is a great one. Maybe this is bound to be popular in Japan because of Otaku culture. I’d probably even get into a couple of such DAOs or FOOs dealing with Anime content just to be able to see what’s happening more closely and vote not to make such terrible anime adoptions as Tokyo Ghoul beyond season 2 (The intro song is still epic below for your listening pleasure).
Speaking of Anime, the NFT project behind my Twitter pfp also gives NFT holders rights to vote on details of the manga and, ultimately, the anime they're working on. It’s great to see such non-financial utilities :)
Wrapping it up: corrupt club leadership bad, empowering fans good. DAOs and FOOs still have a lot to figure out, but are steps in the right direction.
Bear market might be hard, but hey, maybe people can now think about the more sensible use cases of blockchain that aren’t yield-farming a Ponzi scheme. Many of the most successful dApps and chains are born in bear markets, so not the time to despair.
Just remember the words of the famous Usagi Tsukino:
“Without the bad times, We wouldn’t appreciate the good times.”
