World Cup Fever: Difficulties and Innovation Directions of Fan Tokens

The sports industry has long been a hot market. The large base of native fans and huge development prospects have made the crypto community pay attention to and build the sports field. In reality, there are many crypto.com naming the Los Angeles Lakers home stadium, Binance inviting football star Cristiano Ronaldo to endorse, OKEX cooperating with the Argentine national team, and other crypto circles cooperating with other teams or stars. With the 2022 Qatar World Cup about to open, the fan tokens of the World Cup concept naturally attract market attention. This article finds out the commonalities and potential innovation directions among the major fan tokens.

Common

After experiencing zero ticket revenue due to empty-seat games caused by the global epidemic, which greatly affected the club's financial situation, clubs around the world are actively looking for another source of income besides broadcasting and ticket revenue, and fan token sales may become a new path. Socios.com officials said that according to statistics, various fan tokens generated nearly $200 million in revenue for its partner clubs in 2021. In the real world, we often see that many teams are afraid to make big player transfers or are on the verge of bankruptcy because of financial pressure. Through the purchase of fan tokens by team fans, the team can raise funds for the team. The team can sell fan tokens to help solve the team's player transfers and help the team get out of financial difficulties.

Whether it is the fan tokens incubated by Binance or Chiliz, their functions have certain commonalities. As the name suggests, the focus of the construction of fan tokens is fans, and it is fan-centric, improving the fan experience and participation, hoping to transform fans from passive recipients to active influencers.

Increased fan engagement can be reflected in business decisions. Fan Token holders can participate in some of the team's business decisions, such as selecting the best player of the month or the field, the team's motivational slogans at home, the season's full-member posters, and warm-up songs, to strengthen the connection between the team and the fans. Secondly, by holding fan tokens, you can enjoy fan discounts such as discounts on home VIP audience tickets, opportunities to meet football players, such as a one-on-one meeting with star Immobile at Lazio. In addition, use fan tokens to collect club-related NFTs, and display your unique club NFTs through Fan profiles as a social business card to show the fan's personal loyalty to the club.

But in fact, most fan tokens simply transfer off-chain IP to the chain. The rights of holders are almost the same as those of offline members. Special benefits such as team peripherals, captain armbands, and patterns are not rigid or rare for offline member fans. Fans are not enthusiastic about the demand, and in clubs that value tradition, the tokenization of club governance rights will lead to opposition or even loss of loyal members. In the emotion-driven and speculator-dominated fan token track, there is a high degree of uncertainty, and holders also need to bear the risk of currency price fluctuations. Therefore, the long-term holders of fan tokens are mainly a small number of die-hard club fans in the crypto circle.

In addition, most fan token communities are still relatively quiet. Even on the team's official Twitter, the activity in the comment section is still low. When using fan tokens to participate in voting governance activities, the actual activity of users is also low. In the voting of Lazio SS Lazio Fan Token, whether in specific matters or the best player selection, the total number of votes for each activity does not exceed 1,000 on average. In addition, although it is under the banner of serving fans, the event participation weight of the projects that the token holders can reach is small, and the things that can be voted on are insignificant trivial matters. The token holders have no actual say in the participation of major club events.

Innovation

"NFT+Fan Token" Model: The popularity of NBA Top Shot shows the fans' enthusiasm for NFT, a Paninica-style collection. In the case of Porto (PROTO) fan tokens, fans can use the fan tokens on the Binance platform to purchase the club's NFT or blind box to obtain scarce NFTs, which can satisfy the collection feelings of some buyers and also obtain high returns in the market. At the same time, you can pledge NFTs in NFT PowerStation to obtain rewards for the fan tokens. The rarity of NFTs represents the fan power. The higher the fan power, the more fan token rewards users will collect after staking, and fans will obtain passive income.

"DAO + Fan Token" model: Fan Tokens can be used to participate in more than just a few team affairs. They can also create DAOs to organize crowdfunding to acquire teams and achieve full operation. In reality, The Krause House DAO tried to do this. Their goal was to buy an NBA team, and it took only six days to raise the upper limit of 1,000 ETH during the crowdfunding process. Although it is still a long way to go before the team acquisition is completed, it does not prevent us from expanding the rights of fan token holders after the acquisition of the team - fan token holders can share the team's operating income equivalent to shareholder income, realizing an alternative "Entertain to Earn"; most of the team's decision-making power is truly delegated to the fan group, who participate in the team's major decision-making through collective democracy, and blockchain-based voting can be transparent and fair, avoiding the corruption that is prone to traditional team management.

In addition to these innovations, we can also find activities in the market such as using fan tokens to guess the outcome of a game to obtain NFTs, and destroying tokens when a team scores a goal in a game. But overall, the functions of different fan tokens are basically homogenized, and innovations are mostly limited to minor repairs to the original basic functions. However, even in the crypto winter, with the help of the World Cup craze, football fan tokens are still worth looking forward to as one of the few hot narratives.