What are Fan Tokens and How Do They Work?

Fan tokens are a type of cryptocurrency designed for sports fans to engage with their favorite teams in new digital ways. They represent both a new digital asset class for investors and an innovative tool for sports organizations to connect with supporters.

Fan tokens provide utility like memberships, VIP access, exclusive content, games, chat forums, and most importantly, voting rights. Holders can participate in polls that allow fans to provide input on decisions related to their clubs.

Some examples of things fan token holders may vote on include:

• Messages displayed on captain’s armband
• Songs played after goals scored at home stadium
• Slogans used on team bus or jerseys
• Design choices like uniform colors or bus seat patterns
• Charities to support or community initiatives to pursue

This ability to participate in simple governance decisions helps make supporters, especially the most passionate fans, feel more engaged and heard by their favorite teams.

On a technical level, fan tokens are cryptocurrencies minted on their own blockchains, usually Ethereum or Binance Smart Chain. They are sold to fans who must store them in crypto wallets to access benefits. The total supply of tokens is controlled by the issuing organization.

Platforms like Socios.com handle the token creation, distribution, sales, governance mechanics, and rewards ecosystems that bring fan tokens to life. Major soccer clubs partner with Socios.com to launch their branded fan tokens.

Now that we’ve covered the basics, let’s look at some current examples of fan tokens in global soccer.

Current Use of Fan Tokens in Soccer

Socios.com has partnered with over 60 major soccer clubs and leagues around the world to launch branded fan tokens. Some of the most prominent examples include:

Paris Saint-Germain F.C. (PSG) - The French club was the first major European team to launch a fan token ($PSG) in early 2020. PSG has since sold over $60 million worth of tokens to supporters.

F.C. Barcelona (Barca) - Despite recent financial and on-field struggles, Barcelona has sold over $30 million in their $BAR token through Socios.com engaging their global community of fans.

Juventus F.C. - The Italian Serie A giants sold over $6 million in $JUVE tokens right after launch in early 2021, showcasing strong demand.

Manchester City F.C. - Premier League champions Manchester City released $CITY tokens in 2021 that quickly sold out, highlighting demand among their worldwide fanbase.

A.C. Milan - Historic Italian club A.C. Milan launched their $ACM token just as they returned to the Serie A summit after years of decline. It helped them engage supporters around their resurgence.

Atlético Madrid - The Spanish club has seen high usage of their $ATM token with over 70% of holders first-time cryptocurrency users. This shows crypto and fan tokens crossing into the mainstream.

These are just a handful of examples of major European clubs that have launched fan tokens thus far. Many more teams globally are either actively selling tokens or poised to launch similar offerings soon. Clearly fan tokens are going mainstream in the soccer world.

Now let’s take a deeper look at Socios.com and Chiliz, the leading ventures powering the proliferation of soccer fan tokens.

Socios.com’s Platform for Fan Token Creation

Socios.com is a direct-to-consumer platform built on blockchain infrastructure provided by Chiliz that allows teams to create, manage, and distribute their own fan tokens. The company effectively serves as the middleman between clubs and supporters.

Socios.com was founded in 2018 and has headquarters in Malta, Spain, and Argentina. It has partnered with over 130 major sports properties to date across soccer, NFL, MLB, cricket, motorsports, UFC, and esports.

Socios.com enables clubs to do the following:

• Fan Token Design - Create branded fan tokens on the Chiliz blockchain bearing club names, logos, colors, and other intellectual property.
• Token Distribution - Sell newly minted fan tokens directly to supporters through the Socios.com app, both during initial offerings and on an ongoing basis.
• Manage Supply - Control the total supply of fan tokens in circulation at any given time to balance scarcity and access.
• Set Governance Rules - Configure which decisions token holders can vote on and the mechanics of the voting process and policies.
• Launch Rewards & Games - Develop rewards programs, point systems, leaderboards, trivia, digital collectibles, and other gaming elements to engage token holders.
• Access User Data - Gain valuable data and insights on the interests, behaviors, and preferences of their global supporter community.
• Customer Support - Provide support for fan inquiries and issues redeeming tokens for benefits.

In exchange, Socios.com earns a commission on token sales from clubs. They also own a portion of the total token supply of each club to fund operations.

Socios.com built its platform atop Chiliz, a leading blockchain ecosystem for sports & entertainment assets.

Chiliz Blockchain Infrastructure Powering Fan Tokens

Chiliz is a leading fintech provider for sports & entertainment focused on blockchain solutions. It has offices in France, Switzerland, Malta, South Korea, and Latin America.

Chiliz provides the backend infrastructure for Socios.com and fan token platforms through the following:

• Public Blockchain Network – Chiliz owns and operates a decentralized blockchain optimized to securely host fan tokens and related assets. Native CHZ tokens help secure the network through staking.
• On-Chain Token Issuance – Chiliz oversees the technical integration to allow secure minting of new fan tokens on blockchain as needed.
• Trading Exchange – Fan tokens can be bought and sold against CHZ on Chiliz own exchange as well as listed on major external crypto exchanges.
• Wallet & Payments – Chiliz provides digital crypto wallets and payment processing tools to help manage lifecycle of fan tokens.
• Technical Support – Chiliz supports the technical integration and operations of fan tokens minted on their blockchain.

By leveraging Chiliz blockchain infrastructure, platforms like Socios.com can focus on sales, marketing, rewards, and governance while leaving the token creation and distribution to experts.

Now that we understand the fan token tech stack, let’s examine the benefits they provide both organizations and supporters.

Benefits Fan Tokens Provide

Fan tokens offer clear advantages and utility to both soccer clubs and loyal supporters.

Benefits for Sports Organizations:

• New Revenue Stream – Selling fan tokens directly to supporters generates new income akin to merchandise sales.
• Increased Fan Data – Platforms provide valuable behavioral data on global fan interests and engagement patterns.
• Fan Monetization – Most passionate super fans that spend a lot on their team can be further monetized through token purchases.
• Deeper Loyalty & Engagement – Owning governance tokens incentivizes fans to engage more and remain loyal to their teams.
• Global Reach – Borderless crypto tokens allow clubs to connect with supporters anywhere in the world.

Benefits for Fans:

• Exclusive Rewards & Experiences – Token holders gain VIP access to things normal fans cannot like meetups, events, early merchandise access, etc.
• Governance Influence – Fans can directly participate in simple decisions about their favorite clubs to feel more involved.
• Game Mechanics – Platform mechanics like points, leaderboards, trivia, make supporting teams fun like mobile games.
• Tradable Assets – If fan engagement remains high, tokens may appreciate in secondary market trading, unlocking profits for investors.
• Community – Tokens help connect highly engaged supporters around shared interests and passion for their club.

These benefits create a win-win proposition for clubs and supporters in the digital era.

Regulatory Outlook for Fan Tokens

Like many cryptocurrencies, fan tokens currently exist in a legal gray area with fuzzy regulations. Most watchdog agencies are just beginning to evaluate how to oversee and regulate them.

Some of the core regulatory questions surrounding fan tokens include:

• Are they currencies, securities, or something else? Different classifications trigger different rules.
• Can clubs and platforms sell them freely or do they need broker licenses?
• Do voter rights equate to ownership stakes subject to security rules?
• How can average fans be protected from risks like speculative trading, scams, and hacking?
• Do voting mechanisms need governance standards to be fair and transparent?
• Are there data privacy concerns around platforms accessing fan personal data?

Socios.com and Chiliz are attempting to self-regulate proactively by working with legal experts to implement best practices and internal controls.

However, as adoption grows among mainstream fans, regulatory bodies like financial watchdogs, technology authorities, and consumer protection agencies will inevitably step in.
The sports industry must collaborate to find the right balance between guidance, protecting fans, and avoiding restrictive red tape that blocks innovation. The growth of fan tokens will require thoughtful new regulatory frameworks.

Fan tokens represent a truly groundbreaking development in sports business at the intersection of blockchain technology and digital fan engagement. The growth and evolution of blockchain-powered fandom is only just getting started. The potential is limitless. While regulatory uncertainties remain an ongoing risk, the sports industry must be proactive finding solutions to responsibly nurture this innovation. Fan tokens seem positioned to fundamentally transform sports business in the years ahead. The future is bright.