A new category of tokens is loading up for a potential surge. Fan tokens, tied to football teams, connect the model of meme assets with already existing fandoms.
Fan tokens, assets tied to high-profile football clubs, are becoming one of the growing trends in crypto. Trading activity for the token category spiked from baseline levels in what analysts consider a pivot to a new class of assets.
After suffering from limited attention for a long time, fan tokens have emerged as an overlooked source of growth. They start from a low market cap below $300M, lagging far behind the meme market.
Fan tokens are making a comeback with surge in trading volumes. | Source: Coingecko
In the past week, many top fan tokens saw 10X growths in trading volumes, surging past $500M in 24 hours. Most top tokens also experienced short-term price spikes.
Why are fan tokens making a comeback?
Fan tokens became famous during the Euro Cup in the summer of 2024. However, the Chiliz ecosystem renewed its efforts to boost the adoption in December, adding apps to the ecosystem.
Our Fan Tokens have sparked a movement. 🌟
Now, with new dApps on the Chiliz Chain, we’re connecting iconic teams and millions of fans to Web3.
This is SportFi in action.#ChilizChain ⚡️ $CHZ pic.twitter.com/DxR31UPRZ3
— Chiliz – The Sports Blockchain ⚽🏆 (@Chiliz) December 8, 2024
The project revamped its tokenomics, increasing the CHZ supply, with the goal of creating a SportFi sector based on already existing fan tokens. Chiliz also added a merch layer and additional perks, directly targeting already established fan token users.
After years of slow adoption, Chiliz set out on a social media mission to put more sports fans on-chain. It is using rewards, airdrops, and points mining to generate renewed interest among sports fans. The growing token activity is also drawing the attention of crypto insiders, who provided the increased trading volumes.
Fan tokens are also a replacement for celebrity assets, which often have brief successes before falling into obscurity. In comparison, these sports-inspired tokens are less exciting, with less susceptibility to aggressive pumps and rug pulls.
Binance started the sports fan token trend with a dedicated launchpad
Binance actively supported the issuance of fan tokens through a dedicated launchpad. Some of the tokens it supported include LAZIO, PORTO, SANTOS, and ALPINE. The exchange Binance Fan Tokens was also dedicated to boosting utility and organizing events for those assets, though most of the activities were phased out in the past few months.
Other assets use the Chiliz ecosystem, a long-running blockchain dedicated to sports fandom products.
Sports tokens were initially a relatively niche ecosystem and were meant to facilitate activities for the team and fans. Fan tokens helped in fundraising, incentives, community-building, and unlocking various tiers of privileges. They can also be used for voting or spent on NFT markets.
Outside their immediate utility, fan tokens are simply responding to hype, aiming to pump their still relatively low market capitalization. Still, they hold an advantage over memes – a long-running history, an identity, and limited incentives to rug pull. Their low volumes make them volatile, but they also have a higher potential upside during rallies.
Chiliz ecosystem hopes for a recovery
The recent altcoin rally lifted the value of Chiliz (CHZ) by 100%, from $0.06 to $0.12. CHZ is also starting to recover its trading volumes. A more active Chiliz ecosystem may also boost the adoption of Socios and its list of fan tokens. These types of assets have been around since 2019, with various levels of adoption.
Fan tokens also suffered during the bear market and disillusionment of 2022, as they became an afterthought for many clubs. However, the current bull market and emerging Web3 technologies have led to renewed demand.
The renewed interest in altcoins and memes is already reflected in search trends, with a sudden spike in activity at the end of November.
The other factor driving traffic to Chiliz is its emerging DeFi ecosystem. Chiliz holds just $16.68M in value locked, with emerging DEX and the Azuro prediction market. For now, fan tokens only have a hypothetical role in DeFi, but those assets are relatively reliable and can be included in additional pools.
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