Friday night’s mixed martial arts fight between British featherweight fighter Brendan Loughnane and Brazilian Sheymon Moraes could make history – and not because of the expert footwork or nasty elbows.
This is because the entire MMA battle was made possible by the wizardry of the rapidly emerging blockchain technology and a specific platform: Socios, a unit of the Chiliz company, where sports fans can use the increasingly popular genre of cryptocurrencies known as ” Fan Token ”is known to express their devotion.
Some lucky crypto traders have made a fortune wagering on Chiliz’s in-house token, CHZ, which soared 20x in the digital asset markets this year to a previously unthinkable market cap of $ 2.3 billion . This is comparable to a year-to-date gain of 70% for Bitcoin (BTC), the largest cryptocurrency, and a tripling of the price of Ether No. 2 (ETH), the native token on the Ethereum blockchain.
In the case of the PFL (Professional Fighters League) fight on Friday night, the matchup was chosen by fans who had bought PFL-related tokens through Socios. They voted on who they wanted to see at the EPSN + event. The PFL fan tokens sold out in less than 10 minutes for $ 500,000 when first launched.
“I was really excited about that,” said Katie Talati, head of research at cryptocurrency-focused asset management firm Arca Funds, in an interview with CoinDesk, adding:
“I know we work in this room all day. But at the end of the day we really are a tiny subset of the general population. And I think if we want to bring the benefits of tokenization and digital assets on the blockchain to a wider community, we need to offer more applications of this type to consumers who interact with our daily lives. ”
Of course, when it comes to cryptocurrencies, there is no way to avoid the infamous price volatility. On Friday, the CHZ tokens appeared to have gotten into a widespread sell-off in the cryptocurrency markets. According to CoinGecko, at the time of going to press, the price of Chiliz coins was down 21% in the past 24 hours.
Whether the tokens are a good investment may depend on how fast the platform is growing.
Malta-based Chiliz burned around $ 800,000 worth of Chiliz tokens on Thursday following an impressive first quarter earnings report thanks to its business model of combining sports and crypto, two communities with some of the most dedicated followers of all time. Burning tokens means there are fewer supplies in circulation now. In theory, the remaining tokens should be worth more.
According to Messari data, the price increase of the Chiliz token since the beginning of the year makes it one of the top performers among all cryptocurrencies with a market capitalization of at least 1 billion US dollars in a league with the amazing performance of the meme token Dogecoin (DOGE) and of the decentralized exchange of PancakeSwaps CAKE tokens.
Sports and crypto have already proven to be a powerful combination. NBA Top Shot and its FLOW tokens recently became one of the hottest platforms for recently buzzing non-fungible tokens (NFTs) in the form of digital trading cards tied to fan favorite video highlights from NBA players.
There are two main platforms under the Chiliz company: the Chiliz Exchange, which makes it easier to trade fan tokens, and the Socios.com sports fan engagement platform, where sports fans can interact with their favorite sports team via fan tokens – both of them run on the proof-of-authority Chiliz blockchain.
“Since last year, the digital asset market has really started to see different sectors and different themes and to use those kinds of themes for investing,” said Talati. “Chiliz is just a very independent project. There’s nothing else in the sports field that tries to use tokenization to motivate fans in the same way. “
Chiliz raised $ 65 million in 2018 through a private token sale to investors like Binance, OK Blockchain Capital, and FBG Capital. Earlier this year, the company received a stake in Chicago-based trading company Jump Trading. The company recently entered into a partnership with the European subsidiary of Japanese e-commerce giant Rakuten, which enables Rakuten users in Europe to redeem their Rakuten points for fan tokens.
When crypto meets sports
Around 25 fan tokens are now being offered on Socios after the company forged a number of partnerships with sports teams and leagues, including FC Barcelona, Manchester City, Juventus and the Ultimate Fighting Championship (UFC).
“Large organizations like soccer clubs and the UFC need control over their brands and monetization rights,” wrote Mason Nystrom, an analyst at Messari, in a research report on Chiliz last September. “Tokenized loyalty points and rewards offer new ways to increase sales beyond ticket sales. The urge to increase digital revenue streams will certainly increase even after the pandemic ends. “
At the time of writing, according to CoinMarketCap, the most traded fan tokens on the Chiliz exchange are the FC Barcelona fan tokens and the Paris Saint-Germain fan tokens.
As CoinDesk reported, the first sale of FC Barcelona (BAR) fan tokens last June was well over $ 1.3 million with more than 600,000 tokens sold.
According to Talati, the governance of the Chiliz project has also made sports fans stick around for the long term.
“As a woman, I love Beyonce, you know,” said Talati. “I will be able to fully see Beyonce Token one day,” given the high fan engagement enabled by Chiliz’s underlying blockchain technology. (In other words, for music listeners instead of sports freaks.)
Growing speculative interest in East Asia in Chiliz coins
Without the activity on the Chiliz exchange, the volume of trading in the CHZ token is most active for Korean-based global crypto exchange giants Binance, Upbit and OKEx, according to CoinGecko data, reflecting the significant interest from retail speculators in East Asia.
With growing interest in cryptocurrency overall, as well as longstanding passion for professional soccer leagues, Chiliz’s success in East Asian countries was inevitable, said Jason Kim, chief investment officer of Tokyo-based investment firm Anchor Value CoinDesk.
Bitcoin has become too expensive for newly hired crypto investors in South Korea, and the relatively cheap and available Chiliz, especially with its sports theme, makes it a popular crypto investment there, Kim said.
Of course, CHZ tokens aren’t nearly as cheap as they were a few months ago.