The mixed martial arts fight on Friday evening between the British featherweight fighter Brendan Loughnane and the Brazilian Sheymon Moraes could make history – and not because of the expert footwork or the nasty elbows.
This is because the entire MMA battle was made possible by the wizardry of the rapidly emerging blockchain technology and, in particular, a particular platform: Socios, a unit of the Chiliz company, where sports fans use the increasingly popular genre of cryptocurrencies known as “fan Token “can use” 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 is. On the other hand, there is a profit of 70% since the beginning of the year for Bitcoin (BTC), the largest cryptocurrency, and a tripling of the price of No. 2 Ether (ETH), the native token of the Ethereum blockchain.
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In the case of the Professional Fighters League (PFL) fight on Friday night, the matchup was selected by fans who bought PFL-related tokens through Socios. they voted on who to see at the EPSN + event. The PFL fan tokens sold out for $ 500,000 in less than 10 minutes during the initial launch.
“That really got me excited,” Katie Talati, research director at cryptocurrency-focused asset management company Arca Funds, told CoinDesk in an interview, 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 total 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 of this type of consumer-facing applications that interact with our everyday lives. ”
With cryptocurrencies, there is of course no way around the notorious price volatility. On Friday, the CHZ tokens appeared to be swept up in a widespread sell-off in the cryptocurrency markets. According to CoinGecko, the price of the Chiliz coin has fallen 21% in the past 24 hours.
The story goes on
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Whether the tokens are a good investment may depend on how fast the platform is growing.
Malta-based Chiliz burned two communities with some of the world’s most dedicated supporters on Thursday after a formidable earnings report for the first quarter of around $ 800,000 worth of Chiliz tokens, thanks to its business model of combining sports and crypto. The token burn means that there is now less supply in circulation, and therefore the remaining tokens should theoretically be worth more.
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, according to Messari data, in a league with the amazing performance of the meme token Dogecoin (DOGE) and the CAKE token from PancakeSwap.
Sports and crypto have already proven to be a powerful combo, with NBA Top Shot and its FLOW tokens becoming one of the hottest platforms for lately trending non-fungible tokens or NFTs in the form of digital trading cards that come with the favorites of the Fans are linked to video highlights of the NBA players.
There are two major platforms under the Chiliz company: the Chiliz exchange, which makes it easier to trade fan tokens, and the sports fan engagement platform Socios.com, where sports fans can interact with their favorite sports team via fan tokens – both running on the proof of the official Chiliz blockchain.
“Since last year, the digital asset market has really started to see different sectors and different themes and to capitalize on those kinds of themes for investment,” 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, it received an equity stake from Chicago-based trading firm Jump Trading. The company also recently launched a partnership with Japanese e-commerce giant Rakuten’s European subsidiary, which will enable 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 signed a number of partnerships with sports teams and leagues such as 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 opportunities to increase sales beyond ticket sales. The urge to increase digital revenue will certainly increase even after the pandemic has subsided. “
At the time of writing, according to CoinMarketCap, the most commonly traded fan tokens on the Chiliz exchange are FC Barcelona fan tokens and Paris Saint-Germain fan tokens.
As CoinDesk reported, FC Barcelona’s first fan token sale ($ BAR) reached well over $ 1.3 million last June with more than 600,000 tokens sold.
The governance of the Chiliz project, according to Talati, has also made the token attractive for sports fans to keep in the long term.
“As a woman, I love Beyonce, you know,” said Talati. “I can totally see Beyonce tokens one day,” given the high fan engagement enabled by Chiliz’s underlying blockchain technology. (In other words, serving music listeners instead of sports madmen.)
Growing speculative interest in Chiliz coins in East Asia
Aside from activities on the Chiliz exchange, according to CoinGecko data, the trading volume of the CHZ token is most active on the global crypto exchange giant Binance, Korea-based Upbit and OKEx, reflecting significant interest from retail speculators in East Asia.
With growing interest in cryptocurrency overall, as well as longstanding passion for professional football 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 new crypto investors in South Korea, and the relatively cheap and available Chiliz, especially with its sports theme, is making it a popular crypto investment there, Kim said.
Of course, CHZ tokens aren’t nearly as cheap as they were a few months ago.