Chiliz Blockchain: The Future of Sports Engagement
SINGAPORE — The Chiliz blockchain is positioning itself as the definitive “sports blockchain,” according to its CEO, Alexandre Dreyfus. In a recent interview with CoinDesk, Dreyfus emphasized that the market for fan tokens is significantly larger than that of non-fungible tokens (NFTs). This statement raises important questions about the evolving landscape of digital assets and the unique niche that fan tokens are carving out in the sports industry.
To further enhance its offerings, Chiliz is set to launch a new memecoin called Pepper on October 10. Dreyfus humorously noted that the inspiration for this new token comes from “Chili Pepper.” The Chiliz blockchain’s native token, CHZ, powers Socios.com, which is recognized as the largest platform for creating sports fan tokens globally. Token holders of CHZ will receive an airdrop of Pepper, though this offer will not extend to U.S. citizens. Additionally, Pepper can be farmed, adding another layer of utility for token holders. The Upbit crypto exchange in South Korea has already announced its listing of Pepper, highlighting the growing interest in this new asset.
In the lead-up to the 2024 UEFA Euro football championships, the price of the CHZ token saw a remarkable 25% increase within just seven days, peaking at over $0.15. However, it has since declined to approximately $0.068, according to CoinDesk data. Despite this fluctuation, CHZ remains the leading sports token globally by market capitalization.
Navigating the Market: NFTs vs. Fan Tokens
Dreyfus is keen to reshape the conversation surrounding fan tokens by asserting that their market potential is vastly underappreciated compared to NFTs. “No offense to the NFT community, but what people don’t realize is that fan tokens are a much bigger market than NFTs,” he stated. He referenced current data showing a 24-hour trading volume of around $6.8 million for NFTs, contrasted with $134 million for fan tokens, as reported by Coingecko.
While it is essential to acknowledge that NFTs and fan tokens serve different purposes—one being fungible and the other non-fungible—Dreyfus argues that fan tokens offer tangible utility and engagement. “With fan tokens, every single week people are going to stadiums and voting,” he noted. This active involvement sets fan tokens apart from NFTs, which, despite their initial popularity during the peak of the crypto bull market, often lack ongoing utility.
At the height of the NFT craze, unique digital assets gained traction within various communities, including digital art, music, and gaming. This surge in interest highlighted the appeal of owning irreplaceable assets. Conversely, fan tokens represent a different type of digital asset that allows sports fans to engage with their favorite teams and communities. Token holders can enjoy various perks, including exclusive access to game tickets and participation in decision-making processes regarding their teams.
Building Community: The Role of Fan Tokens
Dreyfus founded Chiliz with a clear vision: to cater to the 95% of sports fans who cannot physically attend the games of the teams they support. “We wanted to create something that is both valuable for the fan and scalable for the team,” he explained. Since signing Paris Saint-Germain F.C. as their first partner in 2018, Chiliz has expanded its reach to over 80 sports properties worldwide, employing approximately 300 staff across nine offices.
Each sports team that collaborates with Chiliz has its unique token, while the CHZ token functions as a governance token on the Ethereum blockchain. Dreyfus believes that his firm has established a “network of the biggest sports broker in the world.” This infrastructure empowers fans to make decisions, even if they are soft decisions, such as selecting the music that plays when a goal is scored. A notable instance involved Cristiano Ronaldo scoring three goals for Juventus, where only token holders could choose the celebratory music.
This example underscores how blockchain technology is capable of creating real-world impacts, as Dreyfus stated, “This is the perfect example of how something on-chain changed something in real life.” He emphasized that even soft decisions are meaningful, as they enhance fan engagement and create a sense of community.
Regulatory Landscape and Market Expansion
In 2021, Socios signed partnerships with 27 NBA teams and 13 NFL teams, although no tokens were launched at that time. The platform has also established connections with several cricket teams in the Indian Premier League. Dreyfus mentioned that Socios has secured regulatory licenses in countries such as Italy, Spain, Portugal, and Lithuania, making it one of the most regulated crypto entities globally, second only to crypto exchanges. “We had to go through the same rigorous processes as an exchange, but our focus is solely on fan tokens,” he noted.
Currently, Turkey and Brazil are the largest markets for Chiliz, boasting one million and 500,000 users, respectively. The growing user base underscores the increasing interest in fan tokens and the potential for further expansion in these regions. As the landscape continues to evolve, Chiliz aims to solidify its position as the go-to platform for sports fan engagement through blockchain technology.