Initially, fans engaged passively with players, leagues, clubs and sports teams. They used to buy tickets or any franchise of their choice. The players or the team then accumulated the amount earned through it. However, this scenario then transformed with the inception of fan tokens. The roots of fan tokens lie in the decentralization created through blockchain technology.
In this guide article, we will learn about the working of fan tokens and how they differ from nonfungible tokens.
Understanding Fan Tokens
The digital assets owned by any fan of any player or sports team to derive value are known as fan tokens. These tokens are tangible assets that can be sold, purchased or exchanged with the team. It creates a fan-based reward ecosystem. However, fan tokens cannot be used as a means of payment to trade goods or services. Holders can use the token for participation in voting or similar activities on their platforms.
Several companies have now adopted the fan token model. In addition, multiple teams monetize their fandom through fan tokens and engage them to earn rewards. It increases the involvement of fans with the associated team or players.
Fan Tokens vs Nonfungible Tokens
Fungibility is what separates fan tokens from nonfungible tokens (NFTs). This property allows any product to be interchanged with a similar one. Traders can divide fungible products into multiple parts and trade them conveniently.
As NFTs cannot be replicated and contain unique characteristics, they cannot be interchanged. They are stored on the blockchain like other tokens and provide ownership rights to the owner.
Any fan token can replace a specific fan token. They can also be easily traded in secondary markets. However, the market’s supply of fan tokens is limited.
Role of Fan Tokens as Utility Assets
Fan tokens can be used as utility tokens or security tokens. Traditionally they are used as utility tokens, providing several user benefits. These tokens have a crucial role in monetizing the fan ecosystem. Several teams use these tokens to generate good revenue. Moreover, these tokens can also be used in the blockchain network for voting purposes. However, voting using the fan tokens is only conducted for matters that do not have any significant impact on the project.
Different Types of Fan Tokens
Multiple football clubs collaborate with fan token platforms known as Socios and allow fans to purchase their favourite tokens. Moreover, several martial art companies have also launched fan tokens that allow fans to win rewards and engage with their platform. Some celebrities also issue fan tokens that prove the ownership of any asset. In addition, some gaming businesses issue NFT fan tokens to give customers access to different assets and services.
Working of Fan Tokens
The players or teams that aim to launch their fan tokens must collaborate with Socios to mint them on the blockchain network. These tokens are available at a flat price for the fans through a fan token offering (FTO). However, several factors, such as the demand for the token, its applications, team performance, etc., may affect the price of the tokens.
Fan tokens allow the holders to win rewards and utilize multiple services. In addition, they allow them to interact with the team or the players and access different collectables. Any user with more fan tokens significantly influences the ecosystem more than others.
Places for Buying Fan Tokens
Fan tokens behave similarly to other crypto assets. These tokens have a limited supply in the market. Fans can follow simple steps to purchase them. Firstly, they must create an account on their devices and buy the CHZ to get fan tokens on the Socios. Next, they have to choose their favouritefan tokens and buy them. These tokens can then be stored in the wallets and traded according to ease.
Conclusion
Fan tokens have significant profit potential in the market. Different teams and celebrities create fan tokens to leverage new market opportunities and compete with others.