The blockchain behind Psg, Barca, Juventus and many other fan tokens
Of CNBCTV18.com IST (published)
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Chiliz is a blockchain network launched in late 2016. Sports organizations can partner with the Chiliz network to create custom fan tokens for their teams. These fan tokens are listed on Socios, a fan engagement and rewards app built on the Chiliz network. Fans from around the world can then purchase these tokens using CHZ, the native cryptocurrency of the Chiliz network.
Fan tokens have become hugely popular in the last couple of years. They allow sports fans to interact and have unique experiences with their favorite teams. They also allow sports clubs to monetize their fan base, offering an additional revenue stream in addition to ticket sales and merchandise.
Today, several top sports organizations such as Barcelona FC, Manchester City FC, Golden State Warriors NBA team, Aston Martin Cognizant Formula1 team and many others have a fan token to their name. And all these tokens are powered by the Chiliz blockchain.
What is Chiliz?
Chiliz is a blockchain network launched in late 2016. Sports organizations can partner with the Chiliz network to create custom fan tokens for their teams. These fan tokens are listed on Socios, a fan engagement and rewards app built on the Chiliz network. Fans from around the world can then purchase these tokens using CHZ, the native cryptocurrency of the Chiliz network.
These tokens can give fans exclusive access to meet and greets with players, memorabilia, friendlies, training sessions and more. It also gives users governance rights, allowing them to decide the design of upcoming jerseys, choose celebration songs, vote on stadium/stand names, etc. Not to mention, it can also provide returns if the value of the token increases over time.
How does Chiliz work?
To begin with, a sports club must determine the tokenomics of the fan token, including the sale price (denominated in CHZ) and the supply. They also need to find out what kind of rewards and benefits the fan token will bring to holders.
After these details are determined, Chiliz will raise awareness of the token and announce when it will be available for sale. The token is sold through a Fan Token Offering (FTO). Fans purchase tokens that will be available on a first-come, first-served basis.
After the tokens are sold, they can also be burned to increase their valuation. For example, if a team wins a major trophy or title, some of the fan tokens may be burned, creating scarcity and increased prices.
Blockchain’s original cryptocurrency, CHZ, has a fixed supply of 8.8 billion, minted on the Ethereum network in 2018. These tokens were sold through select crypto exchanges and distributed to early investors.
Since it is based on the Ethereum blockchain, CHZ is an ERC-20 token. However, it was later designed to be BEP-2 compliant since FTOs are now conducted through the Binance Launchpool.
Socios operates as a permitted sidechain on the Chiliz network. Fan tokens are minted through a Proof-of-Authority (PoA) consensus mechanism. With PoA, only a few pre-approved nodes are tasked with creating and validating new blocks, hence the term “permission”. This means that there is less decentralization, but the network can be scaled without problems.
The people running these nodes are part of the Chiliz team and are made public to establish trust in the system. However, in April 2021, Chiliz announced a partnership with European retail giant Rakuten, which will also set up an official node validator for the Socios network.
Conclusion
Chiliz’s list of sporting organizations is growing rapidly. Today, it hosts fan tokens for more than 30 top sports teams and has six more in the works. At the time of writing, CHZ was trading at $0.15, up almost 50 percent in the past month. And with the benefit it brings to fans and sports clubs, the future looks bright for Chiliz.
