As football fever rises, fan tokens are taking center stage in the crypto world. These are not ordinary digital assets, but tokens issued by national teams or individual clubs that offer fans various ways to interact. In the run-up to the European Championship and the Copa América in North and South America, activity with tokens has increased. The market value of the cryptocurrency Chiliz, which maintains the most fan tokens, has risen from around USD 680 million at the beginning of the year to over USD 1 billion, according to the information service CoinGecko. The trading volume of fan tokens has also increased in recent months, reaching over USD 170 in May, while it was USD 25 and 57 million in January. The total market value of listed fan tokens is around USD 413 million, according to CoinGecko.
This Euro summer will be a test for the fledgling fan token sector. Supporters praise the tokens as a good example of real-world crypto utility, while critics highlight the tensions between the stated purpose of team engagement and the speculative – and risky – part of tradable assets. Fan tokens are tools for fan engagement and should be used as such. During an earlier crypto boom in 2021, many football teams and sports stars promoted crypto assets – such as non-fungible tokens (NFTs) or fan tokens – to their supporters, drawing the ire of critics who warned that they could encourage financial speculation. British lawmakers warned last year that the rise of NFTs in sports puts fans at risk of financial harm and potentially damaging the reputations of clubs. Meanwhile, the Football Supporters Association of England and Wales has dismissed fan token partnerships as an attempt to monetize trivial matters or to introduce financial barriers to genuine fan engagement. Changes in token volume and price do not always correspond with a team’s performance. There is no evidence that token holders benefit from holding these tokens as a bet on the success of the respective team.
A study analyzing fan token trading around major sporting events found that it often follows the «buy the rumor, sell the news» pattern found in traditional finance. Volumes and returns typically rise before major tournaments and then fall at the start of important matches. On the other hand, another study found that fans who buy tokens tend to take advantage of the benefits that come from voting on club-related decisions. When fans have the opportunity to influence club decisions, they become highly engaged. The dual nature of fan tokens as an engagement tool and asset offers interesting opportunities for fans. Time will tell how this split between engaged users and speculators develops. However, the growth of fan tokens continues to require a lot of time and patience.
