Socios

Fan tokens struggle to hold on as World Cup quarter-finals draw nearer

Soccer fan tokens have seen their prices and trading volumes plummet since the start of the World Cup on Nov. 20.

Cryptocurrencies tied to national soccer teams have failed to keep the attention of 2022 FIFA World Cup fans, with many soccer-linked fan token prices plummeting since the tournament began.

Between Portugal, Spain, Brazil and Argentina, the associated digital fan tokens have fallen between 60% to 88% percent in price since the start of the World Cup on Nov. 20, according to CoinGecko.

This is despite Brazil, Argentina and Portugal reaching the quarter-finals, while Spain was a strong contender up until they were knocked out on Dec. 6.

The tokens do generally react to immediate results, with Spain’s SNFT token down 39.1% over the past 24 hours following the team’s loss against Morocco. However, Portugal’s POR token is also down 6.1% over that same time frame, despite them beating Switzerland 6-1 on Dec.6. Such suggests that the tokens are becoming less reactive to the associated teams’ success.

Notably, these cryptocurrencies saw their peaks well before any of the teams even walked on the soccer field in Qatar, suggesting a classic “buy the rumor, sell the news” event took place.

Both the Portugal and Argentina fan tokens hit their all-time highs (ATHs) on Nov. 18, while the ATHs for Spain and Brazil fan tokens came two months prior on Sept. 28.

A similar occurrence can also be seen on the chart for Chiliz (CHZ), the native token behind the major fan token platform Socios, which pumped to its own ATH on Nov. 20 but has since dropped 36%.

The 24-hour trading volumes of tokens have also dropped off drastically since kick-off — falling between 79% to 88% since Nov. 20.

This class of tokens was originally designed to offer fans unique interaction opportunities with teams they support, such as allowing tokenholders to vote on minor decisions like what is to be written on the captain’s armband.

Critics of fan tokens see it differently, however, and view the market as a predatory way for experienced traders to milk enthusiastic fans out of capital.

Speaking to The Athletic in Aug. 2021, Martin Calladine, author of The Ugly Game — a book exploring the dark side of FIFA’s dealings with Qatar and its bid for the 2022 World Cup — offered a grim take on the fan tokens.

“We see the price of tokens being driven up in anticipation of football events like signings or titles,” he said, adding that “traders cash them out, prices crash, and fans are left sitting on losses — victims of their enthusiasm for their clubs.”

Argentina’s fan token sinks 31% after World Cup loss against Saudi Arabia

The price of soccer fan tokens, designed for fan engagement, is seemingly impacted by the on-field performance of teams.

Argentina’s shock 2-1 loss to Saudi Arabia in the opening match of the FIFA World Cup has plummeted the price of the Argentine Football Association Fan Token (ARG), in line with the hopes of the nation’s die-hard soccer fans.

With the ARG token priced at $7.21 at kick-off, the poor performance by the Lionel Messi-led soccer team saw the token’s price fall 31% to $4.96 by the end of the match before rising to $5.22 at the time of writing, according to data from CoinGecko.

By contrast, the floor price of “The Saudis,” a Saudi Arabian-themed nonfungible token (NFT) collection unrelated to the soccer team, skyrocketed 52.6% from 0.196 Ether (ETH) to 0.3 ETH over the same time before cooling off to a price of 0.225 ETH, around $250.

The collection’s sales volume also spiked 990% over the last 24 hours, closing in on 24.5 ETH, according to OpenSea data.

Despite the built-up hype for the FIFA World Cup, which officially kicked off on Nov. 20, cryptocurrency research firm Delphi Digital noted that the fan engagement platform Socios’ native token Chiliz (CHZ), in addition to other soccer-based tokens representing participating nations, has also cooled off considerably over the last few days:

Football Fan Tokens have cratered over the past 3 days as the FIFA World Cup 2022 Begins:

Chilis / $CHZ: -21%
Argentina / $ARG: -17%
Portugal / $POR: -17%
Brazil / $BFT: -21%
Spain / $SNFT: -31%
Peru / $FPFT: -26%

The index (FOOTBALL) is down 21% over the period. pic.twitter.com/y7tb72R3Et

— Delphi Digital (@Delphi_Digital) November 21, 2022

CHZ is an ERC-20 token native on Socios, a blockchain-powered fan engagement platform that has been one of the largest contributors to the sports-fan token boom.

Many of the soccer–based tokens run on Socios, which has partnerships with some of the largest soccer clubs in the world, including Barcelona F.C., Paris Saint-Germain F.C. and Manchester City F.C.

While the tokens don’t represent ownership in teams, the token allows buyers to vote in some decisions made by sponsoring teams in addition to enabling access to some rewards.

Popularity for fan-based tokens in the sporting industry has surged lately, too, with token sales volumes often increasing more than 250% month-on-month since Jan. 2022.

Some appear to have viewed the tokens as an indirect way to bet on the success of such teams, despite them not being designed for that purpose.

The tokens are also impacted by factors other than the on-field success of soccer teams, such as the regular ebbs and flows of crypto markets and breaking news events.

An example is the recent FTX collapse sending the price of CHZ falling by nearly 40% since the reports of the exchange’s liquidity issues and proceeding bankruptcy.

In May, smart contract platform Algorand became the first official blockchain-based sponsor for the FIFA World Cup, which is set to wrap up on Dec. 18.