As soon as rumors began to circulate that soccer star Lionel Messi would be transferred from FC Barcelona to Paris Saint-Germain in August, Miguel Schweizer decided to buy the French club's fan token, $PSG, on a hunch that fans would prices would skyrocket. They did, but he didn't hold the chips for long.
He sold them a few days later, betting the rally would be short-lived. His trade was correct: prices fell 34 percent a week later and 73 percent four months after it was issued.
โI would never keep them in my long-term investment portfolio,โ said Schweizer, 29, chief executive of Decrypto, a Buenos Aires-based exchange and wallet. "These are business opportunities."
For many, football club tokens have turned out to be a disappointment, with prices running out of steam in a matter of days.
It has been three years since fan tokens began trading on major cryptocurrency exchanges, promising an alternative for clubs to earn money and for fans to be closer to their favorite teams. Both have yet to live up to the hype.
Clubs that have issued tokens include Manchester City, FC Barcelona, โโand AC Milan.
FC Arsenal have raised $5.5 million through fan tokens, though most transactions are closer to $2 million. That's a fraction of the expenses of these clubs.
Analysts say that the demand for fan tokens quickly goes from euphoria to indifference. His main criticism is that the tokens have few tangible benefits for their owners.
The Juventus token allows fans to use the tokens to purchase VIP tickets, while the PSG token was used to allow holders to vote on the design of the new team bus and the club's slogan.
โThe problem with current fan tokens is that clubs aren't actively promoting them or the utility they have,โ said Oliver Bell, CEO and co-founder of XCAD Network, a company that makes tokens for content creators.
โThe people who buy them are not necessarily fans of the clubs; the only buyers are crypto enthusiasts.โ
Meanwhile, the market remains small. The market capitalization of sports fan tokens is up to $491 million and its daily traded volume is $241 million.
The 10 largest fan tokens have an average daily volume of $13 million, just 28 percent of the daily traded volume, on average, for the 364 coins listed on Binance, according to data from CoinMarketCap and CoinGecko.
The world's largest fan token by market cap, Manchester City has a market cap of $56 million and daily traded volume is less than $15 million, according to data from CoinMarketCap.com. Its price is half of what was issued.
Fan token advocates say it's too early to assess their success. These coins are not intended to be investment assets but to provide a service, said Alexandre Dreyfus, founder and CEO of Socios.com, a company that partners with clubs to develop tokens.
Socios.com has 57 fan token partners, including soccer and Formula 1 teams, up from 20 a year ago. Dreyfus says this indicates a growing interest.
โWe are seeing an increase in interest from clubs in issuing tokens for fans,โ he said. "Fans will be able to enjoy exclusive games and content and earn points that they can redeem for official signed merchandise, free tickets or VIP experiences."
To promote its use, on April 7, Binance began offering Lazio Fan Token holders the opportunity to stake, a process that allows owners to earn passive income from the coins without having to sell them.
The tokens are used to validate transactions on the blockchain, with the rewards and fees split between the participants and the exchange.
Binance offered holders 8 percent annualized returns when they held the Lazio tokens locked for 30 days, or 15 percent if they held them for 90 days.
Some say they still see a good investment opportunity, even amid low volumes reflecting the general mood on cryptocurrency volatility. They point out certain tokens, such as those of PSG or Barรงa, which have attracted peaks of interest when there is big news.
Updated: April 17, 2022, 3:30 am
