What are fan tokens?

Fan tokens are a type of cryptocurrency that have a somewhat specialized use case. Unlike most other cryptocurrencies, they are designed to give holders access to a variety of exclusive perks, which might include special content, experiences, and rewards. Some tokens also give fans the ability to vote on decisions and shape the future of their favorite club, team, and more.

Fan tokens are often issued by sports teams, bands, and other artists or groups. While some may see them as a gimmick, others believe they are an effective way to help supporters feel like they are valued and involved in an important community, which can be difficult to achieve with traditional means. They are also incredibly popular, attracting billions of dollars in sales.

In this AAG Academy guide, we’ll explain fan tokens and how they work in more detail, look at some common types of fan tokens, and cover how to identify them. We’ll also tell you how you can buy fan tokens, and touch on the differences between fan tokens and NFTs.

In addition to the benefits outlined above, fan tokens play another important role. It’s not usually possible to speculate on the success of a certain sports team or artist. Very few sports teams are listed as public companies with stocks and shares. Fan tokens change that, allowing supporters to put capital into an entity that they believe is only going to get more valuable.

Furthermore, they help provide those teams, artists, bands, and more with funding. Some fan tokens have proven to be incredibly lucrative streams of income that not only allow fans to get involved, but could also enable a certain artist to launch their first international tour, or help a sports team purchase better equipment or stadium improvements.

How do fan tokens work?

One thing fan tokens do have in common with other cryptocurrencies is that they work in much the same way. They rely on blockchain technology, and can be bought, sold, and traded on cryptocurrency exchanges. The biggest fan tokens — which we’ll look at later — are even available from more mainstream, centralized exchanges like Binance and Coinbase.

When a fan token first launches, its price is set by the creator. However, because the tokens are listed on exchanges, their value is then subject to market fluctuations in the same way it is for any other tradeable asset. This means the tokens can be more expensive when they are particularly popular, and less expensive when the wider cryptocurrency market is down.

One of the most valuable perks fan tokens can offer to their holders, as we touched on above, is exclusive access to events and the ability to vote on certain decisions. For instance, some can be exchanged for merchandise or open up special VIP experiences, while others allow fans to have a say in things like merchandise designs, ticket allocation, and more.

It should be noted, however, that to gain access to perks like these, a certain number of tokens must be acquired. Those who hold 5,000 tokens, for instance, are likely to receive better benefits or greater voting rights than those who hold just 10.

What are common types of fan tokens?

Some of the biggest and most common fan tokens in existence today are those created by Chiliz, which dominates the market when it comes to sports teams. Through its Socios platform, it offers tokens for some of the biggest soccer teams in the world, including FC Barcelona, Arsenal, Manchester City, Juventus, AC Milan, Inter Milan, and the Italian national team.

These tokens offer many of the perks we’ve already covered in this guide, including the ability to vote in certain club decisions, as well as the ability to participate in exclusive prize giveaways. For example, FC Barcelona token holders were given the opportunity to decide on a dressing room mural and the design of an armband worn by the club’s captain.

Binance also has its own fan token platform, launched in 2021, that allows customers to buy tokens related to other soccer clubs and an F1 team. It currently offers just four options, but Binance says it plans to partner with other “exciting brands across gaming, esports and entertainment” in the future.

How to identify a fan token

Fan tokens are usually recognizable because of their affiliation with a major sports team, band, or personality. Aside from that, however, there’s no obvious way to tell them apart from other cryptocurrencies since they operate in much the same way — they just aren’t used for the same purposes. They are mostly collectables that offer perks, rather than a form of payment.

With that in mind, it’s important to ensure that when buying fan tokens, you are getting the real thing and not an unofficial “copy.” The best way to ensure this is to acquire your tokens through a trusted platform, like those mentioned above, or by checking that any fan tokens listed on a decentralized exchange use the correct token ticker.

How to buy a fan token

Just like other cryptocurrencies, there are two primary ways to buy a fan token. One is to acquire them from a centralized exchange, like Binance, which will allow you to use a regular debit card in many regions. The Socios app and website also accept debit cards, but you must buy the official Chiliz token (CHZ) first, then exchange it for the fan token of your choice.

Alternatively, for smaller fan tokens that aren’t available from centralized exchanges or portals, you can use a decentralized exchange like Uniswap. These do not accept debit cards or provide you with a wallet, so you’ll need to acquire another cryptocurrency first, like Bitcoin or Ethereum, then exchange it. You will also need to set up a decentralized wallet, such as MetaOne.

NFTs vs. fan tokens: What’s the difference?

Fan tokens can be considered somewhat similar to certain NFTs in that they give the holder certain rights or privileges. This is different from many cryptocurrencies, which are designed as a form of payment. However, there is a major difference between fan tokens and NFTs that is important to understand before investing in either one.

NFTs can be incredibly lucrative and a worthwhile investment for some, but they are non-fungible by definition. We have another guide that explains this in detail, but in a nutshell, it means NFTs cannot be easily exchanged for other assets. Fan tokens, on the other hand, are interchangeable with other cryptocurrencies on many exchanges, making them more flexible.

References

• What are fan tokens
• What are fan tokens crypto assets that give fans a voice
• What are fan tokens and how do they work