Last week, we talked about the evolution of SportFi and how Fan Tokens were going omni-chain thanks to a partnership between Chiliz and LayerZero. However, the debut of Fan Tokens on multiple chains is just one part of transforming SportFi into a comprehensive gamified digital asset market.
Perhaps the most exciting development announced by Chiliz in its 2030 Manifesto was Fan Token Play, an initiative that will directly tie tokenomics to on-field performance.
Burn-to-Win: Why Gamified Tokenomics Raise the Stakes
As we know, sporting performance is often reflected in the Fan Token market, with success tending to correlate with heightened trade volumes and value, and failure corresponding to downtrends.
However, Fan Token supply/emission has remained fixed: tokenomics have been independent of on-field action, completely unaffected by results, with positivity or negativity generated purely on the basis of event-driven sentiment.
Well, that will soon change with the arrival of a gamified tokenomics system that links Fan Token supply to real-match outcomes. When teams suffer a defeat, more Fan Tokens are minted; when they win, tokens are burned.
Performance-linked supply mechanics raise the stakes for every single Fan Token, as wins essentially trigger a supply shock with the potential for value accrual, while losses create inflationary pressure by bringing more tokens into circulation.
Fan Token Play is expected to go live as early as Q3, meaning it will coincide with the resumption of league football following this summer’s World Cup. The tournament, set to run from June 11 to July 19, will itself shine a spotlight on Fan Tokens given the increasing number of nations that have their very own digital asset.
By connecting Fan Token supply to match outcomes, these assets will be transformed into living derivatives tied to the team’s on-field track record, in the process converting every game into a significant liquidity event.
How Traders Might Approach Fan Token Play
The cool thing about Fan Token Play is that traders will be even more incentivized to take positions, since there will be a tangible impact on the token’s supply based on results.
Impressive win streaks can already deliver handsome returns for those able to successfully call the action, so imagine how they might be amplified if Fan Tokens are burned after every win.
Similarly, there are ways for traders to exploit the fact that Fan Tokens are minted when teams lose. Aside from simply buying up tokens after losing streaks (when they are abundant/cheap) and waiting for future burns to drive appreciation, they can trade according to the predictable volatility spikes around every single game.
As token minting often causes knee-jerk selling, traders could fade the panic and buy aggressively on the post-loss oversold dip, anticipating a subsequent correction. Because more circulating tokens could result in a larger holder base, traders could also see value in accumulating to take advantage when sentiment flips at a later date.
This latter action is analogous to buying the dip when abundance lowers the entry cost, with any subsequent positive catalyst leading to outsized gains. It might be the favoured play of believers in a team’s long-term value, who get to build a larger position at a lower average cost.
The fact that token supply contracts or expands according to match results means that traders can choose to go long on the losing team’s token (buy cheap/sell the rebound) and trade the winning token based on a team’s prospects of more success.
Of course, as well as deeply strategic plays, there will inevitably be periods of panic selling and opportunistic buying, a corollary of which should be tighter spreads and heightened liquidity.
Irrespective of token supply, Fan Tokens will continue to retain club perks (voting rights, merch, VIP experiences), meaning they retain utility even if their value declines. This should make them more attractive to hold during turbulent periods, particularly for hardcore fans of the club in question.
In summary, the arrival of Fan Token Play sets the scene for numerous strategic opportunities for SportFi traders. Whether you’re a patient, tactical trader or one who enters the water during periods of dangerous but lucrative churn, the opportunities to exploit this mechanism will be abundant.
For more on Fan Tokens, including detailed price information and the latest news, check out Fantokens.com.
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