Fan Tokens: A Bet on Your Favorite Soccer Team?

Does the performance of soccer team tokens align with on-the-pitch performance? Max Good, from CoinDesk Indices’ team, breaks down the match stats.

AccessTimeIconMar 13, 2023 at 4:39 p.m. UTC
Updated Sep 28, 2023 at 2:23 p.m. UTC

During last year’s World Cup, the crypto world saw the re-emergence of an almost forgotten trend: soccer fan tokens. Sorry – football (for you non-U.S. readers) fan tokens, a concept started by blockchain provider Chiliz back in 2021. At the tail end of 2022, while a major crypto exchange was collapsing and much of the crypto market was eroding, some national team fan tokens saw moves in excess of 500%. It was the perfect intersection of rabid football fandom and supercharged crypto speculation.

Crypto ages in dog years and so it already feels like eons ago. But have a look at any national team fan token during the World Cup, such as Brazil (BFT), the odds-on favorites at the start of the tournament, or Argentina (ARG), the winners, and you’ll be reminded of just how fast these things flew – and subsequently flopped. That was not entirely unexpected. For a tournament that comes around only once every four years, it’s impossible to maintain that same fervor for your national team once the dust has settled and the pitch is baked by the Qatari desert sun.

This feature is part of CoinDesk's Culture Week.

Instead, we will have a look at various club-level teams and their fan tokens: in particular FC Barcelona (BAR), Arsenal (AFC), Manchester City (CITY) and Paris Saint Germain (PSG). There are currently about 80 fan tokens under the Chiliz/Socios banner. Between league matches and various tournaments, club teams play almost year-round, taking just a few weeks off in the summer. As such, these club tokens offer the opportunity to do some analysis into what effect, if any, a team’s weekly performance may have on the tokens themselves.

Figure 1: Fan Token Market Capitalizations (Amberdata, CoinDesk Indices)
Figure 1: Fan Token Market Capitalizations (Amberdata, CoinDesk Indices)

The first of these fan tokens were launched in 2021 on a platform called Socios, a social network powered by Chiliz. Chiliz is a crypto protocol in the CoinDesk Culture & Entertainment Sector. Culture & Entertainment (CNE) is one of the seven sectors in the CoinDesk Digital Asset Classification Standard (DACS). CNE represents the collection of projects whose aim is to decentralize social media, create decentralized gaming worlds and empower direct peer-to-peer interaction between content creators and their audience.

Through their fan tokens, Chiliz is ushering in a new era of supporter-team engagement. On the back of that success, as CoinDesk recently reported, Chiliz has set up a $50 million program to invest in new sports-themed Web3 projects. Through Socios.com, these fan tokens allow supporters to vote on various team decisions and can even grant certain VIP perks as a reward for active participation. Fans can now feel they have actual skin in the game, that they are “invested” in their teams. But are they?

As things currently stand, the top football fan tokens by market cap just happen to be the top teams in each of their respective leagues: FC Barcelona, Paris Saint Germain and Arsenal all have sizable leads two-thirds into the season. At a glance, we might conclude that their positions atop the fan token market cap list are a result of their success on the pitch this season. But there could be numerous factors at play. Are these tokens correlating highly with their Sector, Culture & Entertainment (CNE)? Or is their performance merely a function of their perpetual popularity as compared to smaller teams? Let’s dive in.

Figure 2: English Premier League, La Liga, and Ligue 1 top 5 teams (Google)
Figure 2: English Premier League, La Liga, and Ligue 1 top 5 teams (Google)

First, we look at each token’s daily market capitalization performance and compare it to the sector in which it resides: Culture & Entertainment (CNE). CNE launched at the end of August 2022, so we will adjust the start date of everything to 8/28/22. By looking at market cap rather than price we can correct for the supply values that have increased over time, which gives a more accurate representation of overall enthusiasm for these tokens. In the following chart, we can see there is some clear correlation across tokens. Particularly notable is FTX’s collapse in November 2022, which sent the whole market downward.

Figure 3: Fan Tokens vs. CNE (Amberdata, CoinDesk Indices)
Figure 3: Fan Tokens vs. CNE (Amberdata, CoinDesk Indices)

Next, we will examine the sector-adjusted performance to get a better sense of how these tokens stack up against one another. Below, we can see that highly correlated moves like the FTX collapse have been mostly eliminated with this sector adjustment. In theory we’ve removed the broader “Culture & Entertainment” sector effect from these tokens’ performance. Here is where things become interesting. Manchester City and Paris Saint Germain have barely budged. Meanwhile, Barcelona is up nearly 250% and Arsenal has done even better at almost 300%.

Figure 4: Sector Adjusted Token Performance (Amberdata, CoinDesk Indices)
Figure 4: Sector Adjusted Token Performance (Amberdata, CoinDesk Indices)

These teams are all at the top positions in their respective leagues. But two have moved imperceptibly in terms of market cap, and two have more than doubled on a sector-adjusted basis. What’s causing the difference?

With a little more context, the explanation is clear: Arsenal and Barcelona are making comebacks. The other teams mentioned are proven winners – PSG and Man City are reigning league champions in France and England. It’s priced in. Not only that, but looking at league competition Manchester City has won four of the last five seasons; Paris Saint Germain has won eight of the last 10, and even Barcelona, whose legacy speaks for itself, has won 10 out of the last 20, although it hasn’t finished first since 2018-2019. On the other hand, Arsenal has been a top team for decades, though it hasn’t won the Premier League since the days of “The Invincibles” days of 2003-2004.

While these fan tokens offer various perks, they may also present the opportunity to speculate on the next rising star. Is buying your favorite team’s fan token an investment in the team’s success? Probably not. But if some epic underdog suddenly breaks out into the top of the league, you might be surprised.


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Max Good

Max Good is the Senior Index Research Analyst at CoinDesk Indices, based in Miami. Before covering crypto, he was a structural engineer with a BS in Architectural Engineering from University of Colorado - Boulder, and a MS in Civil Engineering from the University of Illinois - Chicago.

Todd Groth, CFA

Todd Groth was the Head of Index Research at CoinDesk Indices. He has over 10 years of experience involving systematic multi-asset risk premia and alternative investment strategies.