Fan Tokens Have a Big Utility Problem

Fan Tokens have become popular assets in the crypto industry. According to Fan Market Cap, there are now 82 fan tokens in existence with a market cap of more than $296 million. They have a diluted market value of over $1.8 billion. So, are fan tokens dead?

What are fan tokens?

Fan tokens are financial assets that leverage the concept of blockchain in fan engagements. They are issued by popular teams that want to raise money and take part in the growing blockchain sector.

Most fan tokens in existence were issued by leading teams like Paris Saint-Germain, FC Porto, Barcelona, and Manchester City. Sports organisations like the Argentine Football Association and Portugal National Team have also issued their tokens. Similarly, F1 team Alpine, has a token.

The biggest fan token in the market is Lazio, which is valued at over $30 million. Others are Santos, Paris Saint-Germain, FC Porto, and Barcelona among others. 

The concept of fan tokens is easy to understand. Teams offer these token holders and provide perks to their holders. For example, the PSG token gives holders the ability to vote on some minor topics. For example, PSG token holders can vote on the best player of the season or the best part of the season.

Further, token holders can be given discounts when buying in a store or when purchasing tickets to attend matches.

Fan tokens utility problem

Fan tokens have several major problems that they need to solve before they go mainstream. First, like Bitcoin, these fan tokens are mostly not used according to their intentions. Buyers rarely buy a fan token because of their utility. Instead, they buy them as an investment. 

This challenge can be solved by providing real utility to fan token holders. For example, token holders could be given a bigger role in how a club is run. A good example is where they are asked to vote for a new team member. 

Today, the votes they are asked to participate in are not all that important. The last vote by FC Porto was for holders to choose the sports practice session they wanted to watch on Instagram stories. Can you buy a fan token for such a vote?

Therefore, unless there is a real utility, fan tokens wil likely remain being a small niche in the broader cryptocurrency industry.