Chiliz (CCC:CHZ-USD) is an Ethereum (CCC:ETH-USD)-based fintech blockchain platform and a company with the same name. The company’s purpose is to get global fans closer to their favorite sports teams and clubs. Basically, it gives sports teams a way to get their own fan tokens that can be traded on exchanges. Chiliz directly benefits from the purchase of these team tokens.
This is very popular in Europe and keeps fans engaged with their chosen team. The tokens trade on Socios.com, a fan site and an app. Users buy CHZ tokens first on the app and then can exchange them for Fan Tokens for their favorite team. They can use the tokens to participate in polls and governance decisions and receive rewards, prizes and other promotions.
Socios.com and Chiliz
For all intents and purposes, the growth of Chiliz is all about the growth of the Socios.com app. On June 17, the Philadelphia 76ers partnered with Socios.com. Socios.com will have a large digital presence on Sixers.com and across 76ers social channels as well as advertising and TV-visible signage at 76ers games.
Here is what the official press release said about the partnership:
“Driven by the central belief that transitioning passive fans into active fans is essential to the future of sport, Socios.com is a direct-to-consumer (D2C) platform that leverages blockchain technology to provide the world’s leading sporting organizations with the tools to engage with and monetize their global fanbases.”
The 76ers are the first NBA team to partner with Socios. But the first team in the U.S. to do so was the NHL’s New Jersey Devils in April 2021. In addition, Endeavor’s (NYSE:EDR) MMA promotion company UFC announced plans to launch a Fan Token on Socios.com in May.
All of these actions were the result of a move announced in March by Chiliz, a Malta-based company. It said it was going to spend $50 million to promote its crypto token with the same name. It also opened up an office in New York City. The company said it was going to focus on soccer, but its moves so far show that it has been successful in other sports.
Chiliz, the company, makes money by taking a commission from sports clubs that go on to list their own sports tokens on crypto exchanges. For example in February 2021, the Milan soccer club fan token created and listed its own token (ACM) using Chiliz blockchain technology. The token was listed on the Binance exchange and generated $6 million in revenue for the Milan sports club.
Effect on Chiliz
As a result, the CHZ crypto token has moved up from its low on May 22 of 16.57 cents to about 24 cents as of June 28. That represents a gain of about 45% from its lows.
Right now, Chiliz crypto has a market capitalization of about $1.4 billion. Moreover, CoinMarketCap ranks it as the 57th largest crypto in circulation by market cap. Chiliz crypto tokens gain value as the number of teams that issue and list their tokens grows.
Concurrent with the February 2021 Milan token listing, Chiliz released the following info on its success so far. There were $30 million in Fan Tokens sold during 2020. It is not clear how much Chiliz makes from the sales of these tokens, but it has plenty of room to grow.
Where This Leaves Chiliz Crypto
Alexandre Dreyfus, the CEO of both Chiliz and Socios, said that the total market cap of all Fan Tokens stands at $194 million as of February 2021. He said he expects it to become a $1 billion dollar “ecosystem.” He also thinks the success will move into the entertainment industry:
“…the world’s leading sporting and entertainment properties will have their proprietary digital assets listed on the biggest global exchange.”
So you can see why Chiliz has such a high market cap. If the move to have sports teams sell their own tokens and eventually list them (along with a commission to Chiliz) takes off, every celebrity, rock band, movie franchise, movie star, online personality and author of any import is going to want to sell their own fan token. That will blast Chiliz crypto tokens to the moon.
On the date of publication, Mark R. Hake held a long position in Ethereum but no other security mentioned in the article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.