By now, almost everyone has heard of Bitcoin (BTC 0.46%) And the Ethereum (ETH 2.63%)But unless you’re a weedy lover of the cryptocurrency world, or maybe you’re a fan of some of Europe’s top soccer leagues, you probably haven’t heard of it. Chili’s (CHZ -1.90%). But with the price of this token up 27% over the past week at a time when most other cryptocurrencies were struggling, you should probably be on your radar.
What is chili’s, anyway?
Chiliz is a cryptocurrency “intended to strengthen a blockchain ecosystem designed for sports and entertainment.” Notably, it is the cryptocurrency that powers the Socios fan token platform. Fan tokens are basically cryptocurrencies issued by sports teams (or bands, artists, etc.) that offer their owners perks and benefits similar to membership in an exclusive fan club. Stands can vote on decisions about their team, such as designs for special uniforms, banners or murals that will be displayed on the field or in the locker room. They can also get chances to win more perks such as access to VIP events or meeting players. Socios has partnerships with more than 100 teams and individuals worldwide, including some NBA and NFL teams, Formula 1 drivers, UFC fighters and some of the major European football teams such as FC Barcelona, Real Madrid, Paris Saint Germain and Manchester City.
Thanks to the momentum generated by these partnerships, Chiliz has grown to the 34th largest by market capitalization at approximately $1.6 billion. Chiliz was previously an Ethereum ERC-20 token, but has since moved to its own blockchain. While Chiliz is down about 70% from its all-time high in March 2021, it is up 190% since its May 2022 cycle slump on the back of these Socios announcements and partnerships.
Barcelona share a big deal
The most interesting of all the developments surrounding Chiliz was the news that it had acquired nearly 25% of Barca Studios for about $100 million. Barca Studios is the media arm of FC Barcelona, one of the most famous and successful Spanish football teams. The iconic players who have acclimated to Barcelona over the years and the club’s continued success have made him very popular outside of Spain. On Facebook, FC Barcelona ranks second in the list of fans among any team in the world, after only its arch-rival Real Madrid. After going through tough times financially, the legendary club was in dire need of funds this summer to acquire new players, so it sold part of its media and promotional rights. The club also obtained a loan of more than 600 million dollars Goldman Sachs (GS -3.50%) She signed a new shirt sponsorship deal with spotify (spot -3.36%).
Chili’s has capitalized on the club’s need for funds, and although it is unclear how he will transform his stake in Barca Studios, he now owns part of a very attractive asset. Socios says it will work with Barcelona to develop non-fungible tokens and metaverse projects.
Picks and Scoops
Fan Tokens offer some interesting perks to fans of the teams they release. But from a purely financial perspective, the investment value they offer is relatively insignificant. For this reason, I’m more interested in Chiliz as the engine powering the fan token world, especially as fan tokens are becoming more mainstream. Instead of betting on a Barcelona fan token, investors can buy Chili’s where the picks and shovels play in making the fan tokens. (During the gold rush, business owners who sold picks, shovels, and other equipment to miners were often more prosperous than the miners themselves, which is one way to look at an asset like Chili’s.)
As the engine that powers the fan token market, and who now owns a large stake in one of Barca Studios’ incredibly interesting real-life assets, Chiliz looks like an interesting investment. Buying cryptocurrencies that are far beyond that in terms of market capitalization can be risky, but Chili’s is making real headway in the world of sports and entertainment, and its stake in Barca Studios provides tangible value. So I see this token as unique among cryptocurrencies and it deserves a small position for risk taking investors. Despite the run Chiliz started this summer, with a recent price tag of about $0.26, it is still well below its all-time high of $0.89. It reached this level long before it acquired its stake in Barca Studios or established several of its existing partnerships, which means that a return to its previous highs or beyond is out of the question if the overall cryptocurrency market is gaining momentum.
Michael Burn He has positions in Bitcoin and Ethereum. Motley Fool has positions in and recommends Bitcoin, Ethereum, Goldman Sachs, and Spotify Technology. Motley Fool has a disclosure policy.
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