Scalability is one of the possible reasons for the fun token industry to grow despite the ongoing bear market, according to Chiliz and Socios CEO.
Fan token company Chiliz has continued to expand its workforce despite the ongoing bear market, reflecting a growing trend in the fan token sector.
The overall cryptocurrency market has seen a massive selloff in 2022, with the total market capitalization plummeting 60% since the beginning of the year. Some major crypto companies, including Coinbase and Gemini, had to cut their workforce by 10%–20% to maintain operations and continue serving their clients.
While a wide number of crypto businesses have faced challenges amid the cryptocurrency winter, the fan token industry appears to have shown some resilience.
Chiliz has increased the company’s headcount by over 70% this year as the firm continued to expand its global presence in 2022, Chiliz and Socios CEO Alexandre Dreyfus told Cointelegraph.
According to Dreyfus, Chiliz’s workforce now counts more than 300 full-time employees operating from the new offices opened this year, including Miami, Switzerland, London, Milan and Sao Paulo. The firm has also been hiring new talent for offices in Madrid, Malta, Lyon and Istanbul.
“We’ve grown our team and our global presence very significantly,” Dreyfus said, adding that Chiliz has successfully survived the previous major crypto winter. “We have been through market conditions similar to this in the past,” he stated, noting that the firm was founded in 2018.
Chiliz’s hiring spree reflects a growing trend in the fan token industry in 2022. According to data from the industry data aggregator CryptoSlam, monthly volumes for global fan token sales surged about 200% since early 2022, reaching about $6.4 billion in September. In January, these volumes amounted to $2.2 billion.
While fan tokens’ sales volumes have been on the rise, the trend has been quite the opposite for nonfungible tokens (NFT), according to CryptoSlam data. Monthly volumes for global NFT sales shrunk by 88% from $4.8 billion in January to $550 million in September 2022, while trading volumes plummeted 98% since the beginning of the year.
Scalability may be one of possible reasons behind the success of the fun token industry, according to Dreyfus. “Fan tokens are the only digital asset that can affordably deliver the scalability to allow millions of users to access these communities,” he said.
Unlike NFTs, fan tokens are fungible digital assets, meaning that they are interchangeable and each token holds the same value at any given time. Dreyfus stated:
“NFTs have been lauded for their many use cases, with the ability to form communities around token holders. The issue is, minting even a few thousand NFTs is a very expensive pursuit.”
The CEO pointed out that fan tokens are not intended at beating NFTs as these two types of tokens rather complement each other. Dreyfus also mentioned that Chiliz has a robust strategy around NFTs as they play an important role in their company vision, stating:
“It’s not about beating NFTs. Fan tokens are a product and NFTs are a technology, one that’s an integral part of our product offering. They are one of the ways we reward fan token holders.”
Despite making some developments in the NFT industry, Chiliz remains committed to fan tokens as the firm’s primary focus. “We are still at less than 1% of our potential,” Dreyfus added.
Related: Crypto.com downsizes some sports partnership deals amid market downturn
Fan tokens are a type of cryptocurrency designed to provide community benefits to fans of sports teams, bands and other groups. The Chiliz platform and the fan engagement platform Socios have established fan token partnerships with dozens of sports organizations worldwide, including FC Barcelona, Juventus, Paris Saint-Germain and others.
In March 2022, Chiliz launched the testnet for its new layer-1 blockchain network Chiliz Chain 2.0, also known as CC2. The full CC2 launch is expected to take place in Q4 2022.
