Binance has announced that they will be launching a football fan token index, for which they will be offering 25x leverage.
The Binance fan token index
Binance’s football fan token index is an index product that tracks the price of certain football fan tokens that are listed on the Binance spot market.
As always with the indexes, the product is formed by using weighted averages for each of the index’s components; the fan club’s with the larger market caps will represent a larger share of the index and vice versa.
Given that they are some of the largest football fan tokens, the tokens who have the largest representation in the index are SANTOS, LAZIO, PORTO and PSG.
It is quite likely that more football clubs will release their own fan tokens in the coming years, and that the composition of the index will therefore change.
Diversified investing is the key to long term success
There are very few tried and tested strategies in the world of capital accumulation, but ensuring that one enacts the appropriate risk management strategies and invest for the long term.
In this context, one has the opportunity to choose which fan token to speculate on or to speculate on the industry as a whole.
If one chooses to just buy one, SANTOS for example, then the success of the token value depends not only on the success of the team, but also the team’s successful management of their fan token – as with all other cryptocurrencies, they run the risk that the founders will behave irresponsibly.
However, with an index such as the aforementioned, Binance customers have the opportunity to speculate on the sector of football fan tokens as a whole.
This likely means that further clubs will be added to the index in due course (there are currently only 10 tokens in the index).
Binance will offer 25x leverage
Binance could have just designed a product that allows their users to speculate on the industry of football fan tokens, but they decided to expand this product offering by enabling users to take out 25x leverage.
This is a good thing for the fan tokens, as it means that they will be able to access a lot more volume. This creates a lot more potential for volatility and trading opportunities.
It is not recommended that people who are unfamiliar with trading and understand risk management well use leverage to trade.
Leverage can be hugely problematic for investors and can wipe out portfolios very quickly.
As Charlie Munger’s famous quotation goes: “There are three ways that smart men go broke: ladies, liquor and leverage”.
Moreover, the use of diversification through an index is that risk and volatility are mitigated somewhat. Introducing leverage into the mix can complicate matters somewhat.
The future of e-sports on chain
The proliferation of blockchains has opened the door to a variety of different innovations.
In the context of the aforementioned football fan tokens, there is an opportunity for clubs to capture further value from their community by offering them a market to trade.
Not only this, but they can also expand and improve upon the product offerings that they have for their communities: by selling virtual collectors’ cards, like TicketMaster and Dapper Labs, clubs can sell
Tokens can be used as a currency for within the club itself to create a circular economy, and can even be used to confer voting rights to their fans. For example, clubs could give fans the option to vote on which songs play when their team scores, or which brands to have on their shirts.
On the extreme end, clubs could even choose to completely change their internal management structure and turn into DAOs, although there is little evidence of this happening.
Is football the key to mass adoption?
Porto FC made headlines as one of the first companies to venture into the metaverse after integrating with Upland.
The club’s foray into the metaverse provides them with more opportunities to generate revenue and more opportunity for players to interact with their fans.
Binance’s business decisions over the past year have comprised huge decisions to make progress in the football arena.
As the world’s most popular sport, billions of people play football and some of the most successful players have hence become some of the most famous people in the world.
Cristiano Ronaldo, who has over 450m followers on his Instagram account, has recently signed a deal with Binance.
Such large-scale promotions come as Binance’s CEO Changpeng Zhao announces that he’d like to scale the company onboard billions of people into crypto within the next few years.
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