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Only 50 days left until the Qatar World Cup on 20th November 2022. With the World Cup approaching, the cryptocurrency fan token sector is now out of the bear market.
According to the data platform CoinMarketCap, LAZIO, ARG, PORTO, AFC, PSG and other fan tokens have achieved varying degrees of increase within 7 days, of which The Lazio Fan Token $LAZIO achieved its highest gain of 45.79% within 7 days.
At the same time, major mainstream cryptocurrency trading platforms such as Binance, MEXC, etc. also took advantage of the popularity of the World Cup to launch fan tokens in advance, and set up fan token areas on their Apps.
As of September 1, Binance has listed more than 13 fan concept tokens including LAZIO, PORTO, PSG, and BAR, and MEXC has listed more than 15 fan concept tokens such as LAZIO, ACM, ALPINE, ASR, and POR.
Fan tokens can be traced back to the period 2019-2020, when Chiliz (CHZ), the developer of the proprietary Layer 1 blockchain for sports and entertainment, launched its fan tokens successively in cooperation with major clubs. For example, AC Milan Fan Token (ACM) is a team fan token launched by AC Milan Football Club based on the Chiliz chain. The total supply is 20 million, and the current market value is about $12.61 million.
In June 2020, the NFT market began to emerge. Fan tokens are not just only a concept, but has become practical application scenarios. The main application value includes participating in voting related to fan governance, participating in related activities to get rewards, enjoying some unique fan rights and interests, purchasing or obtaining Club NFTs, etc.
For clubs, fan tokens can increase fan connection and engagement with the club, giving fans a voice, voting on major decisions such as club colours, stadium music and logos, friendly matches, charity line-ups, admissions songs, and any other matters that involve voting. The voting results are binding, and are able to strengthen the fansā community participation.
MEXC started to deploy the fan token sector in 2020. At present, in addition to launching Fan Zone that is convenient for users to directly trade related tokens in this sector, MEXC also launched leveraged ETF trading of related tokens in line with the trend.
Take the token LAZIO as an example. On August 11, its spot price was 3.1USDT, the highest price was 9.1USDT, with its highest gain hitting 193.5%. After MEXC launched LAZIO spot trading, it also launched LAZIO leveraged ETF trading. Among them, LAZIO3XLong (LAZIO 3x long) rose from 0.94 USDT to its highest of 8.68USDT, with a highest gain of 823%.
According to the data, MEXC's leveraged ETF product was launched in Q4 2019. It is a perpetual leveraged product that amplifies the loss and gain of the underlying asset, and aims to provide leveraged returns on the benchmark perpetual future.
As the name suggests, a leveraged ETF is an open-ended index product with leverage multiples. Because its trading rules are as simple as spot, it is not necessary to use part of margin to occupy positions like futures. But at the same time, it can achieve multiple gains like futures, so it is favored by some low-risk investors.
At present, Binance and FTX have launched similar products as leveraged tokens. The principle is similar to MEXC's leveraged ETF, but the issue price is different, and the latter is based on off-chain issuance, which can avoid high Gas fees when Ethereum is congested.
According to CoinGecko data, the current MEXC leveraged ETF sector supports more than 300 types of tokens tradings, and is currently ranked within the Top 2 in terms of transaction volume on the entire network, which offers products with the most tradable currencies.
The hesitation in Leveraged ETF and its product characteristics, and whether it is suitable for trending or unilateral markets, might be the reasons why the current fan token has become a popular currency in spot and leveraged ETF products. However, what is particularly worthwhile to note is that the rebalancing mechanism of hesitating leveraged ETFs is certainly unsuitable for repeated fluctuations in the market, otherwise there will be cost wear and tear.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.