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OKX Plays Into $3.7 Billion Sports Coin Market With Chiliz Chain Deal – DL News
Sending from Paris Blockchain Week
- The giant cryptocurrency exchange will become a validator on one of the top sports blockchain networks.
- Kylian Mbappé’s club, Paris Saint-Germain, boasts a coin worth $32 million.
- Sportscoins give holders the right to vote on music and kit.
Deepening its bet on sports cryptocurrency gaming, OKX, the fourth largest cryptocurrency exchange, plans to become a validator on the Chiliz blockchain, the companies said on Thursday.
Chiliz Chain, a self-styled sports blockchain launched last May, specializes in launching fan tokens.
These cryptocurrencies give their holders the ability to vote on things like what music should play when a team scores a goal or what jerseys they should wear for specific matches.
And so far they have gained a lot of popularity – it is worth the sports cryptocurrency market $3.7 billionaccording to data from CoinGecko.
The fan token of Paris Saint-Germain FC, the Paris-based football club, has a market value of $32 million. The club, which includes superstar striker Kylian Mbappé, is also a validator of Chiliz.
The coin issued by Manchester City, an English club that has won three consecutive Premier League championships, is valid $28 million.
Validators rewarded
OKX has been listing and promoting these tokens for some time. The cryptocurrency exchange is a major sponsor of Manchester City.
As a validator, OKX will join others in preventing attackers from sending fraudulent transactions through the Chiliz Chain, a layer 1 network.
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To become a validator, users must stake a certain number of a network’s tokens to join.
“PSG owns the Chiliz token to stake the node,” said Alexander Dreyfus, CEO of Chiliz DL News on the sidelines of the Blockchain Week in Paris. It has a third party vendor maintaining that node.
These are important roles in a blockchain network.
Validators are computers that work continuously to monitor a network. They are rewarded for doing this in the network’s native token. Chiliz provides its validators with CHZ tokens, while Ethereum provides its validators with ETH.
Dreyfus says validators on Chiliz today earn 2% annual return in CHZ. One token today is worth 14 cents and the total market value of the token is $1.3 billionaccording to CoinGecko data.
“Technically they are 11 validators because they are like the 11 starters of a football team.”
– Alexander Dreyfus, CEO of Chiliz
Without validators, a network would not be able to function and could be vulnerable to a 51% attack. This happens when poor validators outnumber good ones to pass fraudulent transactions across a network, which would be catastrophic.
Although the number of Chiliz validators is low, Ethereum has almost 1 million — no one can start a validator. Instead, Dreyfus said, they only hire strategic partners who go through a thorough vetting process.
“Technically, they’re 11 validators because they’re like the 11 starters on a football team,” Dreyfus said. “But now it’s moving. There will be around 20 in the next few weeks.”
Not a memecoin
Fan token holders can, of course, speculate on the price of these tokens like any other.
After losing last night against Barcelona in the Champions League, for example PSG token today it is down about 6%.
But Dreyfus said that’s not the point and called the comparison to memecoins “deeply offensive.”
He said there is a big difference between a company like Paris Saint-Germain, which has more than 60 years of intellectual property, and a memecoin launched in a day.
“I hated memecoins,” Dreyfus said. “I think they’re relevant to the blockchain ecosystem, but they don’t fit the utility narrative.”
The utility behind fan tokens, he argues, is the unique voting capabilities that come with them.
Owners can use the tokens to vote on, for example, the type of music that plays when their team scores, or which jerseys they should wear for a match.
“In January 2020, Juventus was the first team to launch a survey for fan token holders,” Dreyfus said. “They asked the fans: ‘What music do you want to play in the stadium when we score?'”
Clubs also conduct these votes and are contractually obligated to respect the results.
If they didn’t, they would face fines, Dreyfus said.
Liam Kelly is DL News’ Correspondent from Berlin. Contact him at liam@dlnews.com.