After football, Socios.com prepares to invest in esports teams in Brazil
- June 23, 2022
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After gaining ground with football, Socios.com is expanding its presence in the Brazilian market. The company that operates with the sale of tokens linked to sports and which has already signed agreements with some of the main clubs in Brazil, now has its eyes on e-sports.
The company founded in Malta by Frenchman Alex Dreyfus is signing an agreement with an esports team in Brazil. The deal, which is still kept confidential between the parties and which should be announced in the coming weeks, is the first agreement for the creation of a fan token by the company dedicated to a sport other than football.
Described as a “fan engagement and reward platform”, Socios.com creates tokens, collectible digital crypto assets (which are neither cryptocurrencies nor NFTs), from sports organizations. These assets are traded on exchanges and on the company’s own platform, generating revenue for the companies involved in the agreements.
Over the last few years, the company, which has offices in Madrid, London, Miami and São Paulo, has established partnerships with more than 150 sports organizations in different modalities. In football, the agreements involve clubs from Latin America and Europe. In other sports, there are clients from leagues such as the NBA, NFL, NHL, MLS, as well as Formula 1 teams and athletes from the UFC and esports.
“Most fans are not in the stadiums, in the cities and sometimes even in the countries of the teams they support. You can be a Flamengo fan and live in São Paulo, or you can support Real Madrid and never set foot in Spain,” says Dreyfus to NeoFeed. “What we wanted was to create something that could be valuable for that fan and scalable for the club.”
The company’s target audience is what Dreyfus calls “casual fans.” “I’m not talking to the fan who is always in the stadium or who has a team tattoo, but the one who likes PSG because of Messi or who watches a UFC fight because of Conor McGregor”, he says.
Although the company does not disclose numbers, Dreyfus says that Brazil is the second largest market for Socios.com, second only to Turkey. Even before the company signed agreements with Brazilian clubs, the country was already showing growth within the platform due to the proximity of users with virtual assets.
Here, Socios.com has already launched tokens from Atlético Mineiro, Bahia, Corinthians, Flamengo, Fluminense, Internacional, Palmeiras and São Paulo. One of the greatest football players of our time, Argentine Lionel Messi is the company’s poster boy, as is the former Italian player Alessandro Del Piero.
On the buyer side, the token allows the fan to participate in exclusive experiences. “The token brings the possibility for fans to participate in voting to choose the song that will play in the stadium or the number that will be used by a newly signed player”, says Dreyfus.
For clubs, the token is seen as a new source of income. Corinthians, for example, signed an agreement so that Socios.com could trade up to 20 million tokens with the acronym $SCCP. In the first offer, in September last year, the operation generated US$ 1.7 million with the sale of 850 thousand units for US$ 2 each.
The amount raised during the first sale, called the First Token Offering (FTO), was shared between Socios.com and the club, but the percentages are kept confidential. Dreyfus explains that, in some cases, the platform operates giving a minimum guarantee of value and that it does not depend on the result of the FTO. In others, there is a division in which each party keeps a percentage of the amount collected.
As with NFTs, the token creator still has the possibility of future earnings when the token is resold on the secondary market. In Brazil, in addition to Socios.com, the Bitcoin Market already allows tokens to be traded between users. “Most of the revenue from clubs and Socios.com will not come from FTOs, but from token resellers over the next five to ten years,” says Dreyfus.
In addition to earning money from a portion of initial token sales and trading on the secondary market, Socios.com also earns revenue from the sale of the Chiliz cryptocurrency ($CHZ), whose blockchain powers the company’s entire operation. To buy crypto assets within Sócios.com, you must first exchange money for the Chiliz cryptocurrency and then use it to acquire the desired fan tokens.
For now, the challenge is to keep the asset attractive in the market. The $SCCP, which was once traded on the market for $3.88, now has a unit value close to $0.29, according to the website CoinMarketCap. “Our job is to sell the tokens only if there is demand,” says Dreyfus. According to the executive, the devaluation is a reflection of a general downturn in the crypto asset market.
In this example, with the token devalued, Socios.com has to wait for a better time in the market to sell the units it still has. Of the 20 million tokens created under the acronym $SCCP, only about 2.3 million are in circulation. As long as the market does not improve, the tendency is that new units will not be put up for sale.