Chiliz Analysis (CHZ) its operating model 2022
Chiliz Analysis (CHZ) its operating model 2022, the project to bring blockchain closer to users through sports, has received a lot of attention around the time of the 2022 Word Cup. For more background information on Chiliz visit this link. So how does Chiliz work?
Chiliz Analysis (CHZ) its operating model 2022
Chiliz Analysis (CHZ)
Chiliz Chain 2.0 and the CHZ token are at the heart of Chiliz’s product ecosystem. Chiliz’s move to build its blockchain (CHZ is still a token on Ethereum) will turn it into an independent ecosystem.
In addition to the benefit of increasing use cases for CHZ, an open ecosystem (blockchain-based will attract more developers to Chiliz. Accordingly, creativity in the design and application of CHZ as well as Fan tokens will not be limited only to the framework of the Chiliz team.
In addition, another application of the CHZ token is to allow holders to participate in FTO (Fan Token Offering) through the Socios app.
Similar to tokens of IDO/IEO platforms, this feature will bring financial benefits to users. This is an attractive factor,especially for an industry that is heavily oriented towards the financial aspect like crypto.
Through IDO/IEO events, the average ROI at ATH of Fan tokens opened for sale at the current price is 6.35x and 2.16x (statistics from cryptorank.io, updated on September 3).
Compared with the evolution of the crypto market in 2022, this is a pretty good profit. Therefore, this is a remarkable feature of the CHZ token, which helps to attract more users to the Chiliz ecosystem.
Fan token system
Overview of the operating model of the Fan token system:
Fan token is a token system issued by teams in partnership with Chiliz, to help fans become more engaged with that team.
The Tokenomics of Fan tokens will depend on the club as well as its fan base. Thus, it is possible to add a few features for Fan tokens such as burning tokens every time the team wins.
As mentioned above, Fan token holders can vote on some team issues, but the team decides the polls. This is completely different from DAO because in DAO, members (token holders) can have the right to propose changes.
Because unlike the DAO (which operates on a smart contract basis), the performance of Fan token polls is guaranteed by a legal agreement between Chiliz and the club.
Socios.com & Chiliz Exchange
Socios is an application that allows Fan token holders to exercise their rights.
The role of Socios in the Chiliz ecosystem can be compared to non-custodial wallets in the current crypto market.
Besides Socios, the development team also has another product, Chiliz Exchange to help increase user experience, this is a Fan token exchange that uses CHZ as a means of payment.
Overall, Socios and Chiliz Exchange help increase use cases and demand for CHZ and Fan tokens. However, these are all centralized applications – which means that the Chiliz team controls the entire blockchain wallet. Therefore, the decentralization and transparency of Fan tokens will hardly be guaranteed.
How does Chiliz capture value for tokens?
Currently, when Chiliz has not completed its blockchain, the need to own CHZ and Fan tokens will depend on:
- Services, their convenience, and customer interest.
- Trading volume on Chiliz Exchange and Socios, the high trading volume shows high applicability and large coverage of CHZ.
- A number of clubs collaborating and implementing Fan tokens.
After the successful launch of Chiliz Chain 2.0, CHZ will act as a blockchain platform token and benefit from the development of the ecosystem.
According to the vision of the development team, in the future, Dapps will be built on Chiliz Chain 2.0 and compatible with EVM, from which developers will easily access the platform and develop more applications to help push strong demand for Chiliz.
Besides, if Chiliz can come up with appropriate ecosystem development and capital allocation strategies (like how Avalanche, Binance, and Polygon… have implemented), it can be expected that in the future the project will take over. the spotlight of the market over a while.
The combination of blockchain and sports
The combination of blockchain, crypto, and sports creates a new experience for market participants as well as sports fans. It can be seen that if successful in realizing its vision, Chiliz will create the following benefits:
- Blockchain and crypto will be popularized in the sports field, contributing to increasing the applicability of this technology.
- In terms of investment, Fan token and CHZ will be able to separate and be less dependent on BTC (compared to other cryptocurrencies). This contributes to the creation of valuable crypto asset classes that diversify their portfolios.
According to a report by Research And Markets, in 2021, the global sports industry value will reach $440.8 billion and will reach ~$600 billion by 2025 with a predicted compound annual growth rate of 8%.
Therefore, the market size that Chiliz targets are hundreds of times larger than the current capitalization value (about 1.1 billion USD) of CHZ.
With current products, Chiliz can enter the sports industry in various roles such as:
- Support e-commerce to get the team’s products into the hands of fans.
- Help monetize through streaming platforms.
- Maybe the organization participating in the organization of events.
If Chiliz can do the above, CHZ and Fan tokens will receive a lot of attention, thereby increasing user demand for ownership. Sports fans will also get new and more immersive experiences.
Transparency and Decentralization Issues
Despite having a new approach to the crypto market, at present Chiliz still has the following problems:
- Decentralization and transparency.
- User experience.
- Issues related to scalability.
On the issue of Chiliz’s decentralization and transparency: the applications that help users exercise their rights when holding Fan tokens (Socios and Chilliz Exchange) are centralized (requires KYC and Chiliz control). the private key of the crypto wallet).
Therefore, important transactions or votes through Fan tokens related to the club’s activities are not fully guaranteed in terms of decentralization and transparency.
Currently, CHZ and Fan tokens are deployed on the Ethereum network – the leading blockchain network in terms of decentralization. However, in the future, when Chiliz Chain 2.0 is released, the issue of power concentration on the network will be a problem that needs to be considered more carefully.
Regarding user experience issues: Socios seems to be not doing well in this area when the application is only rated 3/5 stars with many negative comments.
Therefore, it is likely that the current demand for Fan tokens comes from team speculation and not from the demand for Chilliz’s products and services.
And finally scalability issues: Chiliz’s business model requires the project to coordinate with as many teams as possible, but in reality, is influenced by factors (typically legal) ), and the problem of association with clubs is quite difficult.
Furthermore, this link must be made through negotiation and discussion of the common interests between the club and Chiliz – which is not easy, and therefore Chiliz’s expansion is not easy either.
What to pay attention to when investing in the Chiliz ecosystem?
- CHZ is still not separate from the movements of BTC and the crypto market (correlation coefficient is still quite high, 30-day correlation coefficient greater than 0.5 still accounts for 74.3%).
- Fan tokens also show a similar trend, but data from July back shows that in the future this trend is likely to change.
- Paying attention to major sporting events (especially football) will be one of the critical points when investing in tokens in the Chiliz ecosystem.
- Although there is a link in the operating model, there is no clear correlation between CHZ price movement with IDO/IEO Fan token events.
Find more information about ChiliZ
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DISCLAIMER: The Information on this website is provided as general market commentary, and does not constitute investment advice. We encourage you to do your own research before investing.