Category: Utility Tokens

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Tokenisation of the football industry with Socio.com

Categories Blockchain, ICOs, Malta, ICO Legal Service, The Blockchain Island, E&S Group, Tokenomics, Tokens, esports, Utility Tokens, Football, Sports

Tokenisation of the football industry with Socio.com

Recently a Maltese based Fintech and sports company, Mediarex, has raised $65 million through a private token sale. Mediarex utilizes the blockchain based sports platform chiliz.com. Due to the hype of the World Cup, chiliz.com has set in motion a football platform through Socios.com. This platform will engage and monetize football fans through the World Cup season.

Engaging Fans through Socios.com

Fans around the world bet for their favourite teams to win. Through Socios.com, fans can vote by means of tokens enabled by the blockchain platform. Football fans can buy tokens distributed within the blockchain system. When purchasing these tokens, fans can also trade and execute voting known as “crowd-manger” rights to their favourite team. Since Socios.com is collaborating with chiliZ, players can purchase $CHZ token to participate in this platform. chiliZ has, in fact, contributed $20 million to Socios.com venture, taking the football fan engagement into the mainstream.

Will “Socios” concept be of success?

Since the technology industry is moving at a fast pace, football fans are looking into the digital aspect of fintech and blockchain based solutions. By means of mobile applications, football fans from around the globe will connect together through the Socios.com platform. It is estimated that Socios blockchain will connect 4 billion football fans worldwide to the 1000 UEFA clubs and 2300+ professional football teams in existence. Once registered in the platform, teams can trade voting rights for management decisions within the Socios.com platform. Moreover, each team can manage their “token sale”, receiving funds from their fans and investors exchanging them into voting rights.

 

E&S Group is pleased to have advised chiliZ.com. For more information regarding our ICO Legal Services please check us out on this link. If you would like to contact us please send us an email on [email protected] or phone us on +356 2010 3020

 

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Why Utility and Security tokens are not comparable.

Categories Blockchain, Cryptocurrency, E&S Group, Blog, Utility Tokens, Security Tokens

Why Utility and Security tokens are not comparable.

By Karl Schranz – Director at E&S Group.

 

There is a lot of talk on the subject of security tokens. Many industry players seem sure that these will surpass utility tokens in importance in the medium term. I tend to disagree. I believe the creation of Utility tokens is the most important innovation for the global economy since the creation of the banking system. I will tackle the reasons why in another post.

In their purest sense, Utility and Security Tokens are not comparable. The only thing a Security Token has in common with a Utility Token is the fact that they are both crypto tokens.  Their use, rights and how these are valued could not be more different from each other.

Use

Utility Tokens have a use, hence the name Utility. This is to access the company’s, ecosystems, products or services. In the case of Ethereum, Ether (its utility token) is used to be able to transact on the Ethereum Blockchain. Ether was designed to act as a gas fee. This however evolved with Ether being used to transact in many other goods / services making it more of a currency than a means to transact on a network.

Now Ether is not the best example for this discussion as it has become a cryptocurrency due to its wider acceptability beyond its pure use. If we look at other tokens, we can see that these act as the currency of a specific ecosystem. People buy these tokens to be able to use them on the system or platform that they relate to. This use could be to either pay gas fees, pay commission or pay for specific services on that platform.

Security tokens, again in their purest form, have 2 simple functions.

1.)  For the company to raise finance

And

2.) For the investor to make a return.

This could be either in the form of a share of profit or a fixed return.

Rights

Utility token holders have no right except that of using the token for its intended use.  Security Token holders would have not only rights assigned to the token (dividend, fixed return etc.) but would also have expectations. These expectations are the expectation to receive more than one paid for. This would mean that the company issuing these Security Tokens have more obligations toward holders of Security Tokens.  This is the reason why Security Tokens are and should be regulated.

Valuation

Utility Tokens are valued as currencies, based on their use, acceptability etc. Security Tokens on the other-hand, are valued based on generally accepted security valuation methods, depending on what return method is being offered. In its simplest form, this would be the discounting of future inflows to present value.  This makes Utility Tokens very subjective to value and thus the immense speculation and corresponding price swings that we see today. On the other-hand, Security Token valuations are relatively easy to achieve.

Conclusion

It is thus clear that there is nearly nothing in common between Utility and Security Tokens. Security Tokens are one of many forms that already exist for companies to raise finance and for investors to invest in whereas, Utility Tokens, on the other hand, are the creation of an internal currency that supports an ecosystem.

What is so revolutionary is the ability of a company, to raise capital, by monetising the value of its internal currency!

Karl Schranz is a founding director at E&S Group and heads the Tokenomics and Strategy team. Karl has advised on several ICOs, Crypto Exchanges and Crypto Funds. For more information visit our website.

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