The Wolf Of All Streets - Here Is Why These Fan Tokens Are So Popular | Alexandre Dreyfus, Socios

Episode Date: October 15, 2023

Curious about the hottest tokens in the crypto world? Look no further than fan tokens, which are gaining widespread popularity. These tokens are embraced by fervent supporters of major sports teams worldwide, quietly propelling the widespread adoption of cryptocurrency. Dive deeper into this topic by exploring my interview with Alexandre Dreyfus, the visionary founder behind Socios and Chiliz. Discover the intriguing world of fan tokens and their role in the crypto revolution. Alexandre Dreyfous https://twitter.com/alex_dreyfus ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉https://thewolfden.substack.com/ ►► OKX Sign up for an OKX Trading Account then deposit & trade to unlock mystery box rewards of up to $10,000! 👉 https://www.okx.com/join/SCOTTMELKER ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/ ►►NORD VPN GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets ►►COINROUTES TRADE SPOT & DERIVATIVES ACROSS CEFI AND DEFI USING YOUR OWN ACCOUNTS WITH THIS ADVANCED ALGORITHMIC PLATFORM. SAVE TONS OF MONEY ON TRADING FEES LIKE THE PROS! 👉 http://bit.ly/3ZXeYKd Follow Scott Melker: Twitter: https://twitter.com/scottmelker Web: https://www.thewolfofallstreets.io Spotify: https://spoti.fi/30N5FDe Apple podcast: https://apple.co/3FASB2c #Bitcoin #Crypto #Trading The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

Literally, there is 3 billion soccer fans or football fans, they pay where you are. Hey guys, let's start with 10 million. This would be great. It only fucked us really in the United States. If there is already too many chains, too many tokens, even if Bitcoin were to go to zero, which we do not want, to the edge, at least to go bankrupt,

because we want teams to fight for their fans. What is one of the best ways for crypto to reach the mainstream? Obviously, through sports. We've seen huge partnerships between crypto companies and sports leagues and teams, but nobody is doing more to bridge this gap than Alexander Dreyfus from Socios, creating fan tokens for the biggest teams in the world that fans are using every single day. This is how we get to the mainstream. Hey, what's the difference between Socios and Chiliz? Socios is the consumer-facing product, Chiliz is the token and the blockchain that's behind it.

Okay, so we have this bear market narrative that everything we've tried is dead. Nothing's working. It's all going to zero. Meanwhile, you have the biggest football clubs in the world using your technology, these massive loyalty membership programs. Where's the disconnect? I think I will be very biased saying that, but we are very lucky because what we've built for the last five years is a real use case i mean we have real fan real users using fan tokens and chile as a platform

or socios to engage with their favorite football team soccer team ufc formula one and everything so even if bitcoin were to go to zero which we do not want it will still theoretically not affect our business because there will always be fans and sports teams. Now, having said so, like everybody else, of course, we are suffering of the market, but because we keep launching new features, new teams, it does make sense. How many teams do you have now?

So we work with more than 100 teams. We have 85 tokens launched. We have nine offices. We have 340 employees all over the world. We have more than 2 million users now. Over 2 million users. And that within each ecosystem, of course, you have the huge fans of each team.

And so what are the most popular features at this point that each team is using? I know that every team has like different things that they offer. Yes. But what are the most popular ones? What are the ones that had the most traffic? The one that is kind of the foundation of Chili's

is what we call the, is voting. It's like in the crypto sphere, people call that DAO. It's like, you know, you have a token, it's a governance. We've done that for four years in sports. What does it mean? When you are a Juventus fan, Italian team,

for since 2000, end of 2019, you have been able to vote on decisions of the club. For example, last week, there was a vote in Turkey for a team to choose the number of the player they just signed, the number that he has in the back, the real number of the player.

Or you had another team that asked their fans, what music do you want to have in the stadium when we score a goal? It's a small thing, but it's very valuable for a fan. So all of this initiative we've done for the last five years, we're scaling more and more and more, and they're a really used case. So what's the advantage of doing this with a token,

obviously with a platform like this, as opposed to all of the other fan-based platforms? Why do you ask your fan on Twitter, and why do you ask your fan on blockchain? why do you ask your fan on on blockchain well on blockchain you know that your fans are actually your fans because they own they spend money to own this token this fan token this fungible token it's not an nft and by owning this you're part of a community you're recognized as a super fan fan 3.0 whatever when you're on twitter and you're going to ask your followers which could be be bots, which could be everything,

to actually vote on something, you often, especially in football and esports, you have the competitors, teams, fans, doing it just to troll you. So actually, ironically, blockchain really solves the problem on that by giving you integrity of the vote. That makes sense. So you've built, obviously, this massive business. You've got all of these teams. What's next? So what are the things that you're going to build? They say the best things are built in the bear market, right?

You know, we grew and we launched actually 2018-2019 where nobody believed at all what we were doing. And here we are five years and a half later, so we're still here and actually we grow. We had a booth which we never had before so I guess for us the next step is the last five years we've built more like I like to call ourselves a web 2.2, web 2.5 company because we are very centralized that's the reality

and that's fine when you are a mainstream or a consumer-facing product it's fine to start like this now we want to open more and more the ecosystem. What does it mean? It means that Chiliz became a layer one where every fan token are also tokens minted on that layer one,

meaning that you and I and anybody else can start to develop features, can start to develop utility outside of socios.com and outside of us doing it. So what was our strength for the last five years of us doing everything, now we became something where everybody can bring value to that ecosystem

and to the sports team. I'll give you an example. Here in Singapore, one of the biggest Arsenal fan base. Now there is someone here, a developer, that can develop a feature for the Arsenal fan token that can be compatible with Grab, which is the Uber here, or that could be compatible with another e-commerce platform that exists only in Singapore. And that's the kind of things we are pushing at. Can they build

theoretically outside of fan tokens and all that, literally anything on your layer one that they can build on any other layer one? We can see DeFi and NFTs and... So NFTs, definitely. DeFi, we're going to launch DEXs in the next few weeks. Or some people is going to launch DEXs in the next few weeks. But we're going to try to be this sports and entertainment chain.

We don't want to be the next BNB, Solana, Ethereum for sure, or Polygon. I think everybody should have a purpose, actually. And that's probably a topic for a very much longer conversation later. I was going to ask that next. I believe there is already too many chains, too many tokens.

And that's going to be worse and worse with less and less liquidity. So there is a massive need of consolidation in the next few months and couple of years. And we're going to lead that with some stuff we're going to announce. That industry has already way too many operators and not enough users. It could be a meme but there is many chains where there is more the app than there are users and that's a problem. Which is funny

because if we had this conversation let's say two years ago the argument was there's not enough block space. Yeah. We could have all these people rushing in and now it's like we have so much block space and nobody knows what to do with it. 100%. Okay, so is that ever going to get filled?

You're saying obviously you don't think so, but I mean, we would need 500 million people right now to fill the layer 1 and layer 2 block space. For sure. I mean, there is literally not enough use case and users that are relevant for the existing block space, as you call it, or block chains in general. But the problem in crypto, and it's interesting conversation, tokens

never die. So you can have a chain that will never be used, still people will trade your token. And it's actually an issue. In a traditional business, a token share, whatever, will be delisted. And you know, people just give up on that. Here, you never give up because people have an

economical exposure or people have bags of their token. So this needs to change. I don't have the formula. I don't have the answer. And it's ironic for someone who just launched a layer one anyway. But I do believe that it needs to change. But you built a, you launched a layer one that's, you said it is admittedly for a specific purpose.

People can do whatever they want, but you're never going to build these other things on it. No, no, no, for sure. And you know, someone came to us today and said, hey, we are a new layer one. We would like to work with you because you have users. I say, yes, exactly. That's why.

We started to have users and we built a layer one, not the other way around. Yeah, it's such a chicken and an egg situation and people are definitely doing it backwards. How big is your addressable market? Let's say you, listen, everyone says everyone says yeah it's a bullshit number. I'm here to a billion people. I hate this. How do we onboard one billion people? Hey guys let's start with 10 million. This would be great. That's my answer every time I do it but now I feel dumb

for asking the question. No no no. No no no. I'm laughing. Sports wise it's it's three billion ish so like literally there is 3 billion soccer fans or football fans. They play where you are. It's actually a fun fact. When we launched our first token, which was Paris Saint-Germain and Juventus, how many tokens did we minted per team? Because every team has a pre-minted token. We created a ladder based on the number of fans we believe that in 10, 20 years

will ever own one token. So for Paris Saint-Germain, it's 20 million tokens. For Barcelona, it's 40 million tokens because it's a bigger team. But for smaller esports teams, it could be 1, 2, 3, 5 million. For us, we will be successful.

We have 2 million users today. 10 million is reachable. We will be successful if we have 30 30 40 million users that will be really great and i'm not talking active users and everything i'm talking like yeah yeah and getting there how do you determine whether how do you determine successful like what what why is that number the meaningful number 2018 when we signed a team called atletico madrid in spain the guy that's uh signed with us with us said, Alex, your business will be successful

the day the teams will compete to offer more to their fans because of you. Right now, we want teams to actually offer more utility and fighting against each other because we want teams to fight for their fans, which is eventually what we are doing. Today, here on the stage, we presented something that we launched in January that is very cool. listen to these guys in italy in the seria which is the main league of

football every time that there is a goal there is the referee that takes the ball out of the field put an nfc chip nfc nft chip and that ball is auctioned for free uh to the fan token holders of the team that scored the ball. So if you are an AC Milan fan, you have a chance to win the ball that got scored today. Now you get that ball, you got it home, you put your phone on that ball, on the NFC chip, you're going to get the metadata that is on the NFT on the Chiliz chain. So that ball is certified as the authenticated one that scored a goal etc etc my point here is we are investing money to create a real use case that never existed before that ball till last year nobody ever gave the fans the ball that scored a goal these kind of

things we're doing more and more it's incredibly cool and that's actually was always the promise of nftsTs and the excitement about what the technology could do it was never about PFP projects and cartoons that's how NFTs became sort of popular in the first bubble but actually authenticating something proving its provenance its authenticity that's actually probably the more promising and more widespread potential. I'll give you another example. In March, we invested 5 million euros in a company. We took 20% of a company called MatchWornShirt.com.

It's the number one European company that takes MatchWorn jerseys. So if PSG or AC Milan is playing tonight, the players are getting off their jersey. They are giving it to the company or the team is giving it to the company. These jerseys now are authenticated with a chip. Again, you can auction this jersey online. You buy, actually crypto, not crypto, doesn't matter. But once you get home, you get that jersey, you put your phone there

and you can see all the metadata on the NFT about that jersey. And they sell 30,000 jerseys a year. So that's the kind of things we were pushing at. Yeah, I think that that's really how we're gonna actually reach mainstream adoption technology. It seems kind of boring but But it's cool, you know what? It's cool. Because actually there is usage, there is people who want that, who needs that. So have you had any regulatory challenges with what you're building? I will not talk about America.

Can you do it in the United States? No, well, collectible for sure we can. Actually, in the US, we never launched any token due to regulatory reasons, of course, but we did partner with 27 NBA teams and 13 NFL teams. Now we kind of backed off for the time being because there is no point to be exposed in the US without launching a product.

So we invested like more than $50 million there without any hope to have any return in short term. But to be fair, the rest of the world has way more to offer for the time being. So that's fine.

We are very big in Japan. We are big in Korea, Turkey, Brazil. We have 400,000 users in Brazil. And we are even us licensed in Spain, in Italy. We have regulatory clearance everywhere in the world except in the U.S. Do you ever sleep? Yes, because I have a kid. Of course, it's so sad living in the

U.S. and why did you decide to spend 50 million dollars in the U.S. if you knew that at least right now it wasn't going to be possible to operate, is it because you just want to build the groundwork or lay the groundwork? We've built a relationship. Now we know all the NFL, NBA owners. So we've built a relationship with leagues and everything. And to be fair, we started to invest in early 21, where there was a bit of a hope of positive regulation. In all fairness, all of this gets fucked up because of FTX.

In November last year, there was still a very positive momentum of possible regulation and actually oversight from CFTC. That was actually bills going in that direction. And for us, what would have been the perfect scenario, because we would have been able to launch tokens, utility tokens, but under kind of a CFTC regulatory oversight for spot trading, would have been perfect. FTX happened slightly too early, fucked up everything. Yeah, and that's where we are right now. But what I find interesting is that FTX is an offshore exchange. Everything to us offshore means not United States.

I'm sure it has different definitions than other countries. But it only fucked us really in the United States. Yeah, the rest of the world doesn't States. Yeah. The rest of the world. I was talking to Hasib Qureshi from Dragonfly and he said, so listen, like you guys don't realize FTX. It was just another news story in China or these other places. Two days.

It was like, there's this huge scandal in the United States and then it ended and it went on, but we're still obsessed with it and stuck on it every single day because our regulators, because we have to be there because that's all our regulators and legislators think about

when they think about this industry. They think about how do we not get fooled by another SBF? It's, you know, I come from the online sports betting and online poker industry. And in 2010, 2012,

I spent like two, three years part-time in the US because I sold my business to a listed company in the U.S. And at that time, I get to know how U.S. and regulation works in general. I'll tell you one thing. It's very clear in the U.S. Online sports betting was illegal till 2014 or 16.

I don't remember. Daily Fantasy, if you remember DraftKings, found you a lot of these guys. I'm a huge fan of those. These things were to the edge at this to go bankrupt. And one day, there is one guy say,

hey, you know what? Maybe we can tax that business. As soon as it became taxable, oh, that's great. It's an amazing business. The leagues became shareholders. Everybody became shareholders. All the VCs became shareholders.

Crypto is going to be exactly the same. You can regulate it. You can tax it. It's going to be the best friend of everybody. But it's already taxed. It's going to be regulated.

That's what it is. You know what? Regulation is great. Regulation is not bad, though. In online games, you have to do it. Yeah, because you have regulation who kills industry

and you have regulation who embraces industry. And you need to find the right balance. I love it, man. I, because you have regulation who kills industry and you have regulation who embraces industry. And you need to find the right balance. I love it, man. I love what you guys are building. I've been a long time. It's actually funny because I think one year ago in this exact same spot, I said, let's do a podcast.

Let's have a conversation. It's taken us a year. I met you in person here for the first time. It's true. That's true. So glad that we got it done, man. Thank you so much. Thanks again, man.