*Note: a SWOT analysis is an evaluation of the fundamental, operational, technical, social, economic, and even to some degree administrative elements of a project. This is not a model to be used for trading purposes. (NFA, DYOR)
Composed of four elements, Strengths, Weaknesses, Opportunities, and Threats, a SWOT analysis framework provides excellent insight for establishing a high-level understanding of the state of a project’s well-being through the lens of a birds-eye view.
It can help formulate decisions around which areas require more attention, set performance goals, and organize a foundational understanding of where a project is headed.
Rarely (if ever) used in crypto, it is time to apply this timeless method of evaluation to the digital asset space.
Today, Chiliz (CHZ), the purpose-built, EVM-compatible layer 1 providing blockchain infrastructure for the sport and media industry, will get a SWOT.
💪 Strengths (Internal) (Helpful)
1. Generalized and Narrow Focus
Chiliz explicitly positions itself to provide technological solutions for the Sports and Media industries. Yet they are doing so by building a solution that can be generalized for application to theoretically any use case. By honing in on a specific market with a specific purpose, they remove the noise/distractions and have a higher chance to maximize their impact. So instead of chasing the market caps of 10 different sectors in an attempt to grab a minuscule portion of market share from each one (ex. 0.01% of 10 Trillion dollar industries {netting them $1B}), they are pursuing 2/3 sectors of which they will be able to capture a much more significant percentage (ex. 1% of 3 Trillion dollars {netting them $30B}).
2. EVM Compatibility
Rather than opt for building a blockchain network from scratch, Chiliz decided to create its network by forking BSC (Binance Smart Chain) and making adaptations at the consensus and governance levels. Doing so allows Chiliz Chain to inherit industry-familiar smart contract frameworks (solidity), which in turn provide a much smoother experience for any future developers and keep the potential for bridging to other EVM-compatible networks within reach.
3. World-Class Partnerships
Chiliz has done an incredible job building its professional presence and ecosystem by uniting most of the developed world’s most prominent sports brands under the Chiliz ecosystem. Absolutely legendary names across a multitude of different sports, including Soccer: Manchester City, Juventus, Paris Saint Germain. Basketball: Boston Celtics, Cavaliers. Hockey: NY Rangers, NJ Devils. UFC, ESPORT teams, and even Motor Sport brands like Aston Martin’s Cognizant. By the looks of it, it is merely a matter of time before they onboard everyone else.
4. Creator Of Fan Tokens
Chiliz champions itself for being the creator of a novel digital asset archetype which they have dubbed as “fan Tokens”. The premise here is that Fan tokens are exclusively for signaling some degree of support and involvement from a Fan and their corresponding athlete / league / team. Given the nascent role of these assets, which simultaneously steer further away from traditional financial instruments while embracing certain elements from them, Fan Tokens open up an interesting new dynamic pseudo-economic relationship between celebrities and their audiences. (Fan Tokens are a standard asset framework on Chiliz Chain).
5. POSA Consensus Mechanism
Novelty in consensus mechanisms is a sign of intellectual maturity and a deep understanding of the crypto industry at its core. Chiliz Network is a fork of BSC (Binance Smart Chain) with an adaptation to the consensus model that combines the most desirable properties of POS (Proof-of-Stake) and POA (Proof-of-Authority) into POSA (Proof-of-Staked-Authority). Based on stake weights and the reputations of nodes, Chiliz leverages 11 active validators (and 4 reserve backups) to secure the network’s activity.
6. Socios Application
Sporting over 2 million downloads, the Socios application is considered to be a major success in the world of blockchain. Acting as a user-friendly and compliant interface facilitating a lot of the volume relating to the trading of Fan tokens, Socios is the main driver of activity on the Chiliz Chain. Socios is to Chiliz what BTC is to the Bitcoin Blockchain; without the application, the network itself would be close to, if not totally, dead. This is not to say that Chiliz is entirely dependent on Socios to survive; it is to say that Socios provided the ultimate bootstrapping application that has unlocked the opportunities for new incoming projects.
7. Splitting Application Logic
Chiliz made a smart move (whether intentional or not) to carefully separate the back-end and front-end business logic of the project. Namely distinguishing between the application layers of Socios and Fan tokens and the blockchain itself.
😞 Weaknesses (Internal) (Harmful)
1. Soft Social Presence
Sports is a very community-oriented industry that breeds an almost religious level of followers and fans. Chiliz community can largely be assimilated by combining Chiliz and Socios social media audiences; doing so leaves us at roughly a million. But even if we try to focus on the qualitative measure of a social presence (namely engagement), then things get even weaker. Averaging roughly ~30,000 impressions while getting 100 likes and 10 comments, the social rhythm is quiet. Regardless, it is definitely notable in comparison to many others and deserves tremendous credit must be given for the quality of effort and the consistency with their social activity.
2. Lackluster Information about CHZ Tokenomics
Since the evolution of the Chiliz project into its 2.0, EVM-compatible version that is focused on serving enterprise grade sport & media projects, information pertaining to the CHZ token has become difficult, neigh impossible to find. Of course, basic distribution breakdown can be found on most directories (Coinmarketcap et al), but the more granular information such as emissions, staking rewards, and the so on, are not even detailed in the docs.
🧐 Opportunities (External) (Helpful)
1. Singular Infrastructure Provider for Sport Sector
Chiliz was (and is) the only layer 1 project dedicated to providing the digital infrastructure specifically for the sports and media industry. Being years ahead of any competitors positions Chiliz to be the most competent, trusted project for its use case. Their first mover advantage gives them tremendous defensibility against any potential newcomers dedicating their efforts to the same purpose.
2. Growth of Sport Industry
Sports, as an industry, is easily one of the most opportune of all. There have been a multitude of high-profile deals done, companies born, and novel new financial models circulating that are amplifying the economic potential of Sports. Anticipating growth rates of roughly ~9% (based on a metric that does not account for the innovations taking place) and not experiencing any fundamental distruptions by technology yet, Sports are primed to be an excellent vehicle for capital formation and a wave of transformation.
😳 Threats (External) (Harmful)
1. Regulatory Change of Heart
As it stands, Chiliz is a project on good/neutral grounds with regulators. Based out of Malta with a physical presence in three (or six if we include Socios offices) Malta, Madrid, and Switzerland (plus the US, Turkey, and Korea) of the world’s economic centers. Meaning that they are ready, willing, and able to work with regulatory bodies and already have some operational foundation. Coupled with the nascent archetype of asset that Fan Tokens falls into, Chiliz is well placed to continue building unhindered. However, if for any reason some sharp new regulation comes out or governments decide to take to some radical measures against Chiliz, it is unclear what impact that would have on the fan token & Chiliz ecosystem.
Takeaway:
When it comes to Sports and Media in Web3, there is no second best.
Top Notch, A-Grade, Unique crypto project that stands out by a long shot.
Chiliz has innovated on many levels, elegantly finding/creating the technology sitting between legacy sports infrastructure and Web3. It expresses a deep professional understanding of the Sports industry and has shown total respect for and understanding of the underlying technology.
Existing at the intersection of the highest growth vectors in sports and Web3, Chiliz reaps the benefits of the a market that has yet to be tapped into.
Positive tailwinds (strengths and opportunities) far outweigh the potential negatives (weaknesses and threats).
Conclusion:
The category of on-chain sports has been pursued by a handful of projects over the last few years. The vast majority of them failed due to a multitude of reasons, such as an absence of market participants, no product-market fit, poorly designed systems, narrow application surfaces, and (potentially the most detrimental reason) the lack of crypto infrastructure to support proper use cases.
Being the only infrastructure provider really seals the deal for me on this one. The amount of time it would take any competitors to build out something of similar sophistication would likely result in those competitors turning in cooperators.
Honestly, even in the event of some brilliant sports project rising up aiming to take over the same space, it would be non-fatal given how large and growing the size of this industry's pie is.
Would I Invest in Chiliz?
A large resounding yes.
Quite literally, just grabbed some.
As is the case with the greater market, down ~90% off the highs, decent to start considering a DCA.
Here, the game plan and thesis are simple.
Gameplan: for every -10% decrease in price, scoop the same dollar amount as previously.
Thesis: CHZ can easily (will likely) become the blue chip of this category.
If you know something that I don’t or feel as though I might have missed anything worth noting, please do share, I would tremendously appreciate some feedback.
Thank you so much for reading,
I hope this serves you well on your journey.
Live long and prosper 🥂