Chiliz: Scoring Big in the Web3 Arena

Introduction

Chiliz Chain is an interoperable, Layer-1, EVM-compatible blockchain. More importantly, it is the leading blockchain for enterprise-level sports and entertainment brands building projects in the Web3 space. With Chiliz technology, these brands can mint NFTs and Fan Tokens, build DeFi products and Play2Earn games, and create ticketing and payment operations. Chiliz is ideal for those who want to bring traditional fan experiences like memorabilia and collecting into the Web3 environment.

It unlocks blockchain technology's potential to benefit individual fans, fan communities, sports and entertainment brands, developers, and service providers. Chiliz's approach is to continue developing its underlying infrastructure to enable sports enthusiasts to create essential products and services that fit their needs and attract leading, enterprise-level sports and entertainment brands to Web3.

Chiliz recently announced an upcoming product line that combines SportsFi and GameFi. So, before we deep dive into Chiliz Chain's architecture, let's first examine SportsFi and GameFi to understand the team's mission.

What Is SportsFi?

Sports Finance (SportsFi) combines elements of "sports" and "DeFi" to fundamentally shift how fans interact with their favorite athletes and teams. The main features of this Sports-DeFi combination are Non-fungible Tokens (NFTs) and Fan Tokens.

With NFTs, fans can invest in the sports industry and own digital collectibles commemorating unforgettable moments or their favorite athletes. However, there are other ways to engage fans than NFTs. Another feature of SportsFi is Fan Tokens.

Fan Tokens give owners access to exclusive content and merchandise and a say in a team's minor decisions. Tokenization converts sports-related assets into digital tokens and plays a significant role in SportsFi. Everything from tickets to autographed items, company shares, and stadium seats can be tokenized. Tokenization eradicates barriers between fans and their favorite sports stars while reducing the risks of counterfeiting.

What Is GameFi

GameFi is a market segment within DeFi that combines elements of game theory with blockchain technology to intensify user interest and build relationships with a particular blockchain project or cryptocurrency.

GameFi includes the creation and transaction of unique in-game items that players can sell to each other for digital assets. Some GameFi platforms allow players to stake their digital assets to earn passive income and contribute to the game's growth and development.

Socios App

Socios is a platform built on the Chiliz Chain. Chiliz founder Alexandre Dreyfus launched Socios in 2018 for sports and crypto fans, offering new ways to engage with their favorite teams and players—the mobile app rewards fan loyalty. Chiliz has processed approximately 6 million Socios.com transactions in the past year.

Through the Socios app, Chiliz has distributed Fan Tokens for some of the most significant global sports communities. Collaborating with over 170 leading sports organizations, Socios.com establishes a broad platform for engagement. With Socios, developers looking to innovate within SportsFi can explore Chiliz Fan Tokens' potential with an existing, massive network.

Projects looking to power their dApp with 70+ official licensed Fan Tokens from the world of football, MMA, and motorsports can do so. Developers essentially have two options:

Option 1:

Developers allowed on Chiliz Chain can mint original fungible and non-fungible digital assets relevant to sports and entertainment.

Option 2:

Creators can also collaborate with Socios.com and Chiliz Labs to build new platforms and utilities that leverage existing assets, such as Fan Tokens and NFTs, already developed on Socios.com / Chiliz.

What Is Chiliz Labs?

Chiliz Labs is the protocol's onboarding wing. Its goal is to empower blockchain projects that help grow the Web3 sports industry. This program is ideal for those seeking strategic guidance and project funding. These incubated projects are wide-ranging and include diverse items, from metaverse-based sports to AI-based content platforms.

Chiliz Recent News

We're excited to announce our partnership with @Chiliz, the leading Layer-1 blockchain for sports and entertainment, to provide cutting-edge onchain data and analytics to its ecosystem

Read on to learn more about this partnership and some interesting data... pic.twitter.com/CHTymf57Ty

— Nansen 🧭 (@nansen_ai) March 28, 2024

Chiliz recently partnered with Nansen. By integrating Nansen's sophisticated on-chain data and analytics capabilities, Chiliz can deepen its on-chain insights into its SportFi ecosystem. This collaboration sheds light on the usage and expansion of the SportFi marketplace by providing users with an in-depth view of Chiliz's on-chain dynamics.

Nansen's Macro Dashboard can monitor Chiliz's performance analytics with on-chain data through a Nansen Query. These new capabilities will mark a significant step in understanding and leveraging on-chain data for strategic insights, taking SportsFi intelligence to the next level.

Chiliz 2024 Roadmap

The ambitious roadmap for 2024 includes a change in Chiliz tokenomics, a new decentralized exchange (DEX), strategic partnerships, a new community token, and an NFT collection.

I. Chiliz Tokenomics

According to company documents, "Chiliz currently lacks allocatable inflation and hard-coded burn mechanisms." This challenge prevents the protocol from bootstrapping "long-term community incentives in exchange for broad participation in governance and security."

The solution is to re-configure Chiliz's tokenomic structure to include dynamically decreasing annual inflation and the introduction of a perpetual burn mechanism. Chiliz CHZ started as a basic transactional token six years ago but is expanding its role as the native governance and gas token.

CHZ will work the same way that ETH does on Ethereum. Hence, CHZ can be used to pay gas to invoke smart contracts, perform cross-chain operations, and secure the network through staking. This role reflects today's more extensive and more vibrant Chiliz Chain ecosystem.

Below is an outline of the proposed tokenomics changes for 2024, with implementation subject to governance approval.

Inflation Mechanism:

Year 1's annual base inflation is 8.80%, but it will decrease yearly. The majority of accrued gas fees will be burned.

Inflation Supply Allocation:

Validators / Delegators = 65%.

Liquidity Providers and possible Restaking Rewards = 10%.

Ecosystem and Operational Distribution = 25%.

II. JalaSwap

JalaSwap is the first native DEX to launch on the Chiliz Chain. It's also the first DEX primarily focused on decentralized trading for Fan Tokens as an asset class.

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III. Strategic Partnerships

In 2024, Chiliz will focus on cultivating strategic partners in Saudi Arabia, the UAE, South Korea, Japan, and Brazil. The goal is to engage top-tier industry leaders outside of Web3, help them become node validators, and utilize the Chiliz Chain to accelerate their business objectives.

IV. PEPPER Token

Chiliz is launching a community token called PEPPER along with an NFT collection. PEPPER will represent a cross-platform asset that can connect, reward, and incentivize native Fan Token holders, Socios.com users, and other users on platforms integrated with Chiliz Chain. PEPPER tokens will be delivered exclusively through rewards airdrops across eligible wallets.

V. PEPS NFT Collection

Chiliz Chain plans to launch the Peps NFT Collection, a collection of 8,888 community NFTs. The Chiliz team or any operator on Chiliz can airdrop Chiliz Chain-minted assets into the Peps collection on demand. These assets can be Web3 game assets, meme coins, NFTs representing real-world assets, or any future utility the community can imagine.

PEPPER tokens and the Peps collection should be a general asset layer that stakeholders can plug into to engage the Chiliz community by offering relevant value.

To sum up, the Chiliz Chain roadmap for 2024 will help to explode ecosystem productivity and further the mission of bridging the sports and entertainment industries into Web3.

EVM Compatible

Chiliz Chain is an EVM-compatible fork of the Binance Smart Chain. Thus, it is compatible with Ethereum tooling, which makes it easy for developers to build in the Chiliz Chain environment. However, only approved third-party developers may deploy smart contracts on the Chiliz Chain, which brings a high level of security.

Users can expect 400 transactions per second (TPS), average block times of 3 seconds, and medium gas prices of less than $0.01.

Delegated Proof of Staked Authority Consensus

Chiliz Chain inherits Delegated Proof of Staked Authority (DPoSA), a consensus mechanism that combines Proof of Authority (PoA) with Delegated Proof of Stake (DPoS). DPoSA encourages decentralization and community governance and supports lower fees and shorter block times. It is a consensus mechanism that runs on validator efforts.

Chiliz Chain Validators

Validator nodes maintain the security and integrity of the Chiliz Chain blockchain. To participate in consensus, one must have a dedicated computer and put up a certain amount of stake. Each validator node contributes to consensus by producing new blocks and deciding on their order on the blockchain.

The first criterion for becoming a Chiliz Chain validator is becoming a candidate validator. Candidate validators are a set of inactive validators that play a backup role and remain apart from the active validators. Candidates are responsible for validating blocks when active validators are offline or inactive.

A validator node is selected from the pool of candidate validators based on specific criteria, such as time spent and staked amounts. The most bonded candidates become validators and are allowed to start producing blocks. After selection, the validator authenticates new transactions, creates new blocks, and updates the blockchain.

A limited set of 11 validators are elected based on staking, and they take turns producing blocks in a PoA manner. They earn rewards through transaction fees and commissions in return for their work. These rewards are distributed amongst the validators proportionately to the amount they've staked.

Decentralized Staking

If you're unfamiliar with staking, it is the process of bonding a certain amount of crypto tokens to support the operations of a blockchain network. By doing so, the "staker" can receive rewards. The staking process helps secure the network and maintain consensus, making it vital to the consensus mechanism.

The Chiliz Chain depends on a robust set of validators, who must stake a large amount of CHZ and run a node to create and validate blocks. Thus, staking allows CHZ holders to contribute to the network by locking up their assets.

Managing an active validator set also entails a delegation logic whereby delegators can vote for the best validators. This process brings decentralization to the blockchain while users vote for the most honest and stable validators.

Unsurprisingly, the two different roles in the Chiliz Chain staking model are validators and delegators. Delegators contribute to a validator's staking pool with their tokens. This delegation system allows those with fewer CHZ tokens to participate in the network's security.

Rewards for each block come from the gas fees spent on the transactions in the block. The rewards are then split between three parties:

1. Validators who created the block.

2. Delegators in that validator's pool.

3. The network.

Slashing Penalties on Chiliz Chain

Validators have a massive responsibility since they must have "skin in the game" by pledging their crypto stake to earn a chance to validate and commit blocks on the chain. Thus, validators stand to lose a significant amount of their stake should they incur slashing penalties. Learn about slashing penalties here.

Luganodes X Chiliz

Since launching our validator in August last year, Luganodes has been a key supporter of Chiliz, forming a close partnership that's gone from strength to strength. We've not only provided detailed staking guides to help our community get involved but have also worked closely on projects and promotions to spread the word about both Chiliz and Luganodes. Our efforts have paid off, as we recently became the top validator in terms of $CHZ staked, highlighting the success of our collaboration. We eagerly look forward to continuing this fruitful relationship, building on our achievements and exploring new avenues together.

We're deeply grateful to our delegators and partners for their trust and support. 💛🤝

At Luganodes, we're geared up to serve our @chiliz community with our secure & reliable AAA rated institutional grade services! https://t.co/J9sMnsNhBa

— Luganodes (@luganodes) March 22, 2024

Conclusion

Chiliz Chain is a pioneer in SportsFi and is becoming synonymous with the "Sports Blockchain." It's already accomplished a broad reach covering multiple sports with over 170 partners, including significant teams like FC Barcelona and Manchester City.

By offering the capability to mint fan tokens and use its unique crypto trading platform, Chiliz gives fans a unique way to engage with their teams. SportsFi is particularly appealing to a younger, more digitally savvy market and has become a strategic way for sports brands to tap into this tech-forward audience. Chiliz is at the forefront of this sector, building the Web3 ecosystem for sports and entertainment.

If you hold the CHZ token, you can enhance your portfolio by staking to earn rewards. Leverage Luganodes' institutional-grade infrastructure to stake your holdings and create a passive income. Staking with us ensures ease of use, support, and safety while you earn, and also contribute to the security of the Chiliz chain.

Learn how to stake CHZ tokens using this guide. You can learn more about staking on our website, and feel free to contact us for any queries!

About Luganodes

Luganodes is a world-class, Swiss-operated, non-custodial blockchain infrastructure provider that has rapidly gained recognition in the industry for offering institutional-grade services. It was born out of the Lugano Plan B Program, an initiative driven by Tether and the City of Lugano. Luganodes maintains an exceptional 99.9% uptime with round-the-clock monitoring by SRE experts. With support for 40+ PoS networks, it ranks among the top validators on Polygon, Polkadot, Sui, and Tron. Luganodes prioritizes security and compliance, holding the distinction of being one of the first staking providers to adhere to all SOC 2 Type II, GDPR, and ISO 27001 standards as well as offering Chainproof insurance to institutional clients.