STEPN, a move-to-earn app that allows users to walk, jog or run outdoors to earn crypto tokens, has rapidly become a key player in the play-to-earn blockchain gaming, or GameFi, sector since its December launch. STEPN’s co-founder Jerry Huang, recently stated that the app now has two to three million monthly active users worldwide.
STEPN’s user numbers are nowhere near the hundreds of millions of players enjoyed by big Web 2.0 gaming companies, but in the cryptocurrency sphere, it’s a significant milestone for a five-month-old game. The market valuation of STEPN‘s native Green Metaverse Token (GMT) was roughly $860 million as of May 22nd.
Founded in Adelaide, Australia by Huang and his co-founder Yawn Rong, STEPN made its premiere at a Solana hackathon in October. It placed fourth in the competition, which helped it land its first group of beta users.
When STEPN was formally launched two months later, word of the software that allowed people to earn money by staying fit had already traveled around the blockchain community. Despite the lack of flashy advertising campaigns, a large number of users signed up.
STEPN has grown so quickly in a few of weeks that the company had to limit the number of daily registrations. According to Huang, tens of thousands of new users are joining the app every day.
Sequoia Capital Seed Round Investment
Huang, a serial entrepreneur, and Rong, a blockchain venture capitalist, first funded the initiative themselves since they were “financially stable.” However, they determined in September that fundraising might bring in other valuable resources such as collaborations and publicity. Before they raised a $5 million seed round from Sequoia Capital and others in November, the founders met with over 100 investors and changed their pitch deck over 40 times.
“We didn’t have a product at the time, and many investors couldn’t understand what we were doing. Sequoia did. The process of addressing investor questions also helped us refine the product to where it was later,”
Indeed, the rapidly expanding app appears to be self-sustaining for the time being. It earns $3-5 million in net profit per day from trading fees and up to $100 million per month. Binance provided another round of strategic investment in April.
Some say that the fact that STEPN and other play-to-earn blockchain games like Axie Infinity are fundamentally financial products with a gamified twist is what makes them successful.
STEPN NFT Sneakers Run On Solana and Binance Smart Chain
To begin earning tokens and logging their exercise activity on STEPN, users must first spend at least 12 SOL, or roughly $600 at the current market rate, for a pair of virtual shoes. The digital shoes are in the form of a non-fungible token (NFT) that runs on the Solana network and Binance’s smart chain, and can therefore be resold afterwards. In addition, OpenSea recently added STEPN’s NFT sneaker collection to their marketplace. However, the price to get started with STEPN is still not insignificant for any casual gamer.
STEPN users also need to gather fresh kicks over time in order to level up. The typical return on investment takes around one month, after which some users may be able to start earning up to several thousand dollars each day, based on their level, activity, and the current price of STEPN tokens. In other words, the game has the potential to be profitable for active users.
Huang on GameFi
According to several gaming veterans, most existing GameFi apps’ gameplay is “easy and mindless.” Axie Infinity, for example, includes adorable blob-like animals who engage in simple fights. As a result, Web 2.0 gaming incumbents are flocking to GameFi, promising to restore quality to the industry.
Huang was adamantly opposed. “A lot of triple-A games overemphasize aesthetics and big budgets, but they’re not actually that new when it comes to gameplay,” said Huang, who operated his own gaming business in China before migrating to Australia a decade ago.
“Many newcomers to GameFi are blindly pursuing triple-A productions. But if they weren’t already successful in web2, why would they be in web3? Some simple-looking games aren’t that simple behind the scene, for instance, how we design the economics of our app.”
Is STEPN Sustainable?
Some have questioned the financial viability of play-to-earn. To sustain such a revenue model, the gameplay must either be so addictive that users continue to play without paying out their coins, or the app must continue to attract new users who buy in just to replace those who cash out. Some critics have even compared play-to-earn to pyramid schemes.
STEPN Vs. Axie Infinity Demographics
Axie Infinity’s meteoric rise has come to an end. In a $150 million fundraising round last October, Sky Mavis, the Vietnamese gaming studio behind the game, was valued at $3 billion. Since then, its token has lost more than 80% of its value since peaking at $160 in November. Its sales volume has dropped from $754 million to only $5 million.
For most STEPN users, who are 20-40 year olds from wealthy countries such as the United States, Japan, and Europe, losing a few thousand dollars isn’t the end of the world. According to Huang, China, where crypto trading is prohibited, accounts for less than 5% of its user base.
Conversely, Axie Infinity’s players are concentrated in developing nations such as the Philippines and Venezuela, where many are risking a considerable portion of their savings on the game. It has become a key source of revenue in these countries amid the COVID pandemic.
Price Stabilization Mechanism and Dual-Token Model
STEPN takes a two-pronged approach to sustainability. For one thing, it’s working on a price stabilization mechanism to ensure that the cost of its tokens is always at a level where the shoes are affordable for new users, but also not so low that existing users don’t have an incentive to mint new shoes. In other words, to create new shoes on the blockchain and sell them.
STEPN utilizes a dual-token model. STEPN will urge gamers to burn its “governance coin” GMT to mint new shoes if the price of its “utility coin” Green Satoshi Token (GST) becomes too high. As a result, the supply of GST rises, causing a sell-off and lowering its price. GST is earned when a user moves in the app’s Solo or Background Mode.
Huang also said that STEPN’s fitness component distinguishes it from Axie Infinity. “Yes, users can earn money with STEPN in the beginning, but they will also develop accustomed to being active over time, so they will walk or run independent of cash rewards.”
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