Can Move-to-Earn NFT Game Stepn Avoid the Pitfalls of Axie Infinity?

Stepn is on an enormous “run” this 12 months, if you happen to’ll pardon the pun. The app that rewards customers with crypto tokens for strolling, jogging, or operating has inaugurated a brand new style of recreation referred to as “move-to-earn.” The sport’s utility token Inexperienced Satoshi (GST) and governance token STEPN (GMT) might be traded for Solana’s native token (SOL) or the USDC stablecoin. Early adopters of the sport have been eager to share their enjoyable and boast about their income, with some claiming to earn $200 per day by exercising exterior.

The value of GST began climbing March (you may’t but earn GMT by the app) amid the primary wave of Stepn hype, and peaked at round $8 in late April earlier than crashing together with the remainder of crypto market. The value fell additional upon information of Stepn blocking customers in China, and is at the moment buying and selling round $0.18, a 97% drop from its April 28 excessive.

A glut of GST tokens has additionally been an element within the latest value decline. As our insights group at Bybit has famous, the circulating provide of GST swelled from 20,000 to almost 50,000 in Could.

‘Strava Meets Pokémon Go’: Stepn Has 3 Million Customers, However Its Token Is Down 97%

In the meantime, a take a look at the tokenomics of Stepn reveals that, like most play-to-earn (P2E) video games, it adopts a cyclical construction—first nudging customers to earn in-game tokens, then pushing them to spend extra to rack up extra sooner or later. New Stepn gamers should first put money into NFT sneakers, and are then inspired to earn in-game tokens that permit them to mint extra sneaker NFTs, which they’ll lease or promote on secondary markets. And so forth.

Up to now, these techniques have proved to be unsustainable. If no new exterior capital is injected into the undertaking, the cycle will ultimately produce a diminishing token value, and the failure to draw new customers to hold on the cycle. Skeptics of those tasks would possibly use a much less charitable description: Ponzi scheme.

However calling Stepn a Ponzi, which describes a deliberate funding fraud, could be untimely and unjust to the group behind it. Many new tasks implement a Ponzi-like construction of their early phases to bootstrap development. It’s what they do after this bootstrapping part that ought to inform our ultimate judgment. For now, it’s vital to acknowledge Stepn’s pioneering function within the rising move-to-earn discipline the place tasks are seamlessly tying in the actual world with the digital one, utilizing Web3 mechanics to push customers away from their laptop screens and out into the actual world.

Stepn is encouraging us to move outside and undertake a more healthy life-style. Future improvements inside this area will construct on this concept and comply with an identical path of integrating the actual world into the Web3 area.

As for a way Stepn would possibly carry out in the long run, it’s value P2E tasks like Axie Infinity, which employs an identical type of token construction.

Axie Infinity rose to fame in 2021, and peaked at roughly 6.6 million customers. As a result of giant variety of gamers and its limitless mint of in-game tokens, the sport’s burning mechanics proved inadequate. Axie created an immense provide of tokens that, mixed with a gradual decline in demand, triggered a downward spiral.

The historical past of Axie suggests {that a} sustainable move-to-earn mannequin would require fixed updates to maintain the exercise enjoyable and fascinating, and to draw a gentle influx of recent customers. Providing a sustainable return on the money and time customers make investments may also contribute to lasting demand. The upshot is that Stepn’s group should take note of the undertaking’s tokenomics, and be certain that the token’s value stays worthwhile. Stepn additionally should be certain that the time it takes for a brand new consumer to interrupt even just isn’t too lengthy.

There are indicators Stepn understands these challenges. As our analysts have famous, the corporate is adjusting the required GST for every shoe-minting in response to the fluctuating GST token value. It additionally added restrictions similar to a 48-hour cooling interval and minimal stage of the “guardian sneaker” NFT earlier than with the ability to mint new sneakers. In the meantime, Stepn has but to push into staking, which might assist maintain an inexpensive value for its GMT token.

This all exhibits some forethought on the way to make the sport sustainable long run. Nonetheless, the group may have a tough activity maintaining with its increasing consumer base by guaranteeing the sport supplies a enjoyable and rewarding expertise.

For now, it’s unclear Stepn will be capable of do that. There’s a threat the undertaking suffers from one thing that impacts the present crop of P2E builders, specifically a capability to completely understood the buyer habits and wishes of precise players. They’ve been concentrating on traders and folks excited about creating wealth, and never actual customers who will keep on with and maintain the sport long run.

General, it’s nonetheless very early days for move-to-earn, and Stepn nonetheless has time to adapt and keep away from lots of the pitfalls of Axie and the P2E world. However, if Stepn needs to succeed, the group had higher run, not stroll.