Since its release in December, StepN, an app that enables users to walk and run to earn tokens, has become a household name in the world of play-to-earn blockchain gaming, or GameFi. Jerry Huang, co-founder of StepN, recently reported to TechCrunch that the app currently has between two and three million monthly active users worldwide.
This number pales in comparison to the hundreds of millions of players observed in famous Web 2.0 games, but for a five-month-old crypto program, it is a major accomplishment. As of May 22, the market value of StepN’s native token GMT was around $860 million.
StepN, which was established by Huang and Yawn Rong in Adelaide, Australia, had its debut at a Solana hackathon in October. After placing fourth, the event’s notoriety helped it recruit its first set of beta users. Two months after its initial launch, the blockchain community was already aware of the scheme that enables users to earn money by being active. Despite the absence of an extravagant advertising campaign, a substantial number of individuals joined.
In a few of weeks, StepN developed so rapidly that the firm had to restrict the number of daily registrations. Daily, tens of thousands of new users join the app, according to Huang.
Huang, a tech entrepreneur, and Rong, a blockchain venture investor, first self-funded the project since they were “financially strong.” However, in September they found that funding may provide other useful resources, such as partnerships and publicity. Prior to obtaining a $5 million seed round in November from Sequoia Capital and others, the founders met with more than 100 investors and revised their presentation deck forty 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,” said Huang.
The fast increasing app seems to be self-sustaining for the time being. Trading fees create daily net profits of $3 million to $5 million, and monthly incomes of up to $100 million. In April, Binance made an additional strategic investment.
Is this a game?
Some claim that the success of StepN and other play-to-earn blockchain games, such as Axie Infinity, may be linked to the fact that they are inherently gamified financial products.
In order to begin earning tokens and monitoring mileage on StepN, users must first invest at least 12 sol ($600) in a pair of virtual shoes. Even if the digital shoes are in the form of a non-fungible token (NFT) that functions on the Solana network and Binance’s smart chain and may be resold, the entry fee for casual participants is not negligible.
StepN players must acquire new kicks over time to level up. After about one month, depending on their level, activity, and the current price of StepN tokens, users may begin earning hundreds of dollars each day. In other words, the game has tremendous economic potential.
According to a number of gaming specialists, the gameplay of the majority of GameFi apps is “basic and mindless” In Axie Infinity, for instance, adorable creatures resembling blobs engage in rudimentary warfare. As a consequence, veterans of Web 2.0 gaming are flocking to GameFi, vowing to restore the industry’s quality.
Huang vehemently disagreed. Before going to Australia a decade ago, Huang had his own gaming company in China.
“Many newcomers to GameFi are blindly pursuing triple-A productions,” he continued. “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 it sustainable?
Others challenge the economic potential of play-to-earn games. Maintaining such a revenue model requires either that the game is so engaging that users continue to play without cashing out their coins, or that the app attracts new users who purchase in to replace those who cash out. Play-to-earn has been likened by some opponents to pyramid scams.
The breathtaking climb of Axie Infinity has concluded. Sky Mavis, the Vietnamese gaming firm behind the game, was valued at $3 billion during a $150 million financing round held in October of last year. Nevertheless, after reaching a high of $160 in November, its token has lost roughly 80% of its value, and its sales volume has plunged from $754 million to merely $5 million.
For the majority of StepN’s 20-to-40-year-old consumers from wealthy countries such as the United States, Japan, and Europe, losing a few thousand dollars is not catastrophic. According to Huang, cryptocurrency trading is prohibited in China, which accounts for less than 5 percent of the global user population. Despite this, the majority of Axie Infinity’s players are from poor countries such as the Philippines and Venezuela, where they risk a significant percentage of their income on the game, which has become a significant source of cash in the wake of the COVID outbreak.
StepN proposes a dual strategy for attaining sustainability. It’s designing a price stability mechanism to ensure that its currencies are always priced at a level that makes the shoes accessible to new users while prohibiting existing users from minting and selling new shoes on the blockchain.
Its dual-token system permits price manipulation. StepN will encourage players to burn its “governance coin” GMT in order to manufacture new shoes if the price of its “utility currency” GST rises too high and shoes become too pricey. As a result, the supply of GST increases, resulting in a sell-off and a decrease in its price.
The fitness component of StepN, according to Huang, separates it from Axie Infinity. Users may initially earn money using StepN, but as they get used to being active, they will continue to walk or run independent of financial incentives.
They do not consider it a running app since users may make money from it “Curt Shi, co-founder of Welinder & Shi Capital and an early investor in StepN, said as much. It is now impossible to pinpoint precisely what it is, but time will tell.
Huang’s third justification is the role StepN may play in evangelizing blockchain to the rest of the world. 30 percent of the app’s users have never used blockchain services previously, according to estimates.
“Many people might have used centralized exchanges like Binance and Coinbase to trade, but few know what a DEX [decentralized exchange] is, nor have they traded NFTs on a marketplace or owned a self-custodial wallet. We have the potential to onboard tens of millions of web3 users and I think this is something very meaningful.”
“I think people are paying too much attention to the [sustainability] issue,” the founderadded. “ROI might slow over time, but all games have life cycles. You also need to look at what value an app creates.”
Due to dropping bitcoin prices, the app’s growth may slow down sooner than anticipated. Startups are cautioned to prepare for a “crypto winter,” while industry giants like as Coinbase halt their recruitment efforts. If consumers lose confidence in the market and are less willing to spend on tokens or NFTs, blockchain apps that rely on acquiring new users to grow their economies may face extra obstacles.
In contrast, Huang sees a silver lining in the current downturn. “In the marketplace, there was much froth. Now that the bubble has burst, our shoes will become cheaper, and only [blockchain] applications with practical uses will remain.”
“The market was clearly frothy, so it’s a good thing that [StepN’s market cap] has shrunk over the past few days,” said Shi. “To maintain an ultra-high market cap can be stressful for the team, and now the team will be focusing more on the product itself and we believe StepN will outperform in bear and will be a winner in the next bull market.”
The next phase for StepN is to build a social product centered on its token holder community, with a rapidly expanding team of 70 people located in Australia, the United Kingdom, the United States, and Singapore. Now, it must show that it can continue to attract a consistent number of new runners.