What StepN Needs To Do To Not Turn Into A Ponzi?

StepN is recognized as a pioneer in the emerging field of monetization. However, the project is also facing doubts about becoming a Ponzi because of its unsustainability. So what does StepN need to do now?

Doubtful StepN becomes a Ponzi scheme.

Stepn is having a big “race” this year. The app rewards users with crypto tokens for walking, jogging, or running and has launched a new game genre called “move to earn”. Green Satoshi Game Utility Token (GST) and STEPN Governance Token (GMT) can be traded for Solana’s native token (SOL) or USDC co-stable. Early adopters of the game were keen to share in the fun and brag about their profits, with some claiming to make $200 a day exercising outside.

The GST price started rising in March (you can’t earn GMT through the app yet) amid Stepn’s first wave of hype and peaked at around $8 in late April before collapsing along with the rest of the crypto market. The price fell further on news of Stepn blocking users in China and is currently trading around $0.18, down 97% from the April 28 high.

Too many GST tokens were also a factor in the recent price drop. The circulating supply of GST increased from 20,000 to nearly 50,000 in May.

Meanwhile, a look at Stepn’s token shows that, like most games for money (P2E), it adopts a cyclical structure – motivating users to earn tokens first through in-game alerts, then encouraging them to spend more to earn more money in the future. New players must instead invest in NFT sneakers and then are incentivized to earn in-game tokens that allow them to earn more NFT sneakers, which they can rent or sell on the secondary market grant.

In the past, these systems have proven to be unsustainable. If no new external capital is poured into the project, the cycle will eventually produce a declining token price and fail to attract new users to continue the process. Skeptics of these projects could use a less charitable description: The Ponzi scheme.

What does StepN need to do?

Calling Stepn a Ponzi, which describes an intentional act of investment fraud, would be premature and unjust for the team behind it. Many new projects implement a Ponzi-like structure in their early stages for bootstrap growth, and what they do after this warm-up period will inform our final verdict. For now, it’s essential to recognize Stepn’s pioneering role in the emerging monetization field, where projects seamlessly link the real world to the virtual world, using Web3 mechanics to push users away from their computer screens and into the real world.

Stepn encourages us to get outdoors and adopt a healthier lifestyle. Future innovations in this space will build on this idea and follow the same path of integrating the real world into the Web3 space.

A sustainable monetization model will require constant updates to keep it fun and engaging while attracting a steady stream of new users. Delivering sustainable returns in terms of time and money invested by users will also contribute to long-term demand.

So the Stepn development team will have to pay attention to the project’s token and ensure that the price of the token remains valid. Stepn also has to ensure that it doesn’t take too long for new users to break even.

There are signs that Stepn understands these challenges. As analysts have noted, the company is adjusting the required GST for each shoe mint in response to fluctuating GST token prices. It also adds limitations like a 48-hour cooling period and a “parent shoe” NFT minimum before new sneakers can be molded. Meanwhile, Stepn has yet to push for staking, which should help maintain a fair price for its GMT token.

All of this suggests some forethought to make the game sustainable in the long run. However, the team will have an uphill task to keep up with its ever-expanding user base by ensuring the game provides an enjoyable and rewarding experience.

At the moment, it is unclear if Stepn will be able to do this. There is a risk that the project faces something affecting the current crop of P2E developers, which is the ability to understand the consumer behavior and needs of actual players fully. They have targeted investors and people interested in making money, not real users who will stick with and stay in the game for the long term.

Overall, it’s still very early to make money, and still has time to adapt. Recently StepN has also released the latest upgrade 0.7.2.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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