StepN, an app that allows users to walk and run to earn tokens, has swiftly become a familiar name in the play-to-earn blockchain gaming, or GameFi, sector since its December introduction. StepN’s co-founder Jerry Huang recently told TechCrunch that the app now has two to three million monthly active users worldwide.
That figure is nowhere near the hundreds of millions of players enjoyed by big web2 titles, but in the realm of cryptocurrency, it’s a significant milestone for a five-month-old game. The market valuation of StepN‘s native token GMT was roughly $860 million as of May 22.
StepN was founded in Adelaide, Australia, by Huang and his co-founder Yawn Rong, and made its premiere at a Solana hackathon in October. Its fourth-place finish in the tournament helped it land its first group of beta users.
When it 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 a flashy advertising campaign, 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.
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 may bring in other valuable resources such as collaborations and publicity. Before raising 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.
To begin earning tokens and logging mileage 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, but the admission fee is still not insignificant for any casual gamer.
StepN users will need to gather fresh kicks over time in order to level up. The typical return on investment takes around a month, after which people can 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 highly profitable.
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, web2 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 It Sustainable?
Others 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 scams.
Axie Infinity’s meteoric climb 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. However, its token has lost more than 80% of its value since peaking at $160 in November, and 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 bucks 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.
However, 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, which has become a key source of revenue amid the COVID pandemic.
StepN presents a two-pronged approach to sustainability. For one thing, it’s working on a price stabilization mechanism to ensure that the cost of its coins is always at a level where the shoes are affordable for new users but not so low that existing users don’t have an incentive to mint new shoes, that is, create new shoes on the blockchain and sell them.
Its dual-token method allows for price manipulation. StepN will urge gamers to burn its “governance coin” GMT to mint new shoes if the price of its “utility coin” GST becomes too high. As a result, the supply of GST rises, causing a sell-off and lowering its price.
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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