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

Stepn is on a massive “race” this year, if you will excuse the pun. The app, which rewards users with crypto tokens for walking, jogging or running, has inaugurated a new genre called “move-to-earn”. The game’s utility token Green Satoshi (GST) and governance token STEPN (GMT) can be exchanged for Solana’s native token (SOL) or USDC stablecoin. Early users of the game were keen to share the fun and brag about their profits, with some claiming to earn $ 200 a day by exercising outdoors.

The price of GST began to climb in March (you can not yet earn GMT through the app) in the midst of the first wave of Stepn hype, peaking at around $ 8 in late April before crashing with the rest of the crypto market. The price fell further after the news that Stepn blocked users in China, and is currently trading around $ 0.18, a fall of 97% from the highest on April 28.

An abundance of GST tokens has also been a factor in the recent price decline. As our insight team at Bybit has noted, the circulating offer of GST increased from 20,000 to almost 50,000 in May.

Meanwhile, a look at Stepn’s tokenomics reveals that, like most play-to-earn (P2E) games, it uses a cyclical structure – first pushing users to earn tokens in the game, and then pushing them to spend more to collect more in the future. New Stepn players must first invest in NFT sneakers, and are then encouraged to earn tokens in the game that allow them to create multiple sneaker NFTs, which they can rent or sell in secondary markets. And so on.

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

But calling Stepn a Ponzi, which describes a deliberate investment fraud, would be premature and unfair to the team behind it. Many new projects are implementing a Ponzi-like structure in its early stages to start growth. It is what they do after this bootstrapping phase that should inform our final verdict. For now, it’s important to recognize Stepn’s groundbreaking role in the emerging move-to-earn field where projects seamlessly connect to the real world with the virtual, using Web3 mechanics to push users away from the computer screens and into it. real world. .

Stepn encourages us to go outdoors and lead a healthier lifestyle. Future innovations in this space will build on this idea and follow a similar path to integrate the real world into the Web3 site.

When it comes to how Stepn can perform in the long run, it is worth looking at P2E projects such as Axie Infinity, which use a similar type of token structure.

Axie Infinity became famous in 2021, reaching a peak of approximately 6.6 million users. Due to the large number of players and its unlimited circulation of tokens in the game, the game’s burning mechanics proved inadequate. Axie created a huge supply of tokens which, combined with a gradual decline in demand, triggered a downward spiral.

Axie’s story suggests that a sustainable move-to-earn model will require constant updates to keep activity fun and engaging, and to attract a steady influx of new users. Offering a sustainable return on time and the money users invest will also contribute to lasting demand. The result is that Stepn’s team must take into account the project’s tokenomics, and ensure that the token’s price remains valuable. Stepn must also make sure that the time it takes for a new user to balance is not too long.

There are signs that Stepn understands these challenges. As our analysts have noted, the company adjusts the required GST for each shoe release in response to the fluctuating GST token price. It also added restrictions such as a 48-hour cooling-off period and a minimum level of “parent-sneakers” NFT before they could make new sneakers. Meanwhile, Stepn has not yet pushed for action, which will help maintain a reasonable price for the GMT token.

All this shows a certain concern about how to make the game sustainable in the long run. However, the team will have a difficult task keeping up with its growing user base by ensuring that the game provides a fun and rewarding experience.

It is currently unclear Stepn will be able to do this. There is a risk that the project will suffer from something that affects the current crop of P2E developers, namely an ability to fully understand consumer behavior and the needs of actual players. They are aimed at investors and people who are interested in making money, and not real users who want to stick to and maintain the game in the long run.

Overall, it’s still very early to move to make money, and Stepn still has time to adapt and avoid many of the pitfalls of the Axie and P2E world. But if Stepn wants to succeed, the team must run, not go.

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