The ‘Move-to-earn’ Solana app StepN is the latest crypto gaming craze.

after release In December, StepN, an app that lets users walk and run to earn tokens, quickly became a pseudonym in the Play-to-earning blockchain gaming or GameFi world. StepN co-founder Jerry Huang recently told TechCrunch that the app has between 2 and 3 million users worldwide.

That number isn’t close to the 100 million player size enjoyed by the popular web2 title, but it’s a significant breakthrough for a 5-month-old app in the crypto world. As of May 22, market cap StepN’s native token GMT was approximately $860 million.

Founded in Adelaide, Australia by Huang and his co-founder Yawn Rong, StepN debuted at the Solana Hackathon. october. After taking fourth place, exposure at the event helped win the first batch of beta users. When it was officially launched two months later, rumors of an app that could make money by staying healthy had already spread within the blockchain community. Dozens of users signed up without flashy advertising campaigns.

In just a few weeks, StepN grew so quickly that the team had to limit the number of daily registrations. According to Huang, there are currently tens of thousands of new users signing up for the app every day.

Serial entrepreneur Huang and blockchain venture capitalist Rong initially self-funded a project that was “financially stable” by the two of them. But in September, they decided that the fundraising could bring other meaningful resources like partnerships and publicity. The founders have spoken to over 100 investors and modified their pitch decks more than 40 times before. $5 million seed round closed November From Sequoia Capital and others.

“At the time, we didn’t have a product and many investors couldn’t understand what we were doing. Sequoia did. The process of answering investor questions also helped us improve the product later,” said Huang.

In fact, fast-growing apps now appear to be self-sustaining. It earns between $3 million and $5 million in daily transaction fees and earns up to $100 million per month. Another time in April strategic investment on Binance.

is it a game

Some argue that what makes StepN and other blockchain games such as Axie Infinity so successful is the fact that they are essentially gamified financial products.

In order to earn tokens and record miles on StepN, users must first spend at least 12 soles, or around $600, for a pair of virtual shoes. at the current market exchange rate. Digital shoes can be resold in the future in the form of Non-Fungible Tokens (NFTs) running on the Solana Network and Binance’s smart chain, but admission fees are not yet available. It’s a trivial amount for casual players.

Over time, StepN users must accumulate new kicks to level up. that much A typical return on investment takes about a month, after which time people can start generating income of up to thousands of dollars per day, depending on their level, activity and the current price of StepN tokens. That said, the game can be quite lucrative.

In the eyes of some gaming veterans, the gameplay of most existing GameFi apps is “easy and thoughtless”. Axie Infinity, for example, features cute speckled creatures fighting in simple battles. As such, many established players in the web2 gaming industry are entering GameFi, promising to bring quality back to the industry.

Huang begged him to disagree. “Many Triple-A games overemphasize aesthetics and big budgets, but aren’t very innovative when it comes to gameplay. On the other hand, some simple-looking games like Plants vs. Zombies offer great long-lasting gameplay.” said Huang, who ran his own game studio in China before moving to Australia a decade ago.

“A lot of newcomers to GameFi blindly pursue triple-A production,” he continued. “But if you haven’t already succeeded in web2, why did you succeed in web3? A game that seems as simple as how to design the economics of an app, for example, is not so simple behind the scenes.”

Is it sustainable?

Other critics question the financial sustainability of Play to Earnings. To sustain this business model, the gameplay is addictive, requiring users to continue playing without cashing in coins or continuing to attract new users who purchase to replace users that the app cashes in. Critics have drawn parallels between the play-to-earning and pyramid schemes.

Axie Infinity did not sustain a sharp rise. The Vietnamese game studio behind the game, Sky Mavis, valued at $3 billion In a round of $150 million in funding last October. But its token is loss of more than 80% of value Since peaking at $160 in November, sales have been faint From $754 million to $5 million.

For most StepN users aged 20-40 years from wealthy countries like USA, Japan and Europe, losing a few thousand dollars isn’t the end of the world. China, where crypto trading is banned, accounts for less than 5% of its user base, Huang said. However, Axie Infinity’s players are concentrated in developing countries like the Philippines and Venezuela, with many saving significant sums on games, a major source of income during the COVID-19 pandemic.

StepN proposes a dual solution to sustainability. One is to have a price stabilization mechanism to ensure that the cost of coins is always affordable for new users, but not cheap enough for existing users to lack the incentive to create new shoes. Sell ​​and sell new shoes on the blockchain.

Price manipulation is done through a dual-token system. If the price of “utility coin” GST is too high and shoes are expensive, StepN will ask players to burn “governance coin” GMT to create new shoes. As a result, the supply of GST increases, resulting in a sell-off and lowering costs.

Huang also argued that StepN’s fitness component is fundamentally different from Axie Infinity. “Yes, users can make money with StepN in the early stages, but over time they will get used to staying active, so they will keep walking or running regardless of financial rewards.”

“A lot of people don’t see StepN as a real game. Also, I don’t think it’s a running app because users can make money with it,” said Curt Shi, a founding partner at Welinder & Shi Capital and an early investor at StepN. “It’s hard to define right now, but time will tell.”

A killer app?

Another defense from Huang is the role StepN can play in evangelizing blockchain to the world. About 30% of app users have never used a blockchain service before.

“Many people may have traded using centralized exchanges like Binance and Coinbase, but few know what a DEX is. [decentralized exchange] They have never traded NFTs on the market or own a self-managed wallet. We have the potential to onboard tens of millions of web3 users, which I think is very meaningful.”

“I think people are paying too much attention. [sustainability] problem,” the founder continued. “ROI can slow down over time, but every game has a lifecycle. We also need to look at what value the app creates.”

While crypto values ​​collide, your app’s momentum can slow down faster than expected. venture capital company It’s warning startups to prepare for a “crypto winter” and industry giants like Coinbase are putting the brakes on hiring. Blockchain apps that rely on attracting new users to drive the economy may face more hurdles as consumers lose confidence in the market and are less willing to spend on tokens or NFTs.

But Huang finds a silver wall in the current downturn. “There has been a lot of bubble in the market. Now the bubble will burst and our shoes will be cheaper and only [blockchain] Apps with real-world use cases will survive.”

“The market has definitely bubbled, so the good thing is that [StepN’s market cap] It has shrunk over the past few days,” said Shi. “Maintaining a very high market cap can be stressful for the team and now the team will focus more on the product itself and we believe StepN will perform better in the bear market and in the next bull market. I believe it will be a winner.”

Operating with a rapidly expanding team of 70 people in several countries including Australia, UK, USA and Singapore, StepN’s next step is to build a social product around a community of token holders. Continuous stream new runners.

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