Since its launch in December, StepN, an app that lets customers stroll and run to earn tokens, has rapidly change into a family title within the play-to-earn blockchain gaming, or GameFi, world. Two to a few million customers worldwide are actually lively on the app each month, StepN’s co-founder Jerry Huang just lately instructed Avisionews.
That quantity is nowhere near the hundred-million participant dimension loved by common web2 titles, however on the earth of crypto, it’s a significant breakthrough for a five-month-old app. As of Might 22, the market cap of StepN’s native token GMT stood at round $860 million.
Based by Huang and his co-founder Yawn Rong in Adelaide, Australia, StepN debuted at a Solana hackathon in October. After coming in fourth, its publicity on the occasion helped land its first batch of beta customers. When it formally launched two months later, phrases concerning the app that allow one earn by staying match had already unfold throughout the blockchain group. With none splashy advert marketing campaign, scores of customers signed up.
In weeks, StepN was rising so quick that the staff wanted to cap the variety of day by day registrations. Now, tens of hundreds of latest customers are becoming a member of the app per day, in keeping with Huang.
Huang, a serial entrepreneur, and Rong, a blockchain enterprise capitalist, had been self-funding the undertaking at first for the pair had been “financially steady.” However in September, they determined that fundraising may usher in different significant assets akin to partnerships and publicity. The founders spoke to over 100 traders and revised their pitch deck over 40 occasions earlier than closing a $5 million seed round from Sequoia Capital and others in November.
“We didn’t have a product on the time, and plenty of traders couldn’t perceive what we had been doing. Sequoia did. The method of addressing investor questions additionally helped us refine the product to the place it was later,” mentioned Huang.
Certainly, the fast-growing app seems to be self-sustainable for now. It’s producing $3-5 million in web revenue from buying and selling charges a day, and incomes as much as $100 million each month. In April, it picked up one other spherical of strategic investment from Binance.
Is it a sport?
Some argue what makes StepN — and different play-to-earn blockchain video games like Axie Infinity — profitable is the truth that they’re primarily monetary merchandise with a gamified twist.
To start out incomes tokens and logging one’s mileage on StepN, customers must first spend a minimum of 12 sol or round $600 on a pair of digital footwear on the present market price. The digital footwear are within the type of a non-fungible token (NFT) that runs on the Solana community and Binance’s good chain so will be resold later, however the entry charge remains to be not a trivial quantity for any informal participant.
Over time, StepN customers might want to accumulate new kicks to degree up. The traditional return on funding requires a couple of month, upon which individuals can begin producing earnings of as much as a number of thousand {dollars} per day relying on their degree, activeness, and the present worth of StepN tokens. In different phrases, the sport will be fairly profitable.
Within the eyes of some gaming veterans, the gameplay of most current GameFi apps is “straightforward and senseless.” Axie Infinity, as an example, options cute blob-like creatures that battle in easy battles. As such, web2 gaming incumbents are getting into GameFi in droves, pledging to convey high quality again to the trade.
Huang begged to vary. “A variety of the triple-A video games overemphasize aesthetics and massive budgets, however they aren’t actually that revolutionary with regards to gameplay, whereas some simple-looking video games like Vegetation vs. Zombies include sensible gameplay that makes them final,” mentioned Huang, who ran his personal gaming studio in China earlier than shifting to Australia a decade in the past.
“Many newcomers to GameFi are blindly pursuing triple-A productions,” he continued. “But when they weren’t already profitable in web2, why would they be in web3? Some simple-looking video games aren’t that easy behind the scene, as an example, how we design the economics of our app.”
Is it sustainable?
Different critics query the monetary sustainability of play-to-earn. Sustaining such a enterprise mannequin means the gameplay must be both so addictive that customers proceed to play with out cashing out their cash, or that the app continues to draw new customers who purchase in solely to interchange those that money out. Critics have even drawn parallels between play-to-earn to pyramid schemes.
Axie Infinity hasn’t been capable of maintain its meteoric rise. Sky Mavis, the Vietnamese gaming studio behind the sport, was valued at $3 billion in a $150 million financing spherical final October. However its token has lost over 80% of its value since peaking in November at $160, and its gross sales quantity has nosedived from $754 million to only $5 million.
Dropping a couple of thousand {dollars} isn’t the tip of the world for many of StepN’s customers, who’re 20-40 year-olds from prosperous international locations just like the US, Japan, and Europe. China, the place crypto buying and selling is banned, accounts for lower than 5% of its consumer base, Huang mentioned. However Axie Infinity’s gamers are concentrated in growing international locations just like the Philippines and Venezuela, lots of whom are betting a major quantity of their financial savings on the sport, a significant supply of their earnings throughout the COVID pandemic.
StepN proposes a two-fold answer to sustainability. For one, it’s engaged on a worth stabilization mechanism to make sure the price of its cash is at all times at a price that the footwear are inexpensive for brand spanking new customers but additionally not so low-cost that current customers lack the incentives to mint new footwear, that’s, create new footwear on the blockchain and promote.
Worth manipulation is achieved via its dual-token system. When the worth of its “utility coin” GST is simply too excessive and footwear get dear, StepN will ask gamers to burn its “governance coin” GMT to mint new footwear. The availability of GST will increase consequently, resulting in a sell-off and bringing its price down.
Huang additionally argued StepN’s health element makes it essentially totally different from Axie Infinity. “Sure, customers can become profitable from StepN within the early stage, however over time they will even develop accustomed to staying lively, so they’ll proceed to stroll or run no matter monetary rewards.”
“Many individuals don’t see StepN as an actual sport. Nor do they think about it a operating app as a result of customers can become profitable from it,” mentioned Curt Shi, founding associate at Welinder & Shi Capital and an early investor in StepN. “It’s exhausting to outline what it’s proper now, however time will inform.”
Killer app?
Huang’s different protection is the function StepN may play in evangelizing blockchain to the world. An estimate of 30% of the app’s customers has by no means used any blockchain companies earlier than.
“Many individuals might need used centralized exchanges like Binance and Coinbase to commerce, however few know what a DEX [decentralized exchange] is, nor have they traded NFTs on a market or owned a self-custodial pockets. We’ve got the potential to onboard tens of thousands and thousands of web3 customers and I feel that is one thing very significant.”
“I feel individuals are paying an excessive amount of consideration to the [sustainability] problem,” the founder continued. “ROI would possibly gradual over time, however all video games have life cycles. You additionally want to take a look at what worth an app creates.”
Momentum would possibly decelerate before anticipated for the app amid crashing crypto values. Venture capital firms are warning startups to brace for a “crypto winter” and trade giants like Coinbase are making use of the brakes on hiring. As shoppers lose confidence available in the market and change into much less keen to spend on tokens or NFTs, blockchain apps that depend on attracting new customers to drive up their economies would possibly face extra roadblocks.
However Huang finds a silver lining within the present downturn. “There was loads of froth available in the market. Now the bubble is bursting, our footwear will change into extra inexpensive, and solely the [blockchain] apps with actual use case will survive.”
“The market was clearly frothy, so it’s a very good factor that [StepN’s market cap] has shrunk over the previous few days,” mentioned Shi. “To keep up an ultra-high market cap will be annoying for the staff, and now the staff will likely be focusing extra on the product itself and we consider StepN will outperform in bear and will likely be a winner within the subsequent bull market.”
Working with a quickly increasing staff of 70 individuals throughout international locations together with Australia, the UK, the US and Singapore, StepN’s subsequent step is to construct a social product round its token holder group, the problem now could be to show that it may possibly proceed to attract in a continuing stream new runners.
