Since its launch in December, StepN, an app that lets users walk and run to earn token, has quickly become a household name. Two to three million users worldwide are active on the app every month, according to Jerry Huang.
That number is nowhere close to the hundred-million player size enjoyed by popular web2 titles, but it is a significant breakthrough for a five-month-old app. The market cap of StepN's native token was $860 million as of May 22.
At a Solana Hackathon in October, StepN was founded by Huang and his co-founder Yawn Rong. The exposure it got at the event helped it land its first group of users. The app that let one earn by staying fit had already spread within the community when it was officially launched two months later. Scores of users signed up without a splashy ad campaign.
The team needed to cap the number of daily registrations because StepN was growing so fast. Tens of thousands of new users are joining the app each day.
The pair were self-funding the project at first, but in September they decided that raising money could bring in other resources. The founders spoke to over 100 investors and revised their pitch deck over 40 times before closing a $5 million seed round.
Many investors couldn't understand what we were doing because we didn't have a product. Sequoia did. The process of addressing investor questions helped us refine the product.
The app appears to be self-sufficient for now. It earns up to $100 million a month from trading fees and can make up to $5 million a day. It received another round of investment from the company.
Some argue that StepN and other play-to-earn games are successful because they are essentially financial products with a gamified twist.
To start earning token and logging mileage on StepN, users need to spend at least 12 sol or $600 on a pair of virtual shoes at the current market rate. The entry fee is not trivial for a casual player, since the digital shoes are in the form of a non-fungible token.
StepN users will need to accumulate new kicks over time. It takes about a month for people to start generating income, depending on their level, activeness, and the current price of StepN token. The game can be very profitable.
Some gaming veterans think that most existing GameFi apps are easy and mindless, and feature cute blob-like creatures that fight in simple battles. Web2 gaming incumbents are entering GameFi in droves, promising to bring quality back to the industry.
A lot of the triple-A games over emphasize aesthetic and big budgets, but they aren't really that innovative when it comes to the way they play.
If they weren't 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.
Critics question the financial viability of play-to-earn. Maintaining such a business model means that the game needs to be so addictive that users continue to play without cashing out their coins, or that the app continues to attract new users who buy in only to replace those who cash out. Critics draw parallels between play-to-earn and pyramid schemes.
It hasn't been possible to sustain its rise. Sky Mavis was valued at $3 billion in a $150 million financing round last October. Its sales volume has plummeted from $754 million to just $5 million since it peaked at $160.
Losing a few thousand dollars isn't the end of the world for most of StepN's users, who are 20-40 year-olds from affluent countries like the US, Japan, and Europe. China accounts for less than 5% of its user base. The majority of Axie's players are from developing countries like the Philippines and Venezuela, where they are betting a lot of their savings on the game.
StepN has a solution to the issue of sustainable living. It is working on a price stabilization mechanism to ensure that the cost of its coins is always at a rate that the shoes are affordable for new users but also not so cheap that existing users lack the incentives to mint new shoes.
The dual-token system is used to achieve price manipulation. StepN will ask players to burn the utility coin when it's too expensive to buy shoes. The cost of the goods and services tax is brought down when the supply increases.
Users can make money from StepN in the beginning, but over time they will grow accustomed to staying active, so they will continue to walk.
Many people don't see StepN as a real game. They don't consider it a running app because users can make money from it.
The role StepN could play in evangelizing the world is another defense. 30% of the app's users have never used a blockchain service before.
Many people might have used centralized exchanges like Binance and Coinbase to trade, but they don't know what a decentralized exchange is or if they have traded NFTs on a marketplace. We have the ability to onboard tens of millions of web3 users and I think this is very meaningful.
The founder said that people are paying too much attention to the issue. You have to look at what value an app creates.
The app might slow down sooner than expected. Venture capital firms and industry giants are applying the brakes on hiring because of the winter season. As consumers lose confidence in the market, and become less willing to spend on NFTs, it might be harder for blockchain apps that rely on attracting new users to drive up their economies.
There was a lot of froth in the market. The bubble is about to burst and our shoes will become more affordable.
The market cap has shrunk over the past few days, which is a good thing.
StepN's next step is to build a social product around its token holder community, the challenge now is to prove that it can continue to draw in a constant stream.
Why Axie Infinity’s co-founder thinks play-to-earn games will drive NFT adoption
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