Move-to-earn: The next iteration of crypto-gaming pays users to exercise

Gaming has been one of the most prominent crypto applications — creating new gaming models. Axie Infinity popularized the concept of play-to-earn — earning crypto tokens for playing a game. Here’s where innovation is taking us next…

The next iteration of crypto-gaming: move-to-earn

…letting players earn crypto tokens for exercising.

With over 300K users, STEPN ($GMT/$GST) is one of the first companies to test out the model — rewarding players for exercising.

To start, players must purchase an NFT pair of sneakers on STEPN’s marketplace:

• Sneakers have different attributes — e.g., how much $GST is earned (efficiency) and how fast sneakers wear out (resilience).
• Sneakers only work for either walking, jogging, running or training — and can also be re-sold on STEPN’s marketplace.
• The more sneakers you own, the more you earn — the first pair letting users move (earn) for 10 minutes a day.

STEPN has two tokens: $GST and $GMT.

• $GST is the utility token paid out to players for moving — which can also be sold, used to level up sneakers or used for repair.
• $GMT is the governance token which is more similar to holding a company’s stock — and has a $1.9B market cap.

STEPN primarily makes money by taking a cut of transactions on its marketplace. STEPN reported a $26M profit from its NFT marketplace trading and royalty fees in the first quarter.

“X-to-earn” models vs. pyramid schemes

So far, getting set up on STEPN isn’t easy and requires a significant investment.

1/ Users need an activation code — which can only be acquired from existing users.

2/ Buying a pair of sneakers is expensive — with the cheapest ones currently going for 12 SOL (~$1,300 USD).

Players can recoup their investment by re-selling their sneakers — assuming prices don’t crash.

But where are these token rewards coming from? STEPN creates new $GST tokens to pay users — which inflates the supply of $GST over time — devaluing the rest of the $GST on the market.

• Sneakers retain their value as long as more users play — and $GST’s value rises as more people buy the token for upgrades.
• Sounds a bit — dare we say — pyramid scheme-ish? Pay to start, convince people to join, get paid as more people play.

Investors: Flaw with X-to-Earn

If everyone decides to sell $GST instead of investing in the game, the price can crash. If interest in the game falls, sneaker prices fall —  as was the case for Axie Infinity.

• In 2021, the cheapest Axie (Axie Infinity’s version of sneakers) went for ~$300 USD — today, the cheapest Axie is $17.
• With play-to-earn games, early players and game creators make the most.

STEPN must incentivize players to hold on to sneakers, get them to spend $GST in-game or remove (burn) $GST from the market. Else it risks prices crashing — just like Axie did.

STEPN is learning from Axie’s mistakes — but designing a sustainable game economy isn’t simple.