STEPN’ Into a New Era of X-To-Earn Protocols

MindWorks Capital
7 min readJun 9, 2022


One of the more audacious experiments launched during the last bull run in Crypto was X-To-Earn protocols. The protocols allow users to perform certain actions, such as playing games or walking, to earn tokens which the users could either use to continue participating in the ecosystem or to sell to generate income.

Axie Infinity was the first protocol to see mainstream adoption as many saw a fun way to supplement their income. Axie Infinity became especially popular in countries such as the Philippines, where players can earn above-average national income through playing the game.

Though the Axie Infinity craze seems to have settled down a notch, STEPN burst onto the scene earlier this year with their novel concept of Walk-To-Earn. STEPN encourages users to walk, jog or run outdoors and receive tokens for doing so. In a way, users can monetize a behavior that makes them healthier.

In this article, we will dive into how STEPN improved upon Axie Infinity’s concept and the evolution of the X-To-Earn protocols as we work towards a model that is sustainable for the long term.


STEPN is a Move-To-Earn project on Solana and BNB. Users are required to purchase an NFT sneaker to participate in STEPN and earn tokens. STEPN has 4 types of NFT sneakers: Walker, Jogger, Runner & Trainer. Each type of sneaker has an optimal speed and earns tokens at a different rate. STEPN uses participants’ phone GPS to track user walking activities such as speed, duration, and distance.

These Shoes Are Made for STEPN’

When STEPN launched in December 2021, it was met with a mixed reception as there was a lot of skepticism over the viability of its tokenomics design, the “Play-To-Earn” model in general, and how they would be able to bring in new users from outside web3.

Doubters then watched in disbelief as STEPN gained traction and found mainstream adoption. Chief Business Officer for Find Satoshi Labs, the developers behind STEPN, confirmed that STEPN recorded over 100,000 daily active users in March 2022, and users have continually grown since.


STEPN, like other GameFi, also has a dual token system: a governance token and a game token. GMT is the governance token of the protocol that allows users to vote and share the economic success of the game. GST is the game token that users receive when performing a certain action. (Walk, jog, etc.)

The price and stability of GST have a direct impact on the success of STEPN as a higher price would increase the profitability of STEPN users and lure new users in. If GST price drops significantly, it will materially decrease users' earnings and therefore discourage new users from coming in. However, if GST price increases too rapidly, the increase in sneaker price could also discourage new users by extending the break-even period.

Because of that, STEPN needs to find a way to control token inflation and supply. They introduced many events to encourage users to burn their tokens in exchange for in-game utility.

For example, GST is burned by:

  1. Shoe-Minting
  2. Repair
  3. Leveling up Sneakers
  4. Gems upgrade
  5. Unlocking Socket

GMT is burned by:

  1. Burn GMT to reach level 5/10/20/29/30
  2. Burn GMT to upgrade Level 4+ Gems
  3. Burn GMT to mint ALL Sneaker qualities
  4. Burn GMT to re-distribute Attribute points

STEPN has also been using the funds from NFT transaction royalties to buy back and burn GMT tokens.

GMT Buyback & Burn


STEPN’s rise to the top of the “To-Earn” category was very much similar to that of Axie Infinity. Axie Infinity saw similar astronomical growth last July and helped push Play-To-Earn to the mainstream. As STEPN itself was inspired by the Play-To-Earn ecosystem, we can see a lot of similarities between Axie & STEPN.

Both projects utilize a dual token system consisting of a limited supply governance token and an unlimited supply game token. Both require users to purchase an NFT before they can participate in the project and earn tokens.

Axie & STEPN Comparison, Data as of June 6th, 2022

While STEPN was clearly inspired by Axie Infinity, it was clear to the STEPN team that Axie’s model needed improvement, and in many ways, they have brushed up the tokenomics that made Axie Infinity so successful.

Axie Infinity was a trailblazer. It needed to introduce the world to web3 gaming. In order to do that, Axie prioritized exposure & noise over sustainability. STEPN, on the other hand, can focus on stabilization as they work towards a sustainable business model. STEPN understood Axie’s main problem: introducing a game solely for earning with no solid burning mechanism poses problems for the longevity of the protocol.

Axie Infinity’s fate is largely tied to the performance of its game token SLP. SLP token is minted and rewarded to the players when they win games. The main utility of SLP is to be burned to breed more Axie NFTs. That said, players can sell SLP as a way to monetize from the game. During the bull run, when the Axie NFTs were bought up by speculators, SLP was constantly burned in order for breeders to mint more Axie NFTs. However, during a down market where Axie NFTs are less in demand, there will be an oversupply of SLP with insufficient burning pressure, leading to more dumping pressure from the players.

STEPN’s attempt to mitigate this is to restrict the supply and payout of their tokens and design many ways to burn GST, such as shoe repair, upgrade, and more. This way, it gives the game token much more utility compared to Axie and allows the developers to continually find ways to reduce the possibility of an oversupply of GST.

Moreover, Axie consists of heavy usage players who are in it merely for the money, which created high inflationary and constant selling pressure that led to a death spiral as the token price drops, causing users to leave and the negative feedback loops continue.

To tackle inflationary pressure, STEPN sought to target casual players with lighter usage and controlled the amount users can earn using energy points to control token inflation and prevent full-time users from earning a more significant portion of rewards than casual users.

To stabilize growth, STEPN increased the barrier to entry, whereas it requires an activation code from referees. Referees need to walk over 50 minutes to generate an activation code. This mechanism prevented guilds from coming into the ecosystem to farm and dump their tokens. Moreover, STEPN controls players’ break-even periods by manipulating the price of GST. When GST increases too rapidly, STEPN will ask players to mint sneakers by burning GMT as opposed to GST, leading to a sell-off and bringing its cost down.


Like the rest of the crypto markets, STEPN has been affected by the bear markets as investors’ risk appetite worsened. GMT is down by 76.8% from its all-time high. STEPN was especially affected when its initially successful launch on the BNB chain was derailed by its ban in Mainland China, leaving Chinese users scrambling to sell. There were also reports of unintended user behavior during the launch on BNB that may have contributed to the FOMO and crash afterward. That said, Developers have taken note of what happened and have learnt from the recent events.


At this moment, it is important to remember that STEPN’s main revenue stream is from the sneaker NFT trading fees. According to TechCrunch, STEPN was generating US$3m- US$5 million in net profit from trading fees a day and earning up to US$100m every month as of May 2022. The longevity of the protocol will rely on maintaining steady revenue income as well as generating new revenue streams.

STEPN would be in trouble if sneaker sales volume drastically lowered, as the sales represent all of the protocol’s revenue. Looking forward, it is likely that STEPN will find additional revenue streams that will contribute to the endurance of the STEPN protocol.

It is clear that STEPN recognized this issue and is working to fix it. They hired Mable Jiang, a partner at Multicoin Capital, to become Chief Revenue Officer. She has talked about some of the possible new revenue streams that STEPN can pursue. For example, partnerships with brands and vendors can be integrated into the App to encourage and reward users for exercising and being eco-friendly.


The existing X-To-Earn model evolved from the traditional gaming business model where games generate substantial revenue from selling in-game assets (such as skins, weapons, etc.) that can be translated to NFT. Since the X-To-Earn business model has expanded beyond Gamefi, we are expecting more product innovation that can create additional revenue streams in the future.

The most popular X-To-Earn projects to date are driven by speculations which likely to be short-lived. Future projects that are driven by product innovations on providing more utility to users to capitalize on more revenue potential will likely thrive off the foundation built by the industry trailblazers. The nature of all X-to-Earn projects is distributing the value of new users to existing users. However, to make it sustainable, the project developers have to seek for alternative value-add to the ecosystem to compensate existing users when user base growth slows.

That said, both Axie Infinity and STEPN have done an amazing job of bringing users into web3 and easing the learning curve for people entering the crypto ecosystem. It will be interesting to see what the developers will do as they look to endure the bear market and prove that the X-To-Earn model is viable long-term.

Disclaimer: MindWorks Capital has not invested in STEPN or Axie Infinity. Our team members hold STEPN NFTs. These statements are intended to disclose any conflict of interest and should not be misconstrued as a recommendation to purchase any token. This content is for informational purposes only, and you should not make decisions based solely on it. This is not investment advice.