STEPN — is a move-to-earn health and fitness application available on App Store and Google Play. STEPN has a built-in wallet, token swap, marketplace, and rental system (under development) that allows users to onboard STEPN, even non-crypto users can do it simply. Users equipped with sneaker NFTs can move outdoors to earn tokens and NFT rewards.
I suppose you know everything about STEPN already because of its hype, so I would like to share some in-depth analytics that may be unknown to you. My friends and I are analysing crypto projects and their tokenomics to help other projects learn from their mistakes and make them more attractive and sustainable long-term projects.
If you are familiar with the STEPN, you may jump to the in-depth analytics section or refresh what you already know about it from my perspective.
About other Move-to-earn projects you can read here:
Outline
- STEPN overview
- Tokenomics of STEPN
- In-depth analytics
- Conclusion
1. STEPN overview
As I have previously mentioned, STEPN is a move-to-earn application. It has two tokens:
- GST (Green Satoshi Token) is a standard token for regular spending like repairing sneakers or levelling them up and
- GMT (Green Metaverse Token) is a more specific coin for special events.
We can use any other game for analogue with a standard coin and a premium (donated) coin for better understanding. Players get GST for walking, while GMT could be issued for walking only on the 30th level of the sneakers, but to upgrade to the 30th level, they will need GMT anyway on the 5, 10, 20, 29 and 30th levels.
Now the only incentive for the players is to earn money, and while STEPN will provide the highest returns among other alternatives, it will be popular. The main driver of the price of GST is the demand from the (new) users that buy GST to boost their income faster. While there are more players that buy GST than those who withdraw and sell their GST earnings, the returns will grow and more and more players will join the game. But someday, the returns may stop growing, and the GST price may go down because of the more supply from the “upgraded players”.
STEPN will add later social mechanics, and collaborations with brands will make this game essential for many people to use. Such social mechanics and collaborations may add intrinsic value to the sneakers and tokens. The incentive will shift from earning money to wearing better sneakers and receiving public acceptance. The first collaboration has already happened, Asics had a joint offering with Binance of NFT-sneakers. But what are the incentives now?
2. Tokenomics of STEPN
To simplify the understanding of any tokenomics, let’s analyse it from supply and demand perspectives. There should be a balance between supply and demand to support long-term stability.
GST supply
A player can earn GST simply by moving outside, and this is the only way new GST could be issued (300 GST limit per day, depending on the sneakers LVL). But this token has no supply limit, and more new players will join the game, the more they upgrade their sneakers — the more tokens they will generate and provide to the market.
And there is a strict correlation between invested money and the number of GST produced. Players receive tokens for every energy spent (1 energy — 5 min of exercise, 25% of energy refills every 6 hours). They may increase both — the amount of energy and the efficiency of using this energy. To increase the amount of energy, the player needs to get more sneakers (as shown below) or purchase sneakers of higher quality (common (+0 energy) < uncommon (+1 e) < rare (+2 e) < epic (+3 e) < legendary (+4 e)).
To increase the efficiency — the player needs to buy sneakers with better base attributes (stats) and level up sneakers to choose stats to increase. The higher the level is, the higher the cost of upgrading the sneakers. The attributes of the sneakers matter only for the pairs that are being worn (so people may have incentives to buy cheap sneakers to increase energy).
Early adopters and investors may hold a significant part of the tokens, so they can provide additional liquidity to the market and move the price. GST distribution among users significantly changed on the 19th of April’22, when the top 100 holders owned 78.8%, but this number decreased to 58.6% on the 20th.
But at the same time, some of the top holders even increased their position.
GMT supply
GMT mechanics of issuance is the same as GST, but the only players with 30th LVL sneakers may produce GMT. The total supply is limited by 6 billion tokens and only 30% will come from walking. The rewards for walking will decrease over time. Furthermore, the number of possible tokens issued by one account is limited by 15/day. The following pie chart represents the future distribution of GMT:
They will be issued and unlocked according to this chart:
Demand
Use-cases for GST and GMT in the game are the following:
Demand for the GST
As you can see, GST is the primary game token that is used almost in all possible operations in the game. But all of these operations are to increase the potential income. The players who don’t want to wait and want to boost their income now ensure the demand for this token.
Also, the demand directly depends on the new players, who are dependent on the entry barrier — NTF-sneakers’ price. The sneaker price depends on the GST and GMT prices because they are needed for minting, so the higher the GST and GMT price, the higher the entry-level for new players, which may scare new players. At the moment, the floor price of the sneaker is about $1.5k.
Demand for the GMT
GMT is used in an important part of the game, and it may be used to boost your income even more:
- to permanently increase GST Daily Earning Cap;
- to permanently improve the success rate of all Gem (provide stats) upgrades;
- to permanently improve the chance to receive a higher quality Sneaker from opening Shoebox’
- to permanently improve the chance to receive TWO Sneaker from Shoe-Minting;
Furthermore, GMT will provide additional functionality:
- Earn a part of the protocol fees as a staking reward. The 2% Marketplace Trading Fee is reserved for the team to sustain its operation. No less than 5% of the Trading Fee will be returned to the STEPN ecosystem.
- Stake to participate in governance, the longer the locking period, the higher the voting power.
- GMT stakers can vote to decide the distribution of staking rewards.
The other significant demand is from the STEPN. They burned GMT, and it looks like they will do it quarterly, using their income.
3. In-depth analytics
Token’s supply and demand
Overall, GST seems to be in equilibrium with the demand and supply (green — more deposited than withdrawn and red vice versa).
The average deposited number is $15.5M and $13.1M withdrawn. But there is a massive spike on the 19th of April’22, so after removing this date from the observations, there will be $12.3M deposited and $12.9M withdrawn, not a very significant GST outflow from the project.
The other side of this tokenomics is GMT, which is required for many operations. On the 18th of April, STEPN implemented an update that added GMT as an expense to mint and upgrade sneakers. Still, it looks like that in the future, it will be the primary token because only upgraded players will be able to issue it, and GST is like an intermediate step.
After modelling multiple scenarios of possible production and consumption of GMT per day, I’ve realised that the demand will be more significant for at least one month than the supply (this modelling was made using the minimal amount of data after the update with increased demand). This modelling does not include possible burns because it is hard to make assumptions about future burns. Still, it includes modelling the number of new and active users, token prices, upgrading sneakers to 30th LVL, minting new sneakers, and many more.
Users
The number of users is growing very fast, even with the limitations of the STEPN on onboarding new users. To become a user, you will need an invite code. They could be made by users or by STEPN. An existing user receives one invite if he walks every several days. Stepn usually provides some of the invite codes every day, but this number is limited. Existing users even have started to sell invite codes on the net. The pace of onboarding new users may decrease because the entry barrier increases and now equals $1.5k, which is significant for developing countries.
On the other hand, every new user is producing tokens, and maybe he will not spend a lot of money buying new tokens to upgrade faster. Furthermore, STEPN will allow users to borrow sneakers from others. These users will have no incentives to invest more money in the application, only to earn fast and easy profit.
4. Conclusion
I was thinking a lot about the possible outcomes of STEPN, but I don’t have a favourite one. I believe that the management team and developers learned a lot from the negative experience of Axie Infinity. Also, I think there will be more social activities and collaborations with brands, especially in the summer, that may increase the interest in STEPN. Furthermore, I believe that this could become a common application for all runners, or maybe it will become a closed club for rich people, who will have tons of money for sneakers.
At the same time, I understand the risks, that as more people will use this application — more supply will be in the market and that the only natural demand for the GST and GMT is from “donators” or investors who would like to earn more now and this could end anytime.
This is not financial advice, and I’m sharing this information only for entertainment purposes.
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