Stepn, an "exercise-to-earn" app on the Solana blockchain that allows users to earn cryptocurrency rewards for walking or jogging, is gaining traction in digital asset markets.
The fitness app has grown to over 300,000 daily active users in just a few months.
And Stepn's native token, the green Metaverse token (GMT), is changing hands around $2.20, about 17 times its March trading start, though it's down from an all-time high around $9 last month.
"This actually has value over the long term," said Will McEvoy, senior associate at independent investment research firm Fundstrat. "Price stability is important because if the price were to fluctuate 50% per week, that would be an incentive for users to pull back."
The project is so hot in real life that there is a waiting list to join its Telegram group, which already has over 200,000 members. To join the app, users must receive an invitation, and the STEPN team has limited the number of activation codes available. Users can get the codes from Telegram groups, Discord chats and other STEPN online communities. The company issues 3,000 joining codes per day.
An NFT sneaker is a virtual sneaker that users purchase on the STEPN marketplace to earn crypto by walking, jogging or running. The app tracks users' movements much like a Fitbit. The current starting price for a sneaker (in SOL, Solana's native token) is 12 SOL ($803). The price of the virtual sneakers varies depending on income level, the better the quality, the more benefits are offered.
The sales figures for the NFT sneakers have also increased significantly. According to Delphi Digital, sales peaked at $57 million per day and have dominated most of Solana's NFT trading volume.
Delphi Digital notes in its report on Stepn that this volume generates significant fees for the app, which charges a 6% fee (2% trading fee, 4% licensing fee) for each sale on its marketplace.
"The high fees have earned the team approximately $2 million to $3 million per day at current volumes, with cumulative fees from Feb. 1 to April 30 estimated at $68.2 million," the report states.
Stepn earns
Mohammad Noor, a freelance virtual assistant from Bangladesh, said he heard about Stepn on YouTube and was attracted to the app because he saw it as a good side hustle that could also improve his health.
"Jogging is essential for me and now I earn money for it," Noor, 35, said in an interview with CoinDesk. He said he currently earns about $75 a day by jogging twice a day for 30 minutes each time.
According to the company's whitepaper, players can lease or sell their NFT sneakers on the in-app marketplace; users' earnings are stored in the in-app wallet, which has a built-in barter function.
Noor bought his first pair of sneakers for 10.8 SOL ($70) and said they are now worth 20 SOL. He believes Stepn has a bright future ahead of it because the app makes money from users in more ways than one - by minting shoes, selling shoes and charging users' energy.
"It seems that the developers have learned from other failed play-to-earn projects," Noor says.
Stepn is similar to so-called play-to-earn (p2e) games - where players can earn cryptocurrency rewards by playing video games - in the sense that users participate in an activity and earn passive income from it. According to McEvoy, however, Stepn has a much longer trajectory than p2e games like Axie Infinity.
The app has revamped the p2e model with a lifestyle and fitness trailer that encourages users to exercise. In other words, get off the couch.
"The runway for Stepn is much longer than the runway for Axie," McEvoy said. "That's because the total addressable market of people who would use Stepn is larger than who would use Axie."
"Over a billion people walk and half a billion use fitness tracking apps on their smartphones. That's 500 million people for whom this makes sense," McEvoy said.
Tokenomics
The green Metaverse Token (GMT) can be used to repair, unlock and level up your sneakers. It can also be minted.
One problem with betting on GMT tokens, according to Fundstrat analysts, is that they are difficult to value.
Although they have a limited supply of 6 billion tokens, Stepn developers can change the rules of the game.
"In some ways, Stepn developers are playing the role of a central bank, applying demand-side levers that either support asset prices or cool them down, much like the Fed," McEvoy explains. "That makes it difficult to predict how the token will perform.
Developers have already changed the amount of GMT required for in-game upgrades. Increasing the amount of GMT needed to level up sneakers increases the demand for the token.
GMT is burned when spent on in-game level-ups, which decreases the overall supply of tokens.
"This type of change should have a positive impact on the price and needs to be taken into account when valuing GMT," McEvoy said.
On April 28, GMT's price reached an all-time high of $9.08, according to data from CoinMarketCap, and has since fallen 58%.
STEPN developers soon released an update for the game that temporarily replaced GMT with the Green Satoshi Token (GST), which is required to mint new NFTs.
GST is a utility token that can be used to purchase goods in the app. It has an unlimited supply and can be minted in-game through basic movements.
The decreased demand for GST as a result of the developer change has cooled the price and increased the demand for GMT.
According to McEvoy, these types of updates from the development team provide a level of price stability that should contribute to the overall sustainability and longevity of the app.
The flip side of the coin is that rising NFT prices mean fewer and fewer potential users can afford the game. Finding a balance between the price of GST, GMT and the NFTs will be critical, he said.