Adidas & STEPN partner, Create Co-branded NFT collection

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Introduction

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One of the most successful consumer-facing crypto applications to date, STEPN, has partnered with Adidas to create co-branded NFT sneakers.

STEPN is a ‘Move-to-Earn’ mobile native application where users buy sneaker NFTs that are upgradable, and earn tokens by running or walking. They have a dual token economy and boast five million registered users since launching in 2021.

Ps. We’ve covered STEPN before in these editions…so you can get up to speed if you need!

• STEPN - Move to Earn?

• STEPN Turns 1 year old - Beyond the Hype

Discussed in this edition of Sporting Crypto:

1. STEPN x Adidas 👟a) Overview of the partnership; Genesis Sneakerb) STEPN’s Journeyc) Adidas’ Web3 Journey

2. Concluding Thoughts & Analysis 🧠a) STEPN’s sustainability b) Web2 x Web3 partnerships c) High price pointsd) The difficulty of tokens e) Adidas’ Web3 strategy going forward

STEPN x Adidas: Genesis Senaker👟

STEPN has partnered with Adidas on a collection of non-fungible token (NFT) sneakers.

The partnership centres around 1000 Genesis sneaker NFTs that are cobranded using the iconic Adidas three-stripe logo and STEPN’s lightning bolt logo.

It is the first activation in a year-long partnership between the two brands which will reportedly include physical items as well as further digital products. Details on the reported physical side of the partnership haven’t been outlined but it’s not out of the realms of possibility, with STEPN having previously partnered with ASICS in a similar capacity.

The Genesis Sneakers were sold via the MOOAR marketplace priced at 10,000 GMT, STEPN’s native token (~$3000). The collection was distributed via a two-phase raffle on the 17th of April, which allowed the most loyal supporters of both STEPN and ALTS by Adidas, Adidas’ Web3 Community, to get early access. The public sale was from the 18-21st April, with all the NFTs selling out. The floor price is now ~20,000 GMT which is ~$6000, and there has been 1.75m GMT in volume, equivalent to ~$440,000 at the time of writing. The NFTs have seen good distribution as well with the 1000 digital sneakers held by 600 owners.

To Summarise:

• STEPN, the move-to-earn application has partnered with Adidas

• They have created 1000 co-branded NFT sneakers

• They sold for $3000 each and are now reselling at ~ double

• There has been ~$440,000 of volume and the 1000 NFTs

• The 1000 NFTs are held by 600 wallets

🎢STEPN’s rise and fall, and rise?

Like many crypto applications, STEPN have seen fluctuations in their active user numbers, token prices, deposits and almost any metric — which correlate strongly to the interest, waning interest and then interest again, in crypto.

As per this Dune analytics dashboard showcasing monthly active users (MAUs), STEPN saw users rocket from 2,500 MAUs in January 2022, to 705,452 in May 2022. This then fell to ~100,000 MAUs by September 2022, and a year later STEPN’s MAUs had dropped another 90% to ~10,000 in September 2023. Since consolidating at that number or near there, they have seen an increase to ~50,000 MAUs in March 2024 and ~34,000 in April 2024 respectively.

When STEPN first burst onto the scene, it was dismissed by many as fleeting, unsustainable and only a success due to the last crypto market cycle peaking in May 2022 which corresponded with STEPN’s highest MAU count.

Whilst STEPN’s MAUs highly correlated with the market cap of crypto in the last cycle, peaking in May 2022, STEPN’s MAUs haven’t bounced back in the same way with the rise of crypto this time around. This crypto cycle’s rise started in November 2023, and whilst STEPN’s MAUs did increase somewhat during that period, the rise in the last two months has been far more stark, where we have seen prices hit all-time highs. There is still some correlation, but it does seem like STEPN has a core group of regular users and then many who dip in and out depending on market sentiment.

👟The Adidas Web3 story

Adidas first made waves in Web3 in November 2022 when it released a POAP and partnered with both The Sandbox and Coinbase, all culminating in a collaborative drop with NFT giant YUGA Labs called Into the Metaverse.

In April 2023, they launched a Web3 program called ‘ALTS by Adidas’, a home for their digital collectibles and innovation in the Web3 space.

It’s a loyalty program that centres around your ‘alt’ NFT, with differing rarities and modifiable traits. So far, Adidas launched these dynamic ‘alt’ NFTs in Chapter 1, with Chapter 2 launching in the summer of 2023 which was a digital vending machine that allowed for customisation of these avatars.

Chapter 3 however, hasn’t launched to date and the partnership with STEPN is the first time since Summer 2023 that we have seen Adidas in Web3 headlines significantly.

Analysis & Concluding Thoughts 🧠

When I last wrote about STEPN, I questioned the sustainability of their two-token system but was also impressed by the stickiness within their user base. Even down to their lows, 10,000 MAUs in crypto is nothing to be sniffed at.

I also wrote about how they’d used something habitual in walking to create a crypto application that wasn’t a huge time sink, and didn’t feel too alien for the average consumer:

With the positive angles of STEPN in mind… the tokenisation of everything may be inevitable but to what extent? Or to what detriment…

One of the critiques I’ve outlined regarding Web3 gaming for example has been the fact that market forces outside the game can dictate prices.

The free market mentality that Web3 dictates means there has to be an open and free market for these tokens, and if players of the game are impacted it can of course cause friction and alienation to users.

The same can be said about fan token projects in sports. If you are accruing a token or holding one for some form of utility, but the same token can be traded on third-party exchanges, it can alienate users who don’t understand the price volatility.

Even if users do not feel like they are interacting with blockchain technology, the nature of tokenisation means they are interacting with it. I believe the common theme across all of this is that tokens that touch non-crypto-native consumers are a recipe for disaster.

Now, this scenario may change in the future if we live in a tokenized world where tokens are ubiquitous. But that's not the case presently, and it may very well never be the case.

Conclusion

For Adidas, this feels like a low-risk activation. A partnership that is away from their native channels and drives revenue from a world they want to be a part of (Web3).

It does make me think about their longer-term plans and whether or not the focus on ALTS is as strong as it once was.

We have already seen Nike for example, lay off some of their digital division which will no doubt have an impact on their Web3 platform .SWOOSH. In this era of generational corporate cost-cutting, innovation arms are feeling it. And I’d be shocked if this is not the case for Adidas as well who are yet to deliver chapter 3 of ALTS.

For STEPN, this is fantastic. It is a huge name to be associated with and on top of ASICS, can now show investors, their community and the world that they are hopefully here to stay, and thrive.

For Adidas, it is something that feels fuzzy short term but ultimately feels more like a licensing play than a strategic partnership. That may change with further announcements, but I’m more interested to see what the apparel giant themselves will do in developing their Web3 platform ALTS.

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