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Intro Notes, Plugs & Amendments 🔌🔧

“Write what you like until you like who’s reading”That’s something I saw from Jack Butcher this week on Twitter and it made me realise that the reason that I’ve enjoyed writing Sporting Crypto so much is because of the audience.

I love the people that are reading this thing.

Whilst I was away last week, someone reached out to let me know that they’d gotten a Web3 role in Sports, citing Sporting Crypto as a big reason for it. Stuff like that means a lot.

At some point soon I want to start a Discord community. I get that it’s the classic thing to do in this space, but I want to interact more regularly with readers, get feedback and offer some other forms of content that are specific to that community. More on this down the line!

Apologies that this edition is a day late, but it was a holiday in the UK yesterday!

🔌 If you're interested in sponsoring the newsletter - feel free to reach out to me on Twitter or LinkedIn, or email me back at this address!

This Week’s Deep Dive: Stepn - Walk to Earn?

Over the past couple of years, you will have increasingly heard the phrase Play-to-Earn.

If you’re interested in the space, you will have heard of games such as Axie Infinity that have hit some absurd numbers since their inception- such as $4bn worth of NFT sales. They boast currently, over 2.5m active players per month.

Axie Infinity is a Play-to-Earn game. This is essentially where users own in-game assets and play-to-earn an in-game token, that is then transferrable to real cash.

Let’s imagine you play a game like Candy Crush on your phone.

And the medals you win for completing levels can either be spent to improve your inventory or play more levels in a 24h period…or they can be converted into real cash or stablecoins?

The in-game token in Axie Infinity is called SLP (Smooth Love Potion) and it’s seen a very similar trajectory to most game fuelling tokens; Boom and Bust. 

And you’d think with less money on display, there’d be fewer speculators and therefore - fewer regular players. After the bust part, surely fewer people are playing?

But since that fall in mid-July 2021, Axie has actually increased its userbase by about 800,000 average monthly players.

That’s pretty remarkable considering the drop in price of the in-game assets and SLP. Axie has made a name for itself in countries like the Philippines and Venezuela, where it has replaced some people’s daily incomes.

Amazing, right?

But the USA are third in a list of ‘top countries playing Axie Infinity’ list - so there’s clearly a lot of enjoyment derived here also.

The crazy thing?Axie Infinity was released in March 2018. 

So Axie pioneered play-to-earn. They weren’t the first, but the first that has been played by a mass audience.

But their mainstream moment has also inspired people outside of gaming to think differently.

What if we can create our own economy that users own a percentage of?

Stay with me here.

In 2021 - the Starbucks app was second only to Apple Pay for Point-of-sale transactions in the US.

That’s staggering. 

But it also shows that Web2 brands are creating their own economies - so it’s not necessarily something new, it’s just not an economy that users have any ownership of.

But with Web3 native brands - they’re intent on following the principles of this new ownership economy. To give users a slice of the pie so that if the pie is loved and eaten by people worldwide, those early users who were so dedicated to the brand have some upside for their contribution.

Let’s put it this way; LinkedIn is nothing without people posting on it, but LinkedIn doesn’t reward users for posting. 

When you reach critical mass this doesn’t really matter as people become more reliant on your service, but at the start, when you’re trying to gain traction - it can be difficult.

So creating your own economy is cool and gaming isn’t where it’s stopping.

What about if you were paid to move?

No, literally. What if you were paid to walk, jog or run on a daily basis?Enter STEPN.

They brand themselves as a:

(Where Game-Fi = Play-to-earn.)

So how the hell does this *actually* work?

Firstly, you need a pair of digital trainers to interact with the app.

You need to go and buy some SOL (Solana) and transfer it over to your STEPN app.

You can then go on their marketplace to buy digital sneakers, that are split into 4 categories; Walker, Jogger, Runner and Trainer depending on how fast you want to move in real life.

Users are then able to move-to-earn, using up an energy bar for every walk or run they go on.

Your energy bar then recharges every 6 hours and you can go again when that happens.

There are two tokens associated with STEPN other than SOL, which is used for shoe purchases.

The GMT token is a governance token that is kind of like tokenised equity in STEPN the business. Not quite, but close enough for this newsletter.

GST is the in-game token. This is what you ‘earn’. 

GST has an unlimited supply. You would think this would have caused really big downward pressure on the prices by now, but with lots of new entrants to the marketplace and a plethora of ways to spend the tokens in-game - it seems that the economy is somewhat stable at the moment.

The GST token is then tradeable in the app into SOL or USDC (USD pegged stablecoin).

This is pretty cool.

You’re a buyer, contributor and participant in this game and economy, and you’re paid to be part of it.

And we’ve seen with Axie Infinity’s SLP token price tanking massively that these systems and economies are very sensitive. So if STEPN’s token prices nosedive at some point soon, don’t be surprised.

But what they’ve done here is quite simple in a way, but also really smart.

With Axie Infinity you have to go out of your way to play the game.

With STEPN, your daily walk or weekly run *is the game*. 

Your funnel of potential users is literally everyone who is mobile and can generate a crypto address. The possibilities here are therefore kind of…endless.

We as humans are quite habitual creatures.

And if you walk as a habit - and STEPN becomes part of that routine - it’s very easy to see how this could snowball.

So to summarise so far:

• STEPN is a move to earn game

• You buy digital sneakers that are NFTs with SOL

• You earn their in-game GST token that can then be traded for SOL or USDC

• You can walk, jog or run to earn the token

The Numbers, Names and Partners

In mid march - their Chief Business Officer claimed the app has had 1 million downloads with 100,000 monthly users, which apparently doubled in the space of the next 30 days…mindblowing

STEPN sees over $12 million daily NFT trading and the app has apparently earned $26m in Q1 2022…that’s quite something.

It’s definitely a freight train that is gathering momentum at a frightening pace. 

STEPN has credible investors as well.

Sequoia, Binance, Solana Ventures, 6th man ventures and many more are all part of the cap table.

So far they’ve created something that really does have product-market-fit, is fairly easy to use and has credibility through investment and word of mouth.

Pretty impressive. 

And if that wasn’t enough, STEPN launched co-branded digital sneakers with Asics.

Over 195,000 people participated in the drop and the total trading volume for the collab exceeded $10m.

An Asics spokesperson had this to say:

That’s quite some praise.

A web3 thing that encourages people to get away from their screens. Who would have thunk it?

Conclusion

I’ve been using STEPN for the last week or so before writing about it, and I have to say, I do really enjoy it.

I’ve found other play-to-earn or Game-FI products to be too time consuming and obtrusive to my daily life. When you stack that on top of the high barrier to entry - it’s very difficult for a lot of people to get involved here.

With STEPN, the cost barrier to entry is still high, but the time barrier isn’t. So they’re halfway there in terms of addressing the issues we see with a lot of these to-earn products.

It’s still quite janky and there are definitely some crypto quirks.

But if and when some of these things are worked out, I can definitely see STEPN, or something like it, breaking into the mainstream.

Most of the time I’m quite reserved in recommending ‘normies’ Web3 native applications. Because they’re hard to use and if you don’t know what you’re doing and send money to the wrong address, you’re going to be quite annoyed about it.

STEPN, or something like it, has the potential to bridge that gap.

The thing that everyone is chasing is the mainstream.

And it might come from things we don’t expect.

More sports crypto stories & things to put on your radar

• Angel City FC has been criticised by many as being a marketing brand first and a soccer franchise second. But they sold out their opening game in LA and created some pretty cool digital collectables to celebrate. Strong start!

• Things are weird but they’re going to get weirder. Buying a digital hoodie for your web3 avatar that you can also wear IRL. Stuff like this is coming, and it’s coming faster than you think. Before long, it’ll be the norm.

• Fancurve have launched. They’re looking to reimagine sports & digital fashion.

• Adidas Originals have allowed NFT owners to claim IRL physical merch. There was a lot of pushback though…a lot of NFT holders don’t want them!

• DeGods (a DAO) has acquired a ‘Big 3’ basketball team. Interesting to watch this develop…Big 3 has gained a fair bit of popularity in the US.

• UEFA have created digital mascots in an attempt to encourage a more diverse pool of children to the sport. 

• Alogrand is going to be the official Blockchain Platform for the FIFA World Cup Qatar 2022

Great reads, great tweeting and more general ‘stuff’ that could impact you

• The way large gaming companies think about this space is going to be one of the biggest developments in tech over the next decade. Fortnite sells a lot of skins and makes a lot of money. It’s not as easy a formula as that but the things that come from gaming over the next few years are going to be fascinating.

• The world is weird. And it’s going to get weirder.

• Too big to fail at this point?

• Raises in crypto have been crazy since Jan 20221. Seed rounds are becoming even crazier. People want to be earlier and earlier to the next big thing, and they’re willing to pay a premium to do so.

• This is an absolute must-read by Li Jin & Variant. The ownership economy is a thing.

Thanks!

Thanks for reading the latest edition of the Sporting Crypto newsletter. I’m really happy to see so many people enjoying it and sharing it with their networks. If you enjoyed this, please tell your friends who might be interested - and share it on social :)This newsletter is for informational purposes only and is not financial or business advice. These are my thoughts & opinions and do not represent the opinions of any other business or entity.