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Sporting Crypto - September 26th 2022: STEPN Turns 1 Year Old — Beyond The Hype

Sporting Crypto - September 26th 2022: STEPN Turns 1 Year Old — Beyond The Hype

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I had a great time last week, speaking at two events: Zebu Live Digital and the Live Unofficial Partner podcast at the Emirates stadium.

It was awesome to discuss and debate all things in Web3 in Sports with a variety of industry people, and to those of you who have subscribed to the newsletter due to those events, thanks very much for doing so.

In May 2022, I wrote about STEPN, a Move-To-Earn game that took the world by storm.

You can read it here to get a better understanding of what STEPN actually is and how it works.

Since then, it has crashed massively in terms of market cap and the cost of NFT assets. I insinuated this would happen in my previous write up, which compared STEPN’s trajectory to that of the famed Play-To-Earn game Axie Infinity.

For those that don’t want to read it all, here’s a very brief summary:

STEPN is a move to earn game
It has a dual token system, GST the in-game token and GMT the governance token
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
It has been to date one of the most popular Web3 apps built

So let’s take a look at what has happened with STEPN since.

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This Week’s Deep Dive: STEPN Turns 1 Year Old — Beyond The Hype

STEPN is a Move-To-Earn app that encourages people to walk and run, by paying them in tokens. Yes, literally.

Like many of its ‘To-Earn’ counterparts, it’s failed to find a sustainable model — as of yet — creating a huge boom and bust cycle since its inception a year ago.

GMT, The STEPN governance token, has tumbled from ~ $4.00 in May 2022 to $0.60 in September 2022. An 85% drop. This is basically akin to the company’s equity… kind of…not really — but it’s a good way to explain things without getting complicated.

It has crashed like much of the Crypto market (heck, much of the market in *general*?).

But the real trouble has been with the utility token within the STEPN ecosystem; GST. This is the token that is used in the game.

It has an infinite supply… which isn’t a bad idea if the ‘burn’ mechanisms are astute.

But they weren’t, in hindsight. There was not enough game sink and the inflation of the token supply wasn’t duly managed.

The result? A drop of ~99.5% from its peak.

The GST token was obliterated since I last wrote about STEPN in May 2022.

What goes up, must go down, but this has been a colossal crash.

It’s pretty amazing, therefore, that STEPN still has some incredible underlying numbers which showcase it’s not only still standing but doing fairly well all things considered — at the time of writing.

Of course the money they made during that run up is pretty ridiculous. The app has apparently earned $26m in Q1 2022… which should see them go a long way.

The raw numbers STEPN are producing are still impressive.

Let’s take Monthly Average Users (MAU) as one of these metrics.

In January 2022 STEPN had 2,533 MAU

By May 2022, the MAU number grew to 702,649.

That’s a crazy multiple.

Since then, the STEPN craze has subdued, causing a 90% drop in MAU to 70,235 in September 2022 (so far).

But that 70,235 number is still large, especially for a business that just turned one.

70,000 monthly users is a lot. For pretty much any app, let alone a Web3 application.

Comparatively, they’re still at a 5 x multiple of where they were in Feb 2022 and are on track to equal numbers from March 2022.

Looking more specifically at Daily Active Users (DAU), the drop in numbers is proportionate.

Since June 2022, DAU have dropped from ~60,000 to ~6000 in September 2022, staying in line with the 90% drop there was in monthly active users, and 90%+ drop in the price of GST.

Another really interesting thing to see is that there aren’t that many new users joining the ecosystem - but that number in itself is not negligible.

In Feb 2022, 50% of STEPN’s activity was coming from new users.

Now, it’s 5%. Again, a 90% drop.

By any metric, comparatively — this looks really bad for STEPN. But the raw metrics are still strong.

70,000 monthly active users and 7000 daily active ones are impressive figures.

And whilst I do think that the numbers here will probably wain slightly more, it seems as though STEPN have consolidated and found a sticky audience who simply want to use the app beyond rife speculation. The numbers seem fairly stable since June.

STEPN still accounts for roughly 3.5% of the entire daily active user numbers on the Solana blockchain. That in isolation is a pretty crazy number.

People actually like using the thing. This can’t be said for a lot of Web3 apps that are simply used for speculative reasons.

One of the metrics that might make you think STEPN are on to something here is the amount SOL that is deposited into the app on a daily basis. SOL is the transactional token for the Solana blockchain.

SOL is currently trading at $32.50.

STEPN are still hoovering in 10,000 SOL // ~$325,000 in daily deposits.

I expect that number to go down, but even if it does — you’re still looking at a sizeable number when it comes to daily deposits.

What does the future hold for STEPN?

STEPN have a strong team, a fairly sticky userbase, good funding and the deposits are still flowing.

All of this seems positive.

Users logged over 67 million miles on the app since its launch.

They’ve mastered creating a bit of friction in something we do every day, and pivoting that into a strange but really cool reward scheme and game of sorts.

The current numbers seem far more sustainable than previous months, but it still feels slightly high. That means they’ll either drop further and then consolidate — or STEPN will continue doing really well.

If we also consider the fact that the two token system hasn’t worked particularly well in pretty much every single Play-To-Earn game — STEPN and team will have to be particularly innovative and smart to find new ways to control the inflation in their in-game token, whilst maintaining the price of their governance one.

It’s a really tough task.

What STEPN do have for them however is being one of the first movers in the mobile app game when it comes to Web3. There is hardly any good mobile apps that are Web3 native. You can count them on one hand.

A sticking point, here, however, could of course be Apple’s plan to charge applications 30% on all in app transactions where NFTs are used. That could be a hit to STEPN’s revenues going forward.

Overall, it feels STEPN are going to stick around. And if they can perfect their own two token system (which feels unlikely but not impossible) there's definitely room for growth.

They have shown commercial savviness to date — partnering with the likes of Asics is just one example of this.

This is an area I expect them to double down on over the next 12 months.

STEPN’s growth got out of hand, but it doesn’t seem like they’re going anywhere.

It’ll be really exciting to see where they are 12 months from now, alongside the rest of the Web3 landscape.

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

$30m worth of digital items were bought by players on Volarant in September. A case for NFTs?
Stripe has enabled USDC (Stablecoin) payouts. Crypto isn’t going away.
Apple looks to squeeze NFT startups by charging 30% on transactions.
Disney are hiring a transaction lawyer for NFT & DeFi plans.
We’re already in the Metaverse.
Azuki, one of the largest NFT projects out there, have raised $30m.
In hindsight…

Thank you!

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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 person, business or entity.