Will STEPN follow in the footsteps of blockchain games?

• Main ideas
• The story of STEPN
• Is STEPN sustainable?
• What is the future of STEPN?
• Epilogue

Main ideas

• STEPN is becoming increasingly popular, with over 800,000 daily active users.
• However, many people are still skeptical and questioning: Is STEPN's Tokenomics sustainable?
• If STEPN's player growth rate falls short of expectations, its economy could enter a death spiral. This has happened with previous Play to Earn games.

The story of STEPN

STEPN is a “ Move to Earn ” project built on blockchain technology. STEPN's goal is to help users both exercise and earn money. 

The STEPN app was launched in Beta in December 2021 and maintained steady growth by reaching new users through Discord and Twitter. STEPN ambassadors will reward loyal members of the community with NFT sneakers. 

Also, give them access to start earning GST tokens by moving (jogging or walking). At that time, players could earn between $5 - $50 a day, depending on how long they played and how many pairs of sneakers they owned. 

As the market gloom ends, STEPN continues to grow faster because the value it brings is not only money but also health. 

By March 2022, STEPN had accumulated over 100,000 downloads via Google Play. At the present time, the game's developers boast that it supports more than 800,000 daily active users. Notably, the daily transaction of NFT sneakers in STEPN has reached an ATH of 264,000. 

STEPN's primary source of revenue is generated by taking a 6% cut from NFT athletic shoe transactions on the secondary market. The more NFTs created and traded, the more STEPN earns. 

STEPN tokens have also skyrocketed in recent weeks. In particular, the game's governance token, GMT, reached an ATH of 4.11 USD in April 2022. GST, the in-game currency token, earned through playing the game, also saw a similar increase, reaching $8.51 at the end of April 2022. 

Although the prices of both tokens are currently correcting, they appear to be holding their value. Since players need GST and GMT to repair and upgrade sneakers, the demand for these two tokens will always be high, as long as people continue to use STEPN.

You may be interested : 6 strategies to generate profits with the STEPN project .

Is STEPN sustainable?

STEPN is a new, profitable blockchain project for players. However, many are still skeptical as to whether STEPN's Tokenomics is sustainable. To answer this question, we first need to learn about the mechanics of the game. 

Basically, players only need to own a pair of STEPN NFT sneakers to start playing. However, you can own more than one pair of shoes at once, to earn more GST tokens. Sneakers generate energy daily, and every five minutes of movement, one energy point converts into a GST token depending on the level of the sneakers. 

Players who own at least two pairs of sneakers can also “mint” new pairs by burning GMT and GST tokens. Unused “Virgin” sneakers will cost less tokens when minting, the cost will increase with each minting. After casting seven times, the sneakers will no longer be moldable. 

STEPN's economic structure is similar to the hit Play to Earn game Axie Infinity . In Axie Infinity, players burn AXS and SLP tokens to “breed” Axie, in STEPN, minting sneakers will also require GMT and GST.

Both Axie Infinity and STEPN rely on new players to be able to help existing players make a profit. If demand for new sneakers dries up, their prices on the secondary market will drop. This means fewer new sneakers will be minted, and demand for GST and GMT will decrease accordingly. Meanwhile, old players will continue to earn tokens and sell them on the open market, causing the value of GMT and GST to drop significantly.

This is what happened to Axie Infinity after it became popular during the “NFT summer” of 2021. The token price and demand for Axie skyrocketed as new players joined the game. However, as more players earn and sell the game's SLP tokens, the price of SLP has dropped significantly, making it less attractive to beginner players. 

Finally, Axie Infinity's boom time is over and the game is struggling to find a way to retain users. However, we also cannot forget that the price of AXS has once increased from $4 in May 2021 to an ATH of $164 in November 2021. Six months later, it was trading at just over $20.

However, unlike Axie Infinity, STEPN has introduced several new mechanisms in an attempt to balance its token economy. GST, a earnable token similar to Axie Infinity's SLP, has had many more uses in the game beyond creating new sneakers. 

Players need GST to repair sneakers, unlock more functions, upgrade sneakers, and upgrade gems. Although this add-on will help keep the demand for GST high and create more value. However, it has absolutely no effect to prevent the game from going into a death spiral when the number of players is increasing.

In addition, STEPN may limit the number of new players through the referral system. As a result, STEPN has more control over its development speed. This is integral to managing STEPN's economy. 

Twitter user who goes by the pseudonym “PhABCD” recently pointed out that STEPN’s sneakers inflation problem is currently on the rise and it won’t be sustainable next year.

To slow down the production of sneakers, the game's designers had two choices: Increase the cost of casting new shoes or reduce demand by slowing user growth.

By managing STEPN's development, the designers were able to slow down the time it took for this game to enter a death spiral. However, we cannot rule out that there will be times when STEPN will not have enough new players or shoe casting will not be profitable for existing users. At this point, STEPN's economy is at risk of a recession, causing its NFT tokens and sneakers to collapse.

What is the future of STEPN?

Although, a downturn for STEPN may not happen tomorrow or even in the next few months. However, previous Play to Earn games show that STEPN's current model is unsustainable, unless the game makes cutting-edge changes, but also cannot completely prevent collapse.

At the moment, the main goal of the STEPN team is to keep the game alive for as long as possible, in order to profit from the sneakers NFT transaction fees. 

According to a recent TechCrunch article, STEPN is currently collecting over $100 million in monthly transaction fees. If this continues until the STEPN team's GMT tokens start unlocking in January 2023, the total value of those tokens at the current price is $1.37. 

As the pool's tokens unlock gradually until 2027, it is likely that most of the pool's profits will come from transaction fees. The value of their tokens has nothing to do with STEPN's success.  

In addition, users who are having difficulty interacting, contact STEPN's team directly. To verify this, TraderH4 team has tried to contact STEPN team members and project ambassadors several times since March 2022, but still have not received any response. Even the official email on the STEPN website did not respond to any messages, their Twitter also has direct messaging disabled. 

Therefore, the future development directions of STEPN have not been revealed yet. TraderH4 team will continue to monitor STEPN and update the latest information about this project.

Epilogue

In general, the people who used the STEPN application before are making a lot of profit and can increase their initial investments. However, the difficulty in making a profit will come to the beginner players. 

As for the STEPN project, they have created value and encouraged more people to adopt a healthier and more active lifestyle. But will that be enough to keep players engaged when the rewards run out? Let's wait with the TraderH4 team for the results in the near future.

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