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STEPN descending Will the move-to-earn hype soon run out of breath?

 


The stars in the crypto sky often burn out as fast as they rise. After Terra, the next shaky candidate is on the horizon: the STEPN platform on Solana, one of the top performers of the year.


The native cryptocurrencies of the popular Move-To-App, GMT and GST, have experienced rapid growth since their launch in March 2022. GMT achieved a staggering return on investment (ROI) of nearly 11,000 percent. Both coins lost almost fifty percent of their value this week, GST successively since Monday, GMT crashed between Thursday and Friday.


The reason: STEPN will de-facto cease operations in China from July 2022. Crypto trading is banned in the country. The government wants to take action against any apps. But this price drop could only be the beginning of a severe and longer-term correction for the hype project.


Because critics have been warning about the business model of the popular running app for a long time. Basically, STEPN works like a snowball system.


The rapid rise of STEPN

STEPN's promise is simple: convert steps taken into cryptocurrency. Move-To-Earn is the name of the principle that is finding more and more imitators. According to the developers, the app has over 800,000 daily active users. Most of them come from Japan, the USA and Europe and are between 20 and 40 years old . According to data from Dune Analytics , the real user count is closer to 90,000 active people.


Specifically, the system works like this: Users buy an NFT shoe. This has energy that is charged daily. It converts elapsed time into the GST cryptocurrency. With her and GMT you can improve and repair your shoe. If you don't do that, you won't earn anything anymore.


Anyone who owns more than two pairs of virtual shoes can also create new sneakers with their GMT and GST. These can then be sold on the marketplace. STEPN takes a six percent fee per trade. At times, this generated sales of three million US dollars per day.


The business model in criticism

In addition to our own tester, critical voices from Cryptobriefing and TechCrunch ask how sustainable the move-to-earn model can be in the long run, especially in a crypto market in crisis. The big incentive for users is that they make money with their virtual sneakers, either by "breeding" and selling new ones or by selling the coins they have earned.


However, this means that the demand for virtual shoes must always remain higher than the supply. So neither too many nor too few new users should follow. Otherwise the price of NFT sneakers, GST and GMT will decrease. A user named PhABC calculates on Twitter that the STEPN ecosystem could face inflation of over 31,000 percent over the course of the year.


STEPN has been dynamically controlling the flow of new players for some time. You can only join by invitation. This ensures a balance between supply and demand. But in the long run, you either have to increase the cost of creating new virtual shoes and/or decrease the rewards for running. Both make the app less attractive in the end. In the worst case, the death spiral threatens.

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