Analysis of StepN: Causes of sudden explosion, economic model and future development direction

StepN quickly became popular all over the world, causing extensive thinking in the industry. Its success is inseparable from the selection of niche tracks, the satisfaction of user needs, the rapid development of the team, the thinking of models and gameplay, the “tap water” of a large number of industry leaders, and the support of Binance. More importantly, the team has not fully released the potential of the project itself for the time being, and the future development trend after completing 0 to 1 is worthy of attention.

But on the other hand, both GameFi and Move To Run have their own cycles, and this cycle may be relatively short. Will it become a "flash in the pan"? It is also a question worth thinking about.

One. The reason for the explosion of StepN

StepN is an application that integrates GameFi and SocialFi elements. Many users outside the encryption circle. The explosion of StepN can be attributed to two points: first-mover advantage and skyrocketing prices.

From play-to-earn's Axie, to write-to-earn's Monaco, to move-to-earn's StepN, a new gameplay can always attract a lot of attention in a short period of time. From the perspective of game settings and token models, StepN is not fundamentally different from Axie (at least as of now), but its game experience will give people a feeling of "out of the circle", providing the market with a sense of "out of the circle" in the depressed first quarter. Long-lost hot spot.

There are many doubts that it is similar to CX Panqubu, and its FOMO momentum is also similar. But realistically speaking, there is no similar product in the mainstream of the encryption field. StepN has received investments from Sequoia India, Solana, Binance, etc. Mainland users first need to create an overseas account to participate, and there is a high threshold. It is quite different from Funbu.

In the encrypted world, "pulling the disk" is the best publicity. The surge of StepN’s governance token GMT is definitely a booster for StepN’s explosion. Since its launch, the price has risen from a minimum of $0.01 to a maximum of $2.23, thanks to the unlocking cycle of GMT and the game's upgrade system, and it is inseparable from the boost of Binance.

Source: Official Website

Currently unlocked GMTs are only Launchpad and Airdrop, and Airdrop starts on March 14th. In other words, from the launch on March 9 until the airdrop day, the only selling pressure of GMT is Launchpad, and Launchpad costs almost nothing (shorting BNB can hedge the risk of currency price fluctuations), so most profiters will choose Sell a small portion and keep the bulk for higher yields.

The game upgrade system is shown in the table below:

Source

If users want to upgrade their shoes to the highest level, they must buy GMT, so GMT is very big in the early stage. Not only that, but the upgrade process takes a lot of time.

According to the table, it can be calculated that upgrading a pair of shoes from level 0 to level 30 will take a total of 465 hours, nearly 20 days (although before GMT goes online, users can theoretically upgrade shoes to level 27, But from a practical point of view, there are almost no shoes above level 10 on the market before March 9. Even if you start upgrading from level 10, it will take 17 days). Users can only earn GMT by leveling up to level 30. This means that in the first 5 days of GMT, there is only a small part of the launchpad selling, and the airdrop does not appear until the 6th day, and the real selling (i.e., "digging and selling") will not gradually increase until about the 17th day.

II. Whether the revenue and expenditure model is sustainable

Consumption users vs investment users

The traditional revenue and expenditure model for games is essentially the same as insurance. Insurance revenue comes from the majority of people who pay premiums without incurring claims, and expenses come from the minority who claim. If the premiums collected are not sufficient to cover the claims paid, then the insurance product cannot continue to operate on the inner loop. For example, the national health insurance of a certain island and the pension insurance of a large country can only be maintained by the government's financial subsidy.

Similarly, if a game has more users who make money than users who spend money, then it is a game of "left foot on right foot" after all, and the money earned by users must be lost by latecomers money. That's why we've been emphasizing that GameFi's focus is on Game rather than Fi. If a game allows users to willingly spend money on skins and props without asking for monetary rewards, then the game must be sustainable.

StepN follows Axie's dual-token model, which can effectively prevent the game from being affected by the rise and fall of governance tokens. From a game sustainability perspective, the game token GST is more important than the governance token GMT. If we compare GST to an insurance product, shoe upgrades, repairs, and reproduction are equivalent to collecting premiums, and running rewards are paying claims. Whether GST can balance supply and demand determines whether the game can operate sustainably.

There are only two ways to adjust supply and demand: first, open source, that is, increase insurance premiums; second, throttling, that is, reduce claims. In terms of throttling, the team has done a clever design. The first is to set the upper limit of running time per day:

The second is diminishing marginal returns: it can also be seen from the table that the more shoes, the shorter the average time and the longer the payback period (the specific payback time can be found in the WeChat applet "STEPN Assistant" calculated above).

In terms of open source, StepN has also designed many ways to burn GST, such as the shoe repair, upgrade, and reproduction mentioned above. But for users, the ultimate purpose of all this is still to get more GST, and if the GST burned is not as much as earned, then no one wants to continue playing. Therefore, the real open source should be that users are willing to play even if they lose money. Just like people buy accident insurance, most people don't want the insurance to actually come in handy when they buy it.

In other words, a good revenue and expenditure model should be that the number of consuming users is greater than that of investment users.

StepN's consumer users are mainly from the social field

For ordinary GameFi projects, how to attract consumer users? That is naturally to improve the entertainment of the game. Assuming that GTA5 is changed to GameFi mode, even if the currency price returns to zero, loyal players will not be driven away. The StepN product, I am afraid it is difficult to improve the entertainment from the perspective of games. After all, no matter how much more interesting gameplay is added, it still has to be implemented on "Move", and "Move" is always boring.

Many people made the statement: "Even if the price of StepN's shoes goes to zero, at least I get a workout." But this statement is a typical self-comfort after being stuck. I run for the purpose of making money, and when I lose money, I tell myself that I'm exercising.

In fact, running is boring, and it is difficult for most people to stick to it without the motivation of profit. So why do you see so many people running in real life? Except for a few who really love sports, most of them are for spiritual interests such as "having a good figure to improve their image" or "posting kilometers on social media to show that they have a rich life". And these are essentially social attributes.

Therefore, StepN's consumer users will mainly come from SocialFi in the future, not GameFi.

How many consumer users does StepN currently have

Unfortunately, although the StepN team claims that this product is GameFi + SocialFi, we have not seen it so far. to too many Social elements. If you just take a screenshot and share it on a social platform, it is Social, then everything can be SocialFi. Rather than giving StepN a verbal accolade on social media, Adidas Vice President Scott Dunlap would rather see him announcing the launch of the Ross Remastered 1.5 digital version in conjunction with StepN, preferably with a Ross highlight shot of the NBA Top Shot.

This is the sports blockchain project I most hope to see. Now it has to be admitted that most people buy their shoes just to make money, because there is really no fun and nothing to show.

So do investment users account for a large proportion? To answer this question we need to analyze the net flow of GST. The following figure is the net outflow of GST displayed by the data on the chain:

Source

The above address is the official wallet, namely Spending Account. Users need to transfer GST from their personal wallet to Spending Account to repair or upgrade shoes. After running, they also need to transfer GST from Spending Account to sell.

On March 1, Binance announced the launch of the 28th Launchpad project - STEPN (GMT). On the same day, GST changed from a net outflow (earned by running) to a net inflow (burned by repairing, upgrading or breeding shoes), and the price of the coin soared from the previous $2.6 to a maximum of $4.0. After the good news came out, GST entered a state of net outflow again, and the currency price gradually fell back to around $3.4. Fortunately, since March 16, GST has basically been in a state of balance between supply and demand, so the currency price has also stabilized. The price of GST will directly determine the price of shoes, so the floor price of shoes has been basically maintained at $800-$900 in the past two weeks. It can be seen that the supply and demand balance of GST is very dependent on the number of new players. With the opening of the leasing market in the future, more and more users of "sweeping wool" will flood in. How to stabilize GST prices is particularly important: skyrocketing prices will prevent new users from joining (shoe prices skyrocket), and falling prices will not retain old users (revenues will be significantly reduced).

If the on-chain data of the Spending Account can reflect the real supply and demand of GST, it means that investment users like me account for a larger proportion. And if the real data cannot be obtained from the chain, that is another problem.

Summary

If the game wants to operate sustainably, consumer users must be larger than investment users. The positioning of StepN is GameFi + SocialFi, but the sport of running determines that the plasticity of the Game is poor, so the product should cultivate more consumer users from the social level. But so far, StepN has not shown too many social elements. In the interview, the official seems to focus more on building the NFT market in China, rather than developing more Web2-like social elements.

From the current on-chain data, if no new users enter the market, GST will be in a state of net outflow. Therefore, we have reason to worry about whether GST can withstand the selling pressure once investment users flood in with the opening of the rental market.

Attachment: Supplement to the interview content of the team

Q: Current number of users and regions?

Answer: about 100,000 daily active users and about 500,000 monthly active users, we have not opened registration and need an invitation system. Due to local laws and regulations, China has not been opened. Mainland and other regions download. The user source rankings are Japan, the United States, France, Russia, the United Kingdom, and Taiwan, China, etc. Japan has a lot of Move to Earn gaming traditions, so adoption is quick. About 30% of users are outside the cryptosphere. We don’t want the gold-playing union to enter and destroy the ecology of the game. Therefore, we have not opened the rental market, nor have we cancelled the invitation system or opened up free registration.

Q: Cross-chain? Future direction?

Answer: We will cross-chain to BSC soon, and cross-chain to Ethereum may be later. Our future development direction is to become an NFT market, and even become the largest trading platform in the NFT field. Users can not only buy shoes from us, but also other NFT products. We are developing NFT marketplaces on BSC and Solana and will soon merge platform wallets and native wallets.

source: Analysis of StepN: Causes of sudden explosion, economic model and future development direction

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