StepN, a new game in which people are rewarded for walking or running, saw the value of its native cryptocurrency plunge after deciding to pull the plug on its Chinese players.
It follows similar moves from Binance and Huobi, after Chinese authorities deemed all activity related to digital assets to be illegal.
On Thursday, StepN posted to Twitter that it would disconnect users with a GPS signal in mainland China to ensure it complied with Beijing’s rules. This sent its native governance token called Green Metaverse Token (GMT) tumbling 14% to $1.01 over the 24-hour period ending at 7:30 a.m. ET, according to CoinGecko.
So what is this “move to earn” game, and how does it work?
What is StepN, and how do you use it?
Developed by FindSatoshi Lab Ltd., a reference to the anonymous creator of Bitcoin, the app wants to be the leading crypto-fitness game for smartphone users. Winning fourth place at last year’s Solana Ignition hackathon, it’s now in public beta and can be downloaded for Android and Apple devices.
“StepN aims to nudge millions toward a healthier lifestyle, combat climate change and connect the public to Web 3.0,” the company says on its official website.
Earnings are based on the amount of movement measured by GPS tracking that is made during five-minute increments that equate to one unit of energy, which naturally replenishes over time once fully depleted.
How much are StepN NFT sneakers?
Since there’s no such thing as a free lunch, however, players must first spend Solana tokens (SOL) to purchase a non-fungible token in the form of three different types of digital shoes.
These feature various traits that make them more or less valuable. For example, certain sneakers are more efficient than others, since they earn more in-game currency called Green Satoshi Tokens (GST) per unit energy spent. (GST dropped about 9% over 24 hours ending at 7:30 a.m. ET, according to CoinMarketCap.)
Some are also more durable, meaning the user must spend less to “repair” them over time to prevent a loss in their earning power. Sneakers, whether for walkers, joggers, or runners, can also be upgraded by spending tokens.
On the NFT marketplace Magic Eden, the average price for StepN sneakers was the equivalent of about $400 in the crypto coin Solana. At Binance, some “STEPN x ASICS NFT Sneakers” were being offered for the crypto equivalent of more than $100,000, though most were much less.
When no longer needed, the sneakers can be resold or leased to other players who may not be able to afford them, for a split of their earnings.
Just don’t try to strap your phone to your dog or otherwise try to cheat the game, as it has built in penalties for what it calls “moonwalking.”
Questions regarding sustainability
Backed by big names in the crypto venture capital space, such as Sequoia Capital, Binance, and Alameda Research, StepN claims to have some 580,000 players.
The company earned a $20 million profit in the first quarter, cofounder Yawn Rong told the South China Morning Post in April.
There are serious questions around the sustainability of such play-to-earn games, however.
Once growth in the player base begins to top out, then the business model can turn against it. As fewer and fewer people pay to buy in-game currency in order to purchase NFTs, while more cash theirs out, the value and motivation for play diminishes over time.
That’s because there’s no motivation to engage with the app once it ceases being a form of income, and as with any play-to-earn game, its players eventually move on.
The most famous example, a game called Axie Infinity, developed by Sky Mavis, has seen player interest tail off sharply.
As a result, the value of both its Smooth Love Potion (SLP) game token and Axie Infinity Shards governance token (AXS) had already begun to plummet prior to a March crypto heist that hit Axie; the heist was worth roughly $600 million in Ether and stablecoins and at the time was blamed on North Koreans.