UpOnly | Research #12: STEPN user numbers continue to impress amid growing sustainability concerns
Move-to-earn pioneer STEPN continues to impress with increased user and economic growth. This week, the company publicly shared that it was already pulling in up to $100 million in net profit from trading fees on its app. The staggering figure comes less than six months into STEPN’s launch and has understandably raised more concerns regarding the game’s sustainability.
This week’s UpOnly | Research takes a deeper dive into key metrics from the STEPN ecosystem. We also reveal STEPN’s sustainability approach, considering whether or not the project could ultimately suffer the same fate as other play-to-earn movements that have hit the ceiling in recent months.
STEPN’s rapid growth fuels revenue and sustainability fears
STEPN has risen in prominence within the crypto and blockchain gaming community. The promise of rewarding users for engaging in otherwise beneficial outdoor physical activity has attracted millions of signups. Since a December debut, the Solana and BNB Chain-based application has grown significantly, attracting over 2.3 million users in less than six months.
STEPN’s app model involves the purchase and minting of virtual sneakers that live on the blockchain as NFTs. Users can mint new sneakers based on traits of existing ones, and also trade these sneakers in the in-app marketplace. At the time of writing, one needs to purchase a sneaker for 12 SOL (appr. $600 at today’s prices) to start earning on STEPN, increasing the entry barrier for the average gamer.
However, several key metrics suggest that the high entry batter has not slowed STEPN’s user growth or activity. The app currently attracts around 800,000 active users daily, according to the startup. Worth noting is that publicly available data suggests around 90,000 daily active users, and around 588,000 monthly active users as of May 1st.
(Source: Dune)
(Source: Dune)
STEPN is also seeing a notable increase in terms of in-app user activity. The platform is averaging over 250,000 transactions daily, with each user performing at least two transactions. Users are currently earning around $5 to a few hundred dollars depending on their level of physical activity, investments into the ecosystem, and price performance of STEPN ecosystem tokens.
The majority of the transactions on STEPN involve selling NFTs in the in-app marketplace, a primary source of income for the platform’s developers. STEPN collects a 6% royalty on each, an amount that significantly adds up given the large user base.
STEPN’s co-founder Jerry Huang recently told TechCrunch that the platform was generating between $3 million to $5 million in daily profits, netting a total of at least $100 million monthly. If the numbers are as accurate as claimed, then STEPN’s generated fees would make it the second largest protocol in the entire crypto industry.
(Source: CryptoFees)
The high revenue means that the STEPN (the company) is currently well-funded, a notable feat for a company that needed a $5 million raise to get things started back in September. However, this rapid rise to prominence has also led to industry-wide concern regarding STEPN’s sustainability.
Is STEPN sustainable or not?
Concerns around STEPN’s economic model are generally woven around the performance of Axie Infinity, arguably the first play-to-earn game to reach mainstream users. After attracting over 3 million players at its peak, Axie Infinity, which uses a similar dual tokenomic model to STEPN, has struggled. Axie’s native token is trading over 80% off its all-time high around $160. At the same time, trading volume of in-game assets has dropped from $754 million in November to around $5 million this month.
Although a large-scale security breach contributed to Axie’s continual decline, the economic damage was inflicted when the project could no longer onboard new gamers as fast as existing players were earning. Critics predict that STEPN will suffer the same fate when it reaches a similar level of adoption.
Responding to such comments, co-founder Jerry Huang noted that STEPN’s focus on helping users remain fit means the app essentially differs from Axie Infinity and other play-to-earn games. “Yes, users can make money from StepN in the early stages, but over time they will also grow accustomed to staying active, so they will continue to walk or run regardless of financial rewards,” He argued in the interview with TechCrunch.
Meanwhile, the company is implementing other safeguards to ensure long-term sustainability. For instance, there is a token burn mechanism encouraging players to alternate between burning STEPN’s utility token GST and governance asset GMT, to ensure favorable market dynamics. Also, new users must also receive an invite from existing users and also cough out the $600 entry fee. This model allows STEPN to keep the number of new users within a range that is economically sustainable.
STEPN is also continuing to explore new measures to keep communities ever growing and engaged. This week, the project rolled out “Realms,” a new movement that allows partners to fork and create custom versions of the games. Partners will receive a share of generated revenue and commit to building communities around their desired culture.
The lucrative earnings attached to the move-to-earn app and the focus on physical fitness makes STEPN a novel experiment. It also suggests that growth levels will continue at a steady pace over the coming months. However, investors seeking exposure to the blockchain gaming space must recognize that the current move-to-earn model is an exciting experiment with the potential to onboard several new users to the space. Whether or not it ends up being sustainable is a question only time will answer.
UpOnly’s week in brief
- UpOnly Partners with Pioneering Move-To-Earn Project DEFIT
- UpOnly Hosts the NAKA Strike Prediction Event!
About UpOnly
UpOnly is a first-of-its kind data directory dedicated to providing insightful and actionable data on the move-to-earn, play-to-earn and Metaverse gaming fields. Our solution addresses a market that is left largely uncovered by other data providers and we aim to become a one-stop-shop for gamers worldwide to identify the most lucrative play-to-earn and optimize their performance within these gamers. Alongside our data directory, we will launch a decentralized predictions platform that will allow anyone globally to bet on the outcome of play-to-earn and Metaverse gaming events.
