UpOnly | Research #19: STEPN announces productive quarter despite bear market, Animoca Brands hits $5.9B valuation
While the cryptocurrency market has tumbled from its November 2021 highs and sent several companies like Voyager and Celsius Network closer to insolvency, another corner of the emerging industry is thriving. Move-to-earn pioneer STEPN more than quadrupled its first quarter earnings, and Animoca Brands has raised fresh funding to boost its growing blockchain gaming business.
This week’s UpOnly | Research brings you a roundup of these developments, underlining, among other things, the sustained engagement and investment in the blockchain gaming space. Are we witnessing the emergence of a crypto niche whose returns have little correlation to the broader industry?
STEPN announces record $122.5M profit in Q2
Since launching in December 2021, Solana-based move-to-earn application STEPN has quickly risen through the ranks and is now one of the most used crypto applications. The platform has grown to 3 million users and could have had more, barring the introduction of mechanisms like activation codes to control the rate of user signups.
STEPN is built around rewarding users with tokens for engaging in outdoor physical activity. The company brought in $122.5 million in the second quarter of the year. The latest earnings figure is more than four times the $26 million the startup realized in the first quarter.
How STEPN generates revenue
STEPN’s revenue generation model is relatively straightforward and is behind the startup’s record profit figures amid a broader market decline. The company operates an in-app marketplace enabling new and existing users to purchase and sell NFT sneakers. These sneakers are a prerequisite for earning tokens in exchange for outdoor movement. Although the price of these items might fluctuate as it has in recent weeks, STEPN collects a fixed 2% trading fee and a further 4% for royalties.
In May, STEPN’s co-founder Jerry Huang told TechCrunch that the startup was generating between $3 million — $5 million daily from these platform fees. An analysis by Delphi Digital also confirms that the earnings may be as high as $3 million, with STEPN generating around $50 million in daily trading volume (more volume than the leading Solana NFT marketplace, Magic Eden).
(Source: Delphi Digital)
More volume means more revenue for STEPN, and the move-to-earn app is doing well with acquiring and retaining users. Based on blockchain data, the app recorded over 470,000 active trading users in the past month.
(Source: Dune)
It seems that there is still a lot more to come from STEPN, especially off the back of a strong Q2. Among other things, STEPN will use the profits to buy back its GMT token and expand its team to pursue the rollout of “a full product suite of DEX, NFT marketplace, and social products.”
The startup is also weighing up partnerships or sponsorships of “key on-brand sports and entertainment events.” Similar efforts by other crypto companies have not been very successful. But STEPN’s focus on a healthy lifestyle is unique, putting it in a position to appeal more to mainstream users.
Except for any unforeseen challenges, STEPN looks set to sustain its ecosystem. However, It will also be interesting to note how long the move-to-earn pioneer continues to weather the current downtrend rocking the crypto market.
Animoca Brands hits $5.9B valuation
Hong Kong-based Animoca Brands is one of the most prominent investors in the blockchain gaming industry, with portfolio companies including Axie Infinity, The Sandbox, and Alien Worlds. This week, the company’s venture capital arm announced a $75 million funding reportedly raised at a $5.9 billion valuation.
The latest funding round saw participation from new investors such as Liberty City Ventures, Alpha Wave Ventures, Kingsway Capital, and others. Animoca Brands plans to pursue acquisitions, investments, and other measures that will spur the adoption of blockchain gaming and Metaverse technologies.
A new dark horse investment?
STEPN’s record profit figures and Animoca Brands’ record high valuation are evidence that the blockchain gaming niche is thriving. A sustained investor appetite for the industry further underlines its long-term potential. Investor confidence increases the chance of blockchain gaming startups becoming a ‘dark horse’ bet — an investment category not correlated with the performance of the broader crypto market.
UpOnly provides a robust data directory for investors to gain unique insights into existing and upcoming play-to-earn, move-to-earn, and Metaverse gaming projects. Access to the right information allows players and investors to make data-driven bets on the emerging industry.
UpOnly’s week in review
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UpOnly is a first-of-kind data directory that provides insightful and actionable data on the move-to-earn, play-to-earn, and Metaverse gaming fields. We aim to become a one-stop shop for gamers worldwide to identify the most lucrative play-to-earn opportunities and optimize their performance. Alongside our data directory, we will launch a decentralized prediction platform allowing anyone globally to bet on the outcome of play-to-earn and Metaverse gaming events.
