The latest web3 lifestyle app STEPN is making moves in the GameFi world, and it’s not doing so quietly. The latest blockchain startup that rewards its users for exercising is progressively accumulating a significant following thus leading to the inevitable question that must be asked: is it sustainable? This question remaining unanswered has left a stain on the reputation of similar play-to-earn games that blockchain technology offers.
The quick emergence of STEPN is reminiscent of the hype Axie Infinity received last year. After all, was the popularity behind Infinity that paved the way for other play-to-earn games such as STEPN to make their mark. It is important to note that Axie Infinity and STEPN have fundamentally different game mechanics. In Axie Infinity, players battle characters (Axies) that allow users to earn cryptocurrency by trading for non-fungible tokens (NFT). In the world of STEPN, users earn rewards for exercising and leveling up by getting new “kicks.”
That being said, both utilize a similar economic model. Thus, revisiting the rise and fall (and potential rise again) of Axie Infinity may offer invaluable insight as to what can be predicted for STEPN’s future.
Axie Infinity Capitalized on Their Updates
Each time Axie Infinity would update their software and gameplay, bullish trends would immediately follow. The first major update came when the game moved from Ethereum to the side chain Ronin. The move did two things: it gave the developer of the game, Sky Mavis, more influence on the Axie Infinity ecosystem, and it expanded the game’s economy by giving its players more bonuses.
After a few weeks of fluctuation, the price shot up from $10.81 as of April 28, 2021, to becoming the number one NFT product by 30-day volume, according to currency.com by the end of July. This included jumps from $23.96 on July 15 to over $40 by July 31, 2021.
However, in expanding the economy of the game, the incentives between the players of the game and the developers began to misalign. This was seen in the inflation of one token, the Axie Infinity Shards, and the overvaluing of the other token Smooth Love Potion (SLP). For those who are new to the game, players were rewarded with either AXS tokens or SLP tokens, with the AXS token being the rarer and higher price between the two.
Sky Mavis’s next update was to make SLP rarer. The next update also granted users the ability to stake AXS tokens. The reward for doing so would gift the user voting rights that directly influenced the actions of the game’s community treasury – essentially the right to vote on the future of the game.
Again, prices soared, this time going from $74 on September 30th to $110 on October 1st. This led to the launching of Katana, a decentralized exchange on Ronin, in early November.
With the economy growing even larger, the game had to feature liquidity pools to help users facilitate coin exchanges. This also meant the introduction of the stablecoin USDC which gave users a less volatile currency to invest in. Along with SLP and AXS, a native token of Ronin, Ron, had to be introduced with a transaction fee that followed. Ron would be a reward incentive for players to stake coins in the liquidity pool. By November 5, AXS prices surpassed the $150 mark and reached a high of $160.56 on November 7.
The Decline of AXS
STEPN has done well in its amateur career following Axie Infinity with solid upgrades that continue to keep its users engaged. Today there are an estimated 800,000 daily users of STEPN to 100,000 in Axie Infinity. However, understanding AXS’s decline and learning from its mistakes is going to be paramount in determining STEPN’s future success.
Following its November peak, AXS prices began to take a bullish trend. The reasoning behind this bullish trend came down to two factors:
- Fewer users in the Axie World.
- $625 million dollar hack that took place.
On March 23, hackers breached Axie Infinity’s Ronin bridge and took over 173,6000 Ethereum, which accounted to be over $620 million dollars. Although Axie Infinity promised to reimburse all to those that had lost, the hack left fear in the hearts of many of its users. Moreover, this came at a time when game interest began to decline.
Part of the decline in interest was due to leaks in Axie Infinity’s economic ecosystem. As previously mentioned, the unintended overvaluing of SLP was something that the developers were never able to solve. During the month of February, there were more SLP being made by the game than destroyed.
This spotlights a larger problem that all games, including STEPN, are ultimately bound to run into. With play-to-earn games, it is by nature that a growing game will need a larger economy to handle transactions and “game value.” However, in the case of Axie Infinity, the growth of its economy also meant more autonomy for its users to dictate the game’s valuable features. The eventual rarity of the SLP token thus made it impossible for new users to feel that investing in the game was worth it. If STEPN can avoid the mistakes of Axie Infinity by maintaining its economic climate, it has a chance of being sustainable.