Move 2 Earn

 

I have a lot of thoughts on Move 2 Earn games. This article is an attempt to consolidate my braindump into useful information for those looking to dip their toe into the space. This sector is holding up well against the broader crypto market (for reasons I explain further down) and I think folks should be keeping an eye on this stuff, even if sustainability is a question mark.

(Usual disclaimer: Nothing here is financial advice, these game/token economies are highly delicate/volatile and you should assume every dollar you put into these games is never coming back to you.)

Introduction

So, at this point you’ve probably heard about STEP’N and Move 2 Earn, but if not, here’s the quick explainer:

Move 2 Earn is a subset of Play 2 Earn gaming. Move 2 Earn incentivizes users to exercise, generally by rewarding them with tokens for doing so. Progress is tracked via a smartphone application, which uses some kind of combo of GPS, motion sensors, etc. to verify what it believes to be legitimate fitness activity.

STEP’N is (at time of this writing) the most successful Move 2 Earn app and the first to score wide adoption.

The ultra-basics of how the STEP’N gameplay loop works is like this:

On the STEP’N app (available on iOS or Android) you can pay Solana (or BNB on their recently-launched expansion to Binance Smart Chain) to buy an NFT sneaker, which gets you into the STEP’N ecosystem and allows you to earn. No sneaker, no earnings.

Once you have a sneaker in your inventory, you can press the big green START button in the app at any time to begin your tracked exercise.

You are rewarded with GST tokens for every minute of exercise, provided you are moving outdoors (GPS needs to track you) at a speed deemed acceptable by the app (your shoes govern what this speed range is). You also burn energy at a rate of 0.2 energy per minute.

Owning one sneaker gives you two energy, which is enough for 10 minutes of movement. Owning three sneakers gives you four energy, which is enough for 20 minutes of movement. This continues on with diminishing returns as per this chart:

Accumulating more energy gets quite expensive after your 9th sneaker.

Every 6 hours, 25% of your maximum energy is restored, which means you get a full “bar” of energy to use per day.

Here’s my energy refilling. I have 3 sneakers, which gives me 4 energy per day, 1 energy refilled every 6 hours.

As you’d probably imagine, your earnings per day is heavily impacted by your total energy, but sneakers also have RPG-style stats and you can “level up” to increase those stats, which increases your earnings potential.

These stats have various uses in-game.

There’s a bunch of other gameplay elements (repairing your sneaker after running with it, sneaker “breeding”, gems you can socket into sneakers to enhance your stats, etc.) but that would be an entire article on its own and that’s not what we are here for. Go read the Whitepaper and watch Solana Gaming with Barndog’s videos if you want the full scoop.

Why does any of this have value?

Good question! Play 2 Earn games (which these Move 2 Earn games are a subset of) generally try to maintain value in a coin by this by balancing token creation with token sinks.

Token creation is pretty self-explanatory: Users play the game and create tokens in the process.

Token sinks are how these games attempt to stem the tide of inflation. They are various activities in the game that cost ingame tokens to perform, which removes tokens from user wallets (usually burning them in the process). One example of this is STEP’N is sneaker repair. After every run, your sneaker loses durability, and you must spend GST tokens to repair it.

[sneaker repair screenshot coming after my energy refills for the day lol]

If you do not, there will be penalties on your earnings if your sneaker falls below certain durability thresholds. Therefore, you have to spend some of your earned GST to maintain your sneaker’s earnings.

Ideally a game will have multiple sinks, enough of them so that users are burning as many tokens as they are creating, or at least enough that the inflation rate isn’t catastrophic.

You’ve been talking about GST and I’ve heard people talking about GMT. What’s the difference?

Ah yes, the “fun” part. Many of these game economies have multiple tokens and STEP’N is no exception. GST (Green Satoshi Token) is the main in-game currency and used for the majority of tasks. It has an uncapped supply. GMT (Green Metaverse Token) is a capped supply governance token that is also used for limited things in-app (although the number of use cases is rapidly growing.) You currently have no choice but to buy GMT if you need it, however there will be a way to earn GMT with sneakers rather than GST in a future update. It will require a Level 30 sneaker (which as you can imagine, is not an easy or cheap level to attain and is the maximum level for sneaker.)

Again, I am trying to keep this article short(ish) and to the point(ish) but long story short, make sure you understand the tokenomics if you get into any Play 2 Earn/Move 2 Earn game. Not understanding this stuff before you start playing will generally cost you money, sometimes a significant amount.

So why is this Move 2 Earn stuff going up in a horrible broader crypto market?

Simply put, Move 2 Earn is winning because:

Easy to understand — While normies may chafe at the tokenomics and having to manage a wallet, the basic game loop is simple and attractive. Run/jog/walk, get paid in tokens, do whatever you want with those tokens. Lots of stories of crypto folks setting up their friends/family with sneakers and getting them hooked.

Fun gameplay loop — You literally get paid to exercise. It’s simple, it’s compelling. I have walked/jogged every day since I bought my first sneaker because not doing so is like flushing money down the toilet. Lots of people complain that they lack motivation to exercise. Well, guess what? Here’s your motivation.

Economy is surviving and thriving (so far) — STEP’N has existed for months now and hasn’t imploded. Granted, that seems to mainly be because they have a steady funnel of new users and are gating those users via activation codes, which builds up demand further and ensures the economy doesn’t get too out of whack with too many people flooding in at once.

Wait, so if the main thing sustaining STEP’N for the moment is new users, isn’t this just a fancy Ponzi scheme that will inevitably collapse when they run out of new users?

Ah yes, now we come to the big question. I would argue the answer is somewhere between “yes” and “probably but maybe small chance of no”

So far, it seems all play2earn games are doomed to fail. Why is this? I would argue that it comes down to the simple logic of value creation vs. value destruction.

Value creation is when money enters a Play 2 Earn ecosystem. Say, if someone buys an in-game NFT and gets charged a marketplace fee. Or if a crypto trader not even playing the game buys the ingame tokens as a method of speculation, driving the price up.

Value destruction is when money is removed from a Play 2 Earn ecosystem. If you sell a bunch of ingame tokens for USDC and withdraw that USDC to your bank account, you have removed that money from the game.

If value destruction > value creation, then the game will inevitably collapse as money is sucked out of the system faster than it is replaced.

The problem is, of course, is that the main attraction is that you can make money playing these Play 2 Earn games.

Therefore, a subsection of the population will always be destroying more value via extracting money from the game than they create.

Therefore, a Play 2 Earn game needs a constant stream of value creation to sustain itself against the tide of value destruction.

So how do you create a constant stream of value without relying on endless new users in a Ponzi-like matter?

That’s the million-dollar question I have been thinking about. I am no crypto economics expert, but I have three basic ideas.

1.Advertising/Partnerships — This seems like the most obvious one. Run ads, partner with fitness companies, put the money into the ecosystem. There’s all sorts of clever ways to do this (ie STEP’N recently releasing ASICS-branded sneakers) and it’s a surefire way aid in value creation in a non-Ponzi-like matter.

2.Make the game so fun that a % of the population spends more money because they genuinely enjoy it — This is obviously a tough hurdle for Play 2 Earn games, since earning is the whole point, but lots of options exist here to at least drive additional value creation. One example: Cosmetics that are superfluous to the gameplay itself. What if you could “reskin” your shoes with fancier versions for a fee and show them off, much like Fortnite players buy skins for their characters? STEP’N already has a big group of passionate users and I’d argue they’d welcome show-offy purchases like this with open arms.

3.Make the game part of a wider ecosystem, where other parts outside of the main game drive value creation — This seems to be what Step App is attempting to do (they will be launching a subnet on Avalanche devoted to fitness) and they’ve already announced a partnership with Untold Festival (which includes building a seasonal “dance2earn” app). Presumably they have other ideas in the pipe, and perhaps some of these ideas will ultimately create more value than they destroy.

Could these three things sustain a Play 2 Earn economy in perpetuity? I dunno, honestly. But these are the kinds of things these games should be exploring if they don’t want to go the route of Axie Infinity and other numerous Play 2 Earn failures.

What else exists in this space besides STEP’N?

Step App — Competitor launching on Avalanche. So far appears to be a pretty shameless STEP’N clone, but the app hasn’t launched yet, the base game is compelling enough to copy, and there’s plenty of room to innovate and iterate on what STEP’N built. Has attracted a lot of early interest in their FITFI token. If STEP’N is too expensive for your tastes now, I’d be watching this one.

Genopets — I honestly haven’t looked deeply into this one as I hear it won’t be launching for awhile. Seems to be some kind of Pokemon-like game combined with move2earn mechanics?

Sweatcoin — This is a little different from the other projects: For one, you don’t need to buy anything to participate. This app already exists on smartphones and rewards users with in-app tokens they can spend on various products/services, but they will be transitioning to crypto via an initial minting process this summer (one SWEAT token for every SweatCoin you own at launch.) Token will be run on the NEAR blockchain, which I (embarrassingly) know nothing about.

My hunch is that these SWEAT tokens won’t be worth much since (at least so far) there’s no value creation via users having to put skin in the SWEAT token game via buying NFTs, etc. Also, US users are disallowed from participating (but with a little cheeky ingenuity and some Google searching you can find a way to get around this.)

Conclusion/Links

Thanks for getting all the way to the end. I really find these projects fun/fascinating, even if I am skeptical that they can stay afloat.

If you also find this sort of thing interesting, feel free to follow me on Twitter. I am horrible at focusing long enough to write Medium articles, so I share my thoughts much more frequently there.

Tomohoon https://bitcointalk.org/index.php?action=profile;u=3198788