Mike Lingle at Rocket Pro Forma
Is STEPN Actually Web3?
Updated: Sep 22, 2022
Is STEPN actually #Web3 if they made $122M in profit while user rewards went to zero?
Here's what STEPN says on their website: "All assets in the STEPN app are owned by individual users and [the] majority of [the] earnings in app are made by users."
But is that what actually happens? Let's take a look...
Short story: I use STEPN all the time and I think they do an amazing job nudging me to walk every day.
However, I think they have two massive problems. First, STEPN's proprietary tokens (GST and GMT) put them in direct competition with their customers—which is the opposite of the Web3 ethos.
Second, they've failed to build a sustainable economy, in the same way that all P2E games have failed at this so far (I'm looking at you, Axie Infinity).
The three pillars of a sustainable economy are 1) New money always coming in from outside, 2) Contributors create real value through their work, and 3) Contributors participate meaningfully in the monetization.
In this article I lay out a framework for building a sustainable economy. Hint: it's not about forcing users to spend all of their rewards points inside the app. A healthy Web3 ecosystem should be able to share revenue with its contributors. Even YouTube—arguably Web2—shares more than 50% of revenue with creators.
STEPN's proprietary tokens (GST and GMT) put them in direct competition with their customers—which is the opposite of the Web3 ethos.
And if you're launching your own NFT project, check out my NFT budgeting tool for your calculating income from your mint, revenue from secondary trading, how rarities affect income, staffing, expenses, and tokenomics.
1. First of all, what is STEPN?
STEPN is an app where users equipped with NFT sneakers walk, jog, or run outdoors to earn rewards in the form of two (!) different proprietary cryptocurrencies. These tokens can then be used to level up and mint new sneakers—and may also be converted to crypto or cash.
You can read the STEPN litepaper for more info (go ahead...I'll wait).
Or maybe you want to watch their promo video instead?
The key thing is that to get started with STEPN you have to purchase a sneaker NFT. When the app first launched the most affordable sneakers were $1,000+ (!) Since then the prices have dropped to about $50 for an entry-level sneaker NFT.
The NFT sneakers are completely virtual, so they only exist in the app. Welcome to the future ;)
2. How successful is STEPN?
STEPN launched their beta in December of 2021. Seven months later they announced $122 million USD in *profit* for Q2. Along the way in March 2022 (four months after launch) their NFT marketplace reached an all-time high of 264,000 sneakers in *daily* transactions.
STEPN launched two tokens: the GST utility token for earned rewards and the GMT governance token (which can also be earned once you level-up your sneaker NFT to 30). In July 2022 they launched their own in-app DEX (decentralized token exchange) because their two tokens represented 75% of the volume on Orca (one of Solana's largest DEXes).
Messari reports that STEPN accounted for 20% of Solana’s total users at its peak in May.
From a personal standpoint, STEPN has been successful in getting me to walk for 30 minutes every day. I definitely enjoyed it more when I was earning $40 per walk (!) instead of $2 per walk—but I've embraced the behavior change even after the crash in STEPN's token and NFT prices (we'll talk about that in a minute).
3. How easy is STEPN to use?
STEPN is incredibly *difficult* to set up! Remember that you can't use the app until you purchase an NFT, which requires you to transfer in crypto from your MetaMask or Solana wallet. Here's the workflow:
Download the STEPN app and create an account.
Go to the STEPN's in-app marketplace, choose a blockchain (Ethereum, Solana, or Binance) and pick a sneaker you want to buy—even though you have no idea which attributes are important and the prices range from $50 to $20,000. Make a note of the cost of the sneaker NFT you choose.
Connect your existing crypto wallet to the app and transfer in enough tokens to purchase the sneaker + extra to pay for gas for all of the in-app transactions you'll need to do in the future.
Wait a really long time for your transfer to go through, even on a fast blockchain like Solana. This is *scary* if you've chosen an expensive sneaker and you don't know where your money is or when it will show up inside the app.
STEPN requires two separate in-app wallets—so now you have to transfer your crypto to the other (in-game) wallet.
Again wait a really long time for your transfer to go through. Again, it's scary when your money just disappears for a while. Also, you have to pay a gas fee to transfer the funds between the two wallets inside the app.
Go back to STEPN's in-app marketplace, see if the sneaker you want is still available (remember they were selling 264,000 NFTs per day at one point, so chances were good your sneaker would have sold already), and purchase it.
Exit the marketplace and go to STEPN's main screen to start your first walk.
See that you need to wait 24 hours for your energy to refresh before you can take your first walk.
Close the app and wait. Maybe you'll remember to open it 24 hours later?
Wow that was exhausting!
STEPN is incredibly difficult to set up. It's only for crypto and NFT experts.
I asked one of my super-nerdy-gamer-crypto-developer friends to check it out and he came back and said he couldn't figure out how to get started.
There's no way average people—like my wife, or my parents—could figure it out. Getting started in STEPN is only for people who have been knee-deep in crypto + NFTs for a while.
Once you're in the game, however, it's easy. You just press the Start button once per day and either walk or run, depending on your shoe (you did pick the right type of shoe for your movement speed, right?)
4. Does STEPN put customers first?
STEPN has the single worst tech support I've encountered in 2022. Especially when you consider that many of their customers have spent hundreds of dollars buying sneaker NFTs.
My experience was that after a few months my NFTs started disappearing every time I opened the app.
I submitted a bug report on June 7 through the app but received no response.
My only other option was to post the bug on the "newbie" channel in Discord. This was kind of a free-for-all at the time, although it's slowed down considerably since the crash (more on that below). I did receive responses from the chat moderator, but they were unwilling to do any kind of deep dive on my problem. I ended up getting better advice from other users on the chat.