It’s been a whirlwind of a ride over the past month for the STEPN project, illustrated by the move in the native tokens GST and GMT. We wrote a piece a month ago praising the concept, and looking for big returns in the process. However, cracks are starting to emerge, with some saying this play-to-earn concept will go the same way as Axie Infinity. Here’s our take.
The concept still stacks up
From our point of view, the play-to-earn mechanics of STEPN should allow the coins to hold value in a better way than alternatives. GST needs to be burned by users on a daily basis to maintain the level of their sneakers. Producing other sneakers (known as minting) also burns GST, which is a main way of a player progressing through the game. This supply contestants should help prevent inflation, or simply supply outstripping demand.
Further, we are heading into the summer, with the ease of use likely to encourage many players within Europe to take up the Web3 app. According to STEPN, it has amassed 800,000 active users. Although this is a good base, there is clearly much more room for upside in coming months. We don’t think this has topped out.
Another key differentiator to something like Axie Infinity is that STEPN can control the new users, via activation codes. This helps to stop the game being flooded all at once, and supports a more gradual adoption of the game over time.
Reasons for concern
However, there are some worrying signs emerging. Firstly, GST and GMT have both lost well over 60% in value over the past month. GST is down 18% today alone. The problem with slumps like this with retail players/investors is that many decide to throw in the towel and sell back to hard currency. This only compounds the selloff.
As more users accumulate GST and GMT from playing, it’s natural to have a pressure on selling, but for STEPN this has come very early on. If it can’t even reach a mainstream level of acceptance before experiencing such a spiral in the token price, it really doesn’t bode well.
Add into the mix the concern about SOL and BNB, the two blockchains that the ecosystem is based off. SOL has experienced outages in recent weeks, on top of the coin also slumping in value. Without a stable network to be based off, STEPN could struggle to operate efficiently.
Our take on STEPN (GST)
Personally, we still think that the overall idea behind GST and GMT is sound. Yet we are worried that the coin simply could end up spiralling to a worthless state if it doesn’t pick up soon. The general crypto sentiment could also be a key driver here. If investors continue to shun crypto, STEPN might be dead in the water.