The move-to-earn concept has been gaining popularity. There are already quite a few such projects on the market, but most are clones of the most famous and capitalized move-to-earn project, STEPN. Disputes around this project do not subside. Some believe this is another financial Ponzi Scheme, and some predict the bright future of the project and its participants. In this article, we suggest you take a deep dive into the primary indicator of the project’s sustainability — its tokenomics.
Why Is Tokenomics Crucial?
Tokenomics combines elements that make a particular cryptocurrency valuable and interesting for investors. This includes everything from a token supply and allocation to things like its usefulness.
Tokenomics is an important concept that should be considered when making an investment decision. A project that has reasonable and well-thought-out incentives to buy and store tokens for a long time is more likely to survive and succeed than a project that has not created an ecosystem and an active community around its token. In addition, a well-built tokenomics often leads to higher demand over time as new investors enter the project, increasing the price of tokens and the desire to buy and accumulate them.
Tokenomics defines two things in the crypto economy: incentives that determine how a token will be distributed and the utility of tokens that affects the demand for them. Supply and demand significantly impact the price, and projects that use the right incentives can grow in price. In the case of STEPN, the developers seem to have thought through every detail to ensure the longevity and success of the project:
Supply. STEPN developers implement many burning tokens options, thanks to which the number of coins in circulation reduces. According to the laws of supply and demand, reducing the supply of a token should help support its price, as the remaining tokens in circulation are becoming increasingly scarce.
Demand. For the project to remain popular and its tokens to grow in price, tokens must have really useful use cases and be closely interwoven into the project’s ecosystem. In the case of STEPN, the developers made sure that the tokens have utility and the project itself has demand.
Allocation. STEPN developers deliberately locked most of the GMT tokens and provided a detailed plan for unlocking them. This was to avoid getting a situation where a huge number of private investors sell tokens and thereby cause the price to fall.
GST (Green Satoshi Token) is the utility token of the project. GST has an unlimited supply. However, to ensure the stability of the token, developers have implemented many variations of the “burning mechanism”. At the moment, there are several ways to burn GST tokens in the app:
- Minting new NFT sneakers.
- Repair of sneakers after use.
- Increase the level of sneakers and accelerate this process.
- Modernize sneakers with the help of gems.
- Opening sockets for gems.
In addition, GST is different in different networks. At the time of writing, it exists in the Solana and BSC networks. GST in different networks do not depend on each other in any way and have different prices. For example, GST on the Solana network is trading at about $0.2 and has a circulating supply of 105 million tokens. GST in the Binance Smart Chain network has a total supply of 30 million and is trading at $0.5.
GMT (Green Metaverse Token) is the governance token of the project. GMT has a fixed maximum supply, which is 6 billion. Thus, this token can significantly increase in price, thanks to a limited supply, subject to growing demand. Most of the tokens are currently locked. There are only 600 million GMT in circulation. The project team provided a diagram indicating how tokens are distributed and when they will be unlocked. The largest part of the tokens will be distributed among the users of the STEPN app, sent to the project treasury, and sold in private sales.
Users who have reached level 30 will also be able to earn GMT as a reward for movement. Please note that this feature is not yet available at the moment.
GMT tokens are also burned. That is, with the same demand for GMT, its rate will grow because the token supply is getting smaller. At the time of writing, more than 130 million GMT had already been burned. Now there are several ways to burn them:
- When creating new rare, epic, or legendary sneakers.
- When increasing the level of sneakers at certain stages (5/10/20/29/30 levels).
- To redistribute attribute points.
- Increasing the limit of daily GST earnings.
- To permanently improve the chance to receive a good quality sneaker from a shoe box/ improve the success rate of all gems used/increase the chance of getting two sneakers from a shoe mining.
As already mentioned, the developers of STEPN made sure there was a demand for the project. They actively promote the app. STEPN is discussed on television, in Forbes, and in other famous media. The balance of supply and demand has also been worked out. Users tend to buy internal tokens to start earning in the game, and traders speculate on price growth. However, a sharp increase in the value of tokens does not always positively affect projects. The problem of STEPN was that due to the enormous popularity and, consequently, the rise in the price of tokens, it has a high entry threshold, which repels new users. Fortunately, the project team corrected the situation and applied price balancing tools. To do this, developers use various balancing tools, for example:
- For example, earlier, it was necessary to burn a certain amount of GST for mining sneakers. Due to high demand, at some point, the price of GST rose sharply, and the project team decided to include GMT in the process of mining new sneakers. Thus, users began to use GST less, and its price began to decrease.
- Dynamic mining. To balance the GST/GMT ratio, the project team also used the concept of dynamic mining of sneakers. In this case, depending on the dollar price of GST, more or fewer tokens will be required for minting.
- Double-mint event. Such an event stabilizes the GMT rate and lowers the entry threshold for new participants. For example, the project team announced that at some point, only GMT tokens could be used for mining. In addition, the chance of getting a twin increased by 300%.
Having analyzed the STEPN tokenomics becomes quite evident that the team is making every possible effort to ensure the project’s longevity. Considering an experienced team, a huge active audience, well-thought-out tokenomics, and the price balancing mechanisms used at this stage, we can conclude that STEPN will continue to remain the market leader.