Bill Xing, Head of Financial Products at Bybit, the cryptocurrency exchange, shared with Cointelegraph in Spanish, its analysis of one of the latest trends sounded in recent months: Move-to-earn games.
In his analysis, Xing has taken StepN, the app that rewards users with crypto tokens for walking, jogging, or running, as its focus. and in the first place, it has pointed out that some influencers have claimed to earn USD 200 a day simply by moving in the midst of its price volatility.
“As the backlash increased in early March, the price of the GST token grew. In May it reached a high of over $8 before crashing along with the rest of the market during the UST fiasco. Recently, the price fell again after the gambling ban in China and is trading close to $1 at the moment”, Xing said when reviewing the price of the token.
He also explained that analysts from Bybit’s Crypto Insights team have pointed out that The circulating supply of GST also saw an uptick when, in May, it went from less than 20,000 tokens in circulation to just under 50,000, leading to inflation that contributed to the price drop.
“If we look closely at StepN’s tokenomy, it adopts a cyclical structure, like most play-to-earn (P2E) or move-to-earn (M2E) projects. These systems generally encourage users to earn game tokens in order to earn even more game tokens in the future.”Xing commented.
In this sense, Xing explained that with this mechanism, new players who are attracted to StepN would first have to make an investment to buy NFT sports shoes, and then – he says – be encouraged to earn game tokens to mint new shoe NFTs. sports car, which they can rent or sell on secondary markets.
ponzi silhouette
Bibyt’s representative stressed that in the past, these systems have been shown to be unsustainable. “If no external capital is injected into the project, the cycle is likely to result in a decrease in the price of the token and the inability to attract new users to continue the cycle”he explained.
“From this, we can understand why these projects look like Ponzi schemes based on a vague understanding of the Ponzi concept.”Xing said before saying that calling StepN a Ponzi was premature and unfair to the team behind it because the real definition of Ponzi also referred to investment fraud.
Said that, Xing said that many new projects will implement a Ponzi-like structure in their early phases to drive growth, but what they do after this startup phase should really be judged as he stated that it could be called Since M2E projects are a subset of the P2E industry, it is difficult to remain sustainable in the long term.
“Let’s look at Axie Infinity, for example. P2E gaming rose to prominence in 2021 and peaked with approximately 6.6 million users. However, due to the large number of players and its unlimited minting of game tokens, its recording mechanics proved insufficient. They created an immense supply of tokens which, combined with a gradual decline in demand, led to their downfall.”Xing pointed out.
“A sustainable M2E model would require constant updates to keep its projects fun and engaging, in order to attract a constant stream of new users. The benefit of the time and money that users invest is also a strong demand factor”he added.
Possible solutions
According to Xin, to avoid a fate like Axie Infinity, M2E games must be able to attract new users to their platform. So incorporating new and exciting gameplay mechanics, or even live events, will be essential to maintaining the engagement levels they need.
For StepN’s part, he notes that the problem it faces is that it relies on new players signing up, so that existing users can profit by selling NFT shoes on the secondary market.
However, he has pointed out, that to keep it interesting, the team behind the game should pay attention to the tokenomics of the project making sure that the price of the token remains valuable, and also make sure that the time it takes for a new user to reach the point balance is not too long.
“As Bybit analysts have pointed out, the essence of P2E gaming is for users to win, not just be entertained like in traditional games. It is inevitable that the number of users decreases if the ROI does not meet expectations. Ironically, high ROI relies heavily on sustained user growth, which leaves us with a chicken-and-egg conundrum. If StepN wants to stay in this space long-term, this is an issue they have to resolve.”Xing specified.
“In general, StepN suffers from something that affects the current generation of P2E developers. They have not fully understood consumer behavior and the needs of real gamers. They have been aimed at investors and people interested in making money, and not at real users who appreciate and will keep the game for the long term. What players value are exclusive NFTs, such as limited edition items or skins, as well as a market to trade them. They also want to have more of a say in game development and control the future of their investments.”he explained.
Connection with reality
On the other hand, Xing pointed out that while some commentators were quick to label the projects as Ponzis, he thinks more credit should be given to the current crop of M2E projects. “After all, they were the ones who modernized new projects and found a way to connect the physical world with the metaverse.”, he mentioned.
“These M2E projects seamlessly link the real world with the virtual one. They use web3 mechanics to take users away from their computer screens into the real world. I believe that future innovations within this space will build on this idea and follow a similar path of integrating the real world into the web3 space”he concluded.
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