Monetize Your Lifestyle with Play-to-Earn
If you’re doing it anyways you might as well get paid for it.
We’re currently seeing a strong second wave emerge from the play-to-earn narrative. The first wave was led by Axie Infinity, and the second wave is being led by the new ‘burn-to-earn’ app called Stepn. Stepn, which has a similar two token play-to-earn system to Axie Infinity’s, rewards users for exercising in the form of walking, jogging, and running which is tracked using the GPS system in your smartphone.
Stepn’s governance token, GMT, has recently broken into the to top 100 cryptocurrencies by market cap, and currently sits at rank 74, with a $1.2B market cap. Stepn’s rewards token, GST, currently sits at a $19M market cap.
Stepn users can purchase sneaker NFTs that unlock the ability to earn GST and GMT by exercising, with more expensive and rare NFTs earning larger sums of GST and GMT.
While entry prices of Stepn sneaker NFTs are high (>$1,000 per NFT), at the current GST price of over $5, daily rewards are quite high with many users yielding several hundred dollars per day for their efforts. Personally, I am currently yielding roughly $600 per day from an initial investment of ~$40,000.
Are these returns sustainable?
Absolutely not. GST is an inflationary token with no limit on its maximum supply. Its token price may continue to rise so long as new players are entering the game at a rapid pace, but eventually the music will stop and price will stagnate and/or crash.
My personal prediction is that earnings from an average sneaker setup will normalize towards something more reasonable, perhaps minimum wage. This is because over a long period of time, there should be no shortage of players willing to sell their GST earnings for anything above minimum wage. However, if GST earnings drop significantly below minimum wage, the opportunity cost of playing Stepn should reduce the amount of willing participants and thus the incoming supply of GST.
This assumes Stepn does not add additional utility to the GST token.
Regardless of this assumed drop in earnings, I believe there is significant opportunity in the emerging play-to-earn mechanics of gaming. There has already been a large influx of new play-to-earn games and apps seeking to recreate the success of Axie Infinity. Many of these projects will likely fail, however some may give players opportunities to make considerable amounts of money.
So what should we look for in order to take advantage of these upcoming opportunities and how do we tell the difference between the bad and the good?
My personal strategy is to look for play-to-earn mechanics that have polished user experiences, are fun, fit my personal lifestyle, and have a large addressable market.
Polished User Experience - This is simply a bare minimum requirement. The game or app has to be functional, usable, and otherwise professionally built.
Fun - Games and apps that are fun and addicting will attract and maintain users despite increasing competitive pressure. This is why I am long-term bearish on Axie Infinity. I do not believe the gameplay is fun and addicting enough to sustain an increasing player base as more play-to-earn games pop up. Play-to-earn token mechanics are most profitable for existing players when new players are entering the game. When players leave the game, money also leaves the game. Would
Fits Personal Lifestyle - This is something I do not believe enough people take into account when investing in play-to-earn games. Most play-to-earn games are most profitable for players who buy an NFT, then use that NFT to earn in-game tokens. Simply investing in a game’s token can be risky, as most play-to-earn tokens are inflationary and subject to large VC allocations that are later dumped on retail investors. If push came to shove, and you fell underwater on your play-to-earn game investment, would you actually be willing to play the game for a long period of time to earn tokens?
Large Addressable Market - This pretty straight-forward, but I am seeing a lot of niche play-to-earn games and apps fetch large valuations. Below is a list of some upcoming play-to-earn apps. Personally, I do not think rapping is a popular enough pass-time to support a large scale rap-to-earn game. While the rap industry is large, the number of participants is low especially when compared to the massive amount of people that walk, jog, or run for exercise and leisure.
My personal investments in the play-to-earn space include:
Stepn
Zed Run
Bigtime
Rumble Kong League
Stepn has a polished user experience despite still being in beta. There are occasional bugs, but my experience overall has been very smooth.
The Stepn team has built a powerful and addicting gameplay loop that has been successful in changing my daily exercise habits (the game is fun/addicting).
Stepn fits my personal lifestyle in that I was already spending about 45 - 60 minutes walking my dogs per day. My current sneaker NFT setup calls for 100 minutes of walking/running per day. The additional 40 minutes of exercise per day is a welcome and sustainable additional to my lifestyle for years to come. I’m walking my dogs anyway, I might as well get paid for it.
Stepn has a massively large addressable market. Everyone (outside of those who are physically disabled) walk every single day. Some Stepn sneakers only require a pace of 1km/hr to earn tokens, making the game accessible to virtually anyone capable of walking. Additionally, the more intense jogging/running community is quite large.
“Running is one of the most popular and practiced sports worldwide. In the United States alone, almost 60 million people participated in running, jogging and trail running in 2017. Walking for fitness drew more than 110 million participants in the U.S. in 2017.” - Statista
Zed Run also has functional gameplay with a polished user experience, is built by a very strong team that is backed by quality investors, and has established partnerships with major mainstream companies like Netflix and Nascar. The main gameplay is not my personal cup of tea, (horse racing), however the breeding part of the gameplay only takes me a few minutes of time each month to earn ETH, therefore not interrupting my personal lifestyle. There are many people who do find Zed Run’s horse racing gameplay fun and the addressable market of ‘racing’ is very large, encapsulating multiple markets: real horse racing, Formula 1 racing, Nascar, and other forms of racing.
Bigtime does not yet have a released game, however, the team building the game is an all-star cast with plenty industry-related success. I have very high expectations of fun, engaging, and polished gameplay based on the strength of the team, investors, and initial gameplay footage. While I do not currently have significant amounts of time to dedicate towards playing Bigtime, the gameplay style does suit my tastes in video games, and I would be more than willing to drop some hours into it upon initial release if the token rewards are significant enough. As it stands, I will be looking to flip most of my Bigtime NFT purchases around initial release time to capitalize on the hype of the game and large influx of new players. The addressable market of an MMORPG game is also large with many similar games reaching player bases in the millions.
Rumble Kong League is basketball themed play-to-earn NFT project that does not yet have a functional game, however, RKL has hired a very proficient studio (Angry Birds designers) to design their game and gameplay which makes it reasonable to expect fun and engaging gameplay. I personally have very little interest in playing a basketball themed mobile game, (doesn’t fit my lifestyle), which is why I’ll be looking to sell most of my RKL NFTs around the time of launch unless a promising staking/rental feature is implemented. Basketball is another large addressable market and RKL has already established significant partnerships in the space including a partnership with Steph Curry.
Before you go investing in the next big play-to-earn game or app, I think it’s pertinent to really ask yourself how it fits into your current lifestyle, among other points of analysis. Many play-to-earn schemes reward those who actually play the game (as they should) and passive investors can find themselves penalized for not participating. Make sure you understand the reward incentives associated with the in-game tokens and NFTs, and tailor you investment strategy accordingly. Ask yourself, “What do I spend a lot of my time doing?” and be on the lookout for play-to-earn opportunities that can help you monetize that time. If you’re doing it anyways you might as well get paid for it.