#stepn Community Insights & Market Sentiment

A pair of virtual running shoes, starting at 5,000 yuan, with walking supposedly enough to earn your money back. Three million people ran the numbers in the spring of 2022. Almost all of them got it wrong.

Back then, open Twitter or a WeChat group and you’d see the same question everywhere: How long until these shoes pay for themselves? People worked out how many kilometers they had to run each day, how many tokens they could mine, and what those tokens were worth in yuan at the time. Two or three months to break even, they said. After that, it was all profit.

The shoes were just an image on your phone: an NFT called a sneaker. You paid 5,000 yuan for it, ran around your neighborhood, and your phone used GPS to track the distance. Those kilometers earned you in-game tokens, which you could sell for cash. The project was called STEPN. It was founded in Australia in October 2021, and the person leading the team was a Zhejiang University graduate.

It took just one month for this model to explode across the Chinese internet. Daily active users jumped from 30,000 to 700,000, registered users topped one million, and the valuation hit one billion dollars. From launch to a billion: five months.

I looked back at the price records from the time. The governance token GMT surged to $4.18 at the end of April 2022, while the in-game token GST reached around $9. At those prices, the two-to-three-month payback period really did add up. The remaining question was: whose money were your earnings coming from?

STEPN used two tokens. GST had no supply cap: every step you ran meant the system minted a little more. GMT had a total supply of six billion. In a bull market, this design looked like it worked perfectly, because new people kept coming in to buy shoes. The money they spent supported the token price, and there was always someone to buy the tokens mined by early users.

The money you earned came from the people who joined after you. Once the growth in new users slowed, the token price couldn’t hold up. The payback period got longer, and even fewer newcomers showed up. The cycle could only spiral downward.

On May 27, 2022, STEPN issued an announcement saying that, from mid-July, it would no longer provide GPS and IP services to users in mainland China. The official explanation was that mainland users accounted for about five percent of its user base.

Around the time of the announcement, GMT fell from $1.32 to around $0.80, losing 40 percent in a single day.

By the end of May, it was down to around $1.20, a 70 percent drop from its April peak. GST fell 86 percent that month.

What happened next was no surprise. GMT is now down 99 percent from its peak, and GST is worth less than $0.01. The running shoes that once cost at least $1,000 now have a floor price of around $25.

My view is that the removal of those users only brought the inevitable forward. This model required new users to always outnumber existing ones. But in a real market, all rapid growth eventually stops. The day it stops is the day the payback period becomes longer than the price of the shoes.

What I still can’t figure out is this: so many people were calculating the payback period back then, but hardly anyone thought to ask the opposite question: What happens if nobody buys my tokens? The answer was right there in the white paper. Those words—GST has no supply cap—said it all.

There’s nothing wrong with walking. I still do it every day. It’s just that those 5,000-yuan shoes were nothing but an image from the very beginning.

$GMT $SOL $BTC #币圈往事 #STEPN #跑鞋 #RunAndEarn

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