Why STEPN’s Collapse Is Inevitable?

STEPN

Earnings

Ponzi Death Spiral

Guilds

Unit Economics

STEPN’s Unit Economics

  • Marketplace Fees → Every time there is a marketplace transaction, the economy charges a tax. This is typically a 5% tax. A user with 3 common sneaker NFTs typically pay 100 GST ($180) in marketplace fees per year to STEPN.
  • Deflationary Sinks → Deflationary sinks are not active yet but let’s assume users can buy customized sneakers/cosmetics sponsored by brands/influencers (Nike, Prada, Kanye West, etc.). This is a behavior driven by social signaling and very common in MMO games. Average Fortnite user spends $86 per year on virtual items. There will be players who spend thousands and ones who spend nothing on deflationary sinks just like in the F2P industry, let’s 10x Fortnite’s figures and assume that the average STEPN user will spend $860 on deflationary sinks in a year.
  • Ad Revenue → Consumer brands (shoe manufacturers, fitness equipment products/services), crypto apps (DeFi, GameFi, L2s), nearby retail shops (restaurants, groceries, retailers) would love to advertise their products/services to STEPN users. Thus, they would be wiling to pay a price for their attention. But how much would they spend? Meta generates $242 ad spend revenue from an average North American user. STEPN has a more targeted user base so let’s assume STEPN can generate 4 times what FB — $1k per ad revenue per user.
  1. What is the probability that STEPN can achieve these per user revenue targets?
  2. And more importantly — how long will it take them?

Conclusion

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Thesis-driven research firm dedicated to the long-term development of Web3 Gaming. Follow us on Twitter @DeFiVader

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Vader Research

Vader Research

Thesis-driven research firm dedicated to the long-term development of Web3 Gaming. Follow us on Twitter @DeFiVader

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