STEPN clears mainland users: Implementing GPS technology to prevent cheating is inevitable

On May 27, StepN, a Web3.0 game in which Zhu Xiaohu, a partner of GSR Ventures, participated, announced that it would clear out users from mainland China.

According to the announcement, in order to actively respond to relevant regulatory policies, StepN will check the accounts in mainland China. If users in mainland China are found, StepN will stop providing GPS and IP location services to their accounts at 24:00 on July 15, 2022 (UTC+8) in accordance with the Terms of Use. If users expect to log in and use their accounts in the GPS or IP location of the region for a long time, the official encourages users to make their own decisions to deal with the assets in the app. During this period, more details will be notified to users through official social media announcements, emails, in-app prompts, etc.

It was reported online that StepN’s domestic team at the Zijingang office was questioned by the Hangzhou West Lake Branch, and there were also rumors that the company would leave mainland China.

Immediately after the announcement, the game’s related tokens Green Satoshi Token (GST) and StepN Token (GMT) fell by double digits . GST fell from about $2.08 to $1.53, a drop of more than 26%. GMT fell from $1.24 to $0.83, a drop of more than 30%.

According to statistics from China Investment Network, the famous investor Zhu Xiaohu spent about $2,700 on the NFT shoes, and originally expected to get his money back in three months. Now this withdrawal policy has undoubtedly extended the payback period and increased the uncertainty of the game.

StepN’s economic model design “may not be a Ponzi scheme”

StepN is a popular Move to Earn game based on Solana ( SOL ) and BNB Chain ( BNB ) created by two Chinese immigrants now living in Australia.

The team, which references Bitcoin creator Satoshi Nakamoto and also uses anonymity, hopes to become the leading crypto fitness game for smartphone users. The game took fourth place in last year’s Solana Ignition hackathon.

Axie Infinity, a game previously introduced by Ruisi, is the leader of Play to Earn in the crypto world. This project has inspired new enthusiasm for the development of Web3.0 applications, and countless new Web3.0 applications are eager to apply the money-making model to their respective ecosystems.

StepN has added a social model to the "play to make money" concept and has written a series of programs that allow owners of its NFT sneakers to make money while walking .

The game is a dual-token model, using game tokens GST and governance tokens GMT. StepN players must first spend SOL tokens or BNB tokens to purchase virtual NFT sneakers. After equipping NFT sneakers, they can walk or run outdoors to earn GST tokens. The earned tokens can be used to upgrade and mint new NFT sneakers. When the shoes are no longer needed, the sneakers can be resold or rented to others.

This type of incentive behavior is not a new concept in the health and fitness space. Founded in 2018, SweatCoi is one of the first applications to pay users with cryptocurrency. There are other crypto fitness apps, such as Dotmoovs, Calo, Step, and the popular running product "Qubu" in China in the past few years. Each application has its own in-app reward token. So StepN is not a pioneer of this model, but it is indeed the hottest Web3.0 application at the moment, revitalizing the "exercise is money" economic model.

In April, StepN sneakers could earn users up to $20-30 per day, and premium sneakers could earn users hundreds of dollars at current GST prices. At the time, the cheapest StepN sneakers sold for about $2,000 on the secondary trading market, while the most expensive ones could reach nearly $30,000.

"StepN aims to move millions of people towards healthier lifestyles, combat climate change and connect the public to Web 3.0," the company said on its official website.

Backed by big names in crypto venture capital, including Sequoia Capital, Binance, and Alameda Research, the company posted $20 million in profits in the first quarter. As of the end of May, StepN had 620,000 cumulative users.

Zhu Xiaohu also said in his WeChat Moments that the tens of thousands of yuan he spent on the NFT shoes were worth it, and praised StepN's economic model design, thinking that it "may not be a Ponzi scheme" and that it has a chance to work, and "worth experiencing and learning." But soon, he added a comment under this status, "Such a model has regulatory risks in China."

Web3.0 has no borders, but policies do

“Everything is being cleared out, and the price of shoes has dropped from 20 BNB to 4 BNB.” said Xiao Sun, a user who participated in StepN.

Xiao Sun is an old player who participated in "Qubu" from 2017 to 2018. He said that at that time, "Qubu didn't require much investment. You could play by downloading an app. If you didn't buy coins, you wouldn't lose money even if you didn't make money. Later, Qubu was filed and became a watch device seller, and the project was abandoned." He is an early user of StepN, who loves to participate in running encryption projects and entered the market before February this year. He also said, "Those who participated early have made their money back."

“However, around the end of April, StepN officials saw that the SOL chain was rising too fast and suppressed the price. In that week, the officials changed the rules of the game four times in a row, causing the market to lose confidence. ”

Before the end of April, only GST tokens were used to mint shoe boxes. Xiao Sun explained, "The shoe box is a blind box that produces shoes. When you open it, you get shoes." In order to increase the price of GMT tokens, the official changed the rule to require GST+GMT tokens for minting. As a result, the price of GMT tokens did not rise, and the price of GST tokens fell all the way.

Seeing that the prices of its two native tokens were falling, the official changed the rules again. "From two shoes + GST ​​to produce one shoe, it was changed to two shoes + GST ​​+ GMT to produce one shoe, then it was changed to two shoes + GMT, and now it is changed back to two shoes + GST ​​+ GMT." Xiao Sun believes that the project party's frequent changes have increased users' distrust of StepN.

After announcing the withdrawal of mainland users, StepN's market confidence plummeted. "A few days ago, I bought a pair of shoes for 50,000 yuan, but now the floor price is less than 10,000 yuan. So for those who bought shoes for 50,000 yuan, they only make a few hundred yuan a day now, and the payback period must have become longer." Xiao Sun said that when he first entered the market, he could get his money back in a few days, but if he enters the market now, even if the token maintains the current price, it will take about a month to get his money back.

According to the calculation of the StepN simulator, the shortest payback period for shoes purchased with SOL tokens is about 37 days. Xiao Sun believes that since the official clearance date is July 15, domestic users who enter the market now may still have hope of getting their money back, "but those who invested more before will lose money ."

After the July 15th withdrawal, can mainland users still participate in StepN through other means? Xiao Sun said, "At present, it is impossible to run. There is no solution. You can only run abroad, because even if you can change the IP address by using a VPN, the most important thing is that you can't change the GPS ." Therefore, many participants in his circle of friends who are overseas have started "overseas running business." Some even said that they are already negotiating with the largest Chinese supermarket, hoping to cooperate with the takeaway team.

Jerry from the StepN team noted that users from mainland China account for 5% of its platform’s overall user base, suggesting that the company’s exit from that market will not have a significant impact on its financial success.

"From the beginning, we have been complying with local regulations in China, which is part of our long-term strategy," Chief Marketing Officer Shiti Manghani said in a live broadcast on Friday. "We hope to become a sustainable long-term project."

Manghani added, “As part of the delisting, we need to implement GPS technology to prevent cheating,” she said. “China has different rules and regulations around GPS regulation, so we are not the only one. Nike just removed their Nike Run Club app. We have to comply with local regulations, and that would be our position with any country.”