Solana-based 'move-to-earn' startup STEPN raises $5 million in SAFT sale

Quick Take

  • STEPN, a move-to-earn NFT gaming startup, has raised $5 million in seed funding.
  • The startup rewards users for exercising, but it’s not quite free money.

STEPN, a Solana-based "move-to-earn" startup that rewards users for exercising, has raised $5 million in a seed funding round.

Sequoia Capital India and Folius Ventures co-led the round, with Solana Ventures, Alameda Research, 6th Man Ventures, Sfermion, and others participating.

Angel investors, including Santiago Santos, a former ParaFi Capital partner, and Zhen Cao, Asia partner of investing platform Republic, also backed the round.

This was STEPN's first fundraise and realized via a simple agreement for future tokens (SAFT) sale, the startup's founder Yawn Rong told The Block. The funding will help expand STEPN's current team of over 30 and further refine its product, said Rong.

What is STEPN?

STEPN is an Australia-based startup that offers a blockchain-based fitness app. It works by letting users buy NFTs that last for a certain amount of time. During this time, the user can exercise in a certain way and earn the platform's native GST tokens as a reward.

To get started with the move-to-earn app, users have to deposit Solana's native SOL token in STEPN's in-app wallet, buy a sneaker NFT from its in-app marketplace, and wait for 24 hours for "energy" replenishment. Energy is how many minutes a user gets for exercising with a sneaker NFT, said Rong.

There are three types of sneaker NFTs available within STEPN: walker, runner, and jogger. One walker sneaker, for instance, gets an average of 10 minutes of energy. Once a sneaker and energy is gained, users can either walk, run or jog depending on what sneaker they bought and earn GST tokens. The current price of one GST token is $1.70, according to CoinGecko.

Earned GST tokens can be swapped to SOL or the USDC stablecoin via STEPN's in-app swap function and can be withdrawn to an external account.

"Currently, a fresh player can earn $20 to $30 a day through walking/running 10 minutes, and a savvy player can earn $300 to $450 a day through walking/running 60 minutes," STEPN's other co-founder Jerry Huang told The Block.

But to be sure, that isn't completely free money, as users have to first spend money on sneaker NFTs — similar to how most play-to-earn games, such as Axie Infinity, work.

The current floor price of STEPN's NFT sneakers is around 4.5 SOL (around $615 at current prices), according to NFT marketplace Magic Eden. Magic Eden also sells STEPN's NFT sneakers, besides its in-app marketplace.

STEPN also has an option to rent NFT sneakers — similar to how play-to-earn gaming guilds offer gaming NFTs on rent. However, with rented sneaker NFTs, GST token earnings get reduced. Huang said owners get to keep 70% of profits, and renters get the rest 30%.

STEPN also has an option of minting new sneaker NFTs and repairing existing sneakers to regain energy. Huang said the current cost of minting a new NFT is around 200 GST (about $350 at current prices), and the cost of repairing a sneaker is roughly 20% of GST earnings.

Gaining traction 

Within a month of its launch, STEPN has gathered users from over 90 countries, said Huang, adding that China, the US, and India are its biggest markets. The app currently has 1,500 daily active users.

As for its business model, STEPN earns fees for various in-app user activities. Rong said the app gets 4% fees on marketplace sneaker trading, 6% on sneaker minting, and 8% on sneaker rentals. "The profit goes to a treasury pool, and the GMT staker can decide how to distribute the profit," he said.

STEPN has a dual token system. GST is used for rewards and various in-game activities, and GMT is its governance token. GMT is expected to be launched next month or early March, said Rong, adding that STEPN will also hold an initial exchange offering or initial DEX offering to raise funds in a public token sale.

User interest around STEPN may be high because of its current early adopter "double earning" program. The program now offers 16 GST tokens in rewards for one sneaker. But the program ends on January 22, and after that, rewards will get cut to 8 GST tokens for one sneaker, said Huang.

The move-to-earn concept seems to be catching up in crypto. In October, another Solana-based move-to-earn NFT gaming app Genopets raised $8.5 million in seed funding. But the app isn't live yet.

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