Combining financial incentives and gamification techniques is a potent combination, giving rise to the umbrella term, GameFi. We have already seen the boom of the Play-to-Earn (P2E) economy borne out of actual games. However, the same approach could apply to traditionally unentertaining activities such as exercising. Dubbed Move-to-Earn (M2E), a wave of projects, like Genopets, STEPN, and WIRTUAL are capitalizing on motion-sensor technology to build a new GameFi niche that rewards users for staying physically active.
What is Move-to-Earn (M2E)?
M2E may be a new term, but it is not a new concept. Exercise has been gamified for years. Nintendo popularized movement-based mobile app games through Pokémon GO. They have recently launched a suite of fitness games with their Nintendo Switch console that even have dedicated fitness controllers (e.g., Exercise Ring). If we go further back, we also had the Wii console, pushing forward games like Wii Sports. One could even consider sports a form of M2E since professional players make money from it through sponsorship, winning tournaments, etc. Playing sports professionally, though, is probably beyond most of us. But M2E now allows you to earn financial rewards for being active.
The innate characteristic of becoming more healthy is not just attractive to users who may need a ‘gamification push’ but also other businesses that benefit from a more physically active society. An example of this is AIA Vitality, a health program created by the insurance company AIA. Under this program, members may accumulate points from various activities, including collecting steps. Points can be used to redeem rewards like food or shopping vouchers. Notably, reaching certain tiers can even be used to reduce insurance premiums.
From AIA’s standpoint, the upside is tremendous. Aside from the advancement of the Corporate Social Responsibility image, there is a financial benefit too. Healthier users lead to fewer insurance claims.
However, even if we ignore the synergistic opportunities for M2E games and other businesses, there is already a massive demand for movement-based games. In 2020, Pokémon GO earned $3B in revenue. As of 16 March 2022, Pokémon GO has averaged 8.6M DAU over the last 30 days.
However, such numbers are not that surprising as the Pokémon franchise is a behemoth, with millions of users tapping across its different intellectual properties. Nonetheless, this does not detract from its incredible user retention rate and popularity.
A more concrete example is perhaps Zombies, Run!, a story-driven, movement-based, mobile-app game. In this game, players unlock audio content such as music and story narratives as they walk, run, etc.
What is remarkable is that ⅙ of the 300,000 MAU have a paid subscription (roughly $40 per annum). People are willing to pay to use an app that incentivizes them to work out, even if Nintendo isn’t here with their Pikachus.
All-in-all, essential elements of the M2E model have already proven to be successful and shown strong product fit. The real question is, how can crypto projects tie them all together with tokens to create a sustainable and cohesive ecosystem? We will be looking at three projects: Genopets, STEPN, and WIRTUAL.
Genopets
Tamagotchi has inspired many games, including Aavegotchi ($GHST) and, more recently, Genopets. Throw in some Pokémon GO mechanics and trainer battles with collectable creatures, and you have Genopets.
Genopets are generative NFTs that can evolve, be upgraded, and customized as they level up in-game. $KI is the base in-game currency players earn and use to improve their Genopets, while $GENE acts as the governance token. Anyone can mint a free Genopet infant, but its value is derived from the amount of XP earned by accumulating steps.
The in-game intricacies are as follows:
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XP: XP, or experience points, are a state in a Genopet’s metadata that increases by taking steps. Once you get enough XP, you can upgrade your Genopet to have better stats.
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Refined Crystals: NFTs that require $GENE and $KI to be crafted. Refined Crystals come in many forms and help shape a pet’s evolution. For instance, using a Fire Gene Crystal during evolution will change your Genopet’s Elemental Genotype to Fire will change its appearance and receive Fire-attack moves.
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Habitats (land): NFTs where you can hold and farm necessary materials for crafting. In addition, Habitats boost your XP, unlock your ability to craft Refined Crystals directly, and earn you daily $KI.
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Augments: NFT accessories that can be used to enhance and modify a Genopet’s appearance and stats.
To earn $KI, players must hold a Habitat which generates $KI based on the number of steps taken. However, for non-Habitat owners, the only way to earn is by trading/selling their Genopets which have accumulated enough XP. The economic flywheel effect is encapsulated below:
The game is still in its private beta stage at the time of writing. The $GENE token has been launched, which was used to purchase Genesis Genopets. These pets are limited edition and have maxed-out evolutions as they signify the first wave of Genopets in existence. The following key milestone for the project is their Habitat launch. Currently, a Treasure Hunt is going on where participants will be able to mint a Habitat if they fulfill all the requirements. The cost to acquire a Level 1 Habitat through this route is 15 $SOL.
STEPN
STEPN is a health/lifestyle app that incorporates GameFi elements. The core gameplay is centered around Sneaker NFTs. Holding a Sneaker while traveling on foot will allow users to earn the in-game currency, $GST. Sneakers have four primary components: Attributes, Types, Levels, and Quality. Together with the Energy system (reward capping), these components affect the amount of $GST you can earn.
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Type: there are four Sneaker types (Walking, Jogging, Running, and Trainer), each designed to suit a different exercise intensity or fitness level
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Attributes: there are four attributes (Efficiency, Luck, Comfort, and Resilience) that influence in-game mechanics, depending on whether it is on Solo or Marathon Mode:
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Efficiency: in Solo Mode, Efficiency plays a part in GST earnings. Having higher Efficiency will result in better $GST earnings per Energy spent. In Marathon Mode, higher Efficiency leads to a faster accumulation of Leaderboard points. Efficiency deteriorates as Durability drops. Durability is the measurement of a Sneaker’s usage and naturally decreases as you use it more.
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Luck: currently still under development
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Comfort: currently still under development
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Resilience: In Solo Mode, Resilience affects the decay rate of Durability. Higher Resilience will result in a slower Durability decay. In Marathon Mode, resilience will allow users to earn more points as their Sneaker will stay above the “worn-out” penalty mark longer.
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Quality: there are five tiers (Common, Uncommon, Rare, Epic, and Legendary) that determine the base stat distribution range for each attribute (similar to IV stats from Pokémon). It also determines how much Energy you get per day.
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Level: leveling up allows you to allocate attribute points (higher allocation given to higher Quality Sneakers). Reaching certain levels unlock certain features, rewards, and achievements. For example, reaching the maximum level of 30 grants the option to earn the governance token, $GMT instead of $GST.
Beyond these in-game mechanics, however, other parameters affect $GST/$GMT earnings:
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GPS Signal: poor GPS signal will lead to reduced earnings
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Mobile Data Signal: if the data signal is choppy, it could also lead to reduced earnings.
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Randomization: reward rates have a randomized element.
The flywheel effect of the entire economy is encapsulated below:
The game is in its public beta stage at the time of writing. Both $GMT and $GST are live, and users can reap in-game rewards by exercising while owning a Sneaker. More features are planned for the future, including gems that can boost Attributes and customization features (e.g., name changing and adding a quote). It is also worth mentioning that STEPN has pledged a portion of its profits to buy Carbon Removal Credits on the blockchain to combat climate change in the future.
WIRTUAL
WIRTUAL initially started as a website in 2019 to test their prototype product in Thailand. After building a portfolio of traditional clients like Mitsubishi and the NBA, they have fully pivoted into an app that offers the same functionality, built on the blockchain. Like STEPN, WIRTUAL also markets itself as a health/lifestyle app. However, the core product is quite different and is centered around a pay-as-you-go model, allowing users to compete with one another on distance traveled, pace, etc.
Users may pick between different categories to compete with others to earn $WIR, such as who runs the most. Some categories are free, while others require payment through traditional payment methods like credit/debit cards or their native currency, $WIR (option to be made available in the future). $WIR tokens are the economy’s lifeblood as WIRTUAL only uses a single-token model. Its use-cases are as follows:
To earn $WIR, you must participate in challenges, whether in a running, cycling or even swimming category. There is a daily default earning cap at 0.1 $WIR for users who do not hold any $WIR. Having more $WIR will allow you to unlock new levels, which will enable you to earn more $WIR.
It is worth noting that requirements for unlocking higher levels (up to level-7) exponentially increase, partly because the team also caters to companies and large organizations that might want to participate. For example, holding 1500 $WIR puts you at level-4 (Business), which allows the holder to create entire events for themselves.
The amount of $WIR that you earn mainly depends on your holder level and the leaderboard rankings at the point in time. Since WIRTUAL awards 55,555.55 coins every day, the coins will be distributed among participants who submitted their results, according to their holder level. The daily coin threshold will be distributed among all app users by averaging the number of users with the number of results submitted within each activity type. The top-5 will get extra rewards. However, if the daily cap of 55,555.55 coins is reached, only the top users above the minimum threshold will earn $WIR. Therefore, it is possible to not earn any $WIR, despite submitting a valid result because other users performed better than you.
Beyond the base distribution rates for $WIR, however, equipping NFT wearables can also boost $WIR earning rates while providing other benefits such as increasing the number of submissions you can make per day. NFT wearables have 5-tiers: Common, Uncommon, Rare, Epic, Legendary, and Mythic.
The app is in its public beta stage at the time of writing. Notably, the team has collaborated with multiple sports brands such as Garmin and Under Armour Thailand for giveaways and partnership events. A public token auction launch is ongoing from 15-18 March 2022. In the future, the team plans to incorporate social media elements and allow users to own and sell their personal data to them as a form of data mining.
Overview & Key Differences
Whenever you add tokens into the equation, the parameters for success become complicated. Traditionally, the number of active users, either measured in daily active users (DAU) or monthly active users (MAU), is the gold standard for an app’s success. However, in tokenized ecosystems, the assumption is that most users are primarily utilizing the app for financial rewards. We have seen many P2E games rise and fall quickly once inflation of their in-game currency becomes unsustainable.
This tells us that user adoption rate, the purpose of playing, and tokenomics are all critical factors. However, since user data is not publicly available, we can only look at tokenomics. We will focus on market data and utility because it is challenging to assess other factors like distribution rewards, especially since the projects are new and are likely to adjust regularly.
The table above shows that both Genopets and STEPN have adopted the dual-token model while WIRTUAL has adopted a single-token model. Dual-token models are the most popular tokenomics structure, likely because Axie Infinity was the forefather of P2E and pioneered the dual-token model. While not strictly comparable, I included Axie’s $AXS and $SLP tokens in the comparison table to provide some context since their performance may offer some insights on where these projects are headed.
It is probably too early to compare market cap values now as the three M2E games are still very early in development compared to Axie, whose gameplay has been live for more than a year. However, out of the three M2E projects, STEPN is the closest to a fully-launched game. Earning rewards is live, and there is actual utility in-game for its tokens, generating demand and giving it the highest market cap of the three. Genopets and WIRTUAL have both yet to launch full token utility.
However, one interesting development to watch for is the price of the utility token itself. There were growing concerns regarding Axie’s tokenomics design (too much $SLP emissions, too little utility), which led to an overinflation of its in-game currency, $SLP, leading to a massive drop in price:
The developers have tweaked the reward rates numerous times but have yet to introduce meaningful $SLP sinks on top of breeding new Axies. There are plans to introduce other sinks in the future, such as releasing Axies and cosmetics, but this has already proven to be a valuable learning point for other projects.
Although M2E is a different niche, we see a trend of introducing more utility, inflation limits, and burn mechanisms as early as possible. STEPN, for example, has a Durability system from the get-go, which requires $GST to fix and improve your Efficiency for higher $GST earning rewards. Genopets will only allow Habitat owners to earn $KI directly, limiting inflation. WIRTUAL will also offer multiple use cases to hold and use $WIR.
Whether or not these economic features prove sustainable will take time and experimentation. Furthermore, you have also to consider the other factors below:
Feature-wise, WIRTUAL has the edge as they fully integrate with some of the most popular fitness apps; it is easy to capture and submit more data types. Consequently, they can also add more types of physical activities like swimming and cycling. Genopets and STEPN are more limited as they are only walking-based apps. Moreover, since Genopets only relies on step counters, it might be easier to ‘game’ the system and farm $KI as they are notoriously easy to manipulate, especially when GPS is not considered.
WIRTUAL is also the only project to collaborate with external parties, not just any party, but fitness giants like Garmin and Under Armour. This is a considerable advantage because sports/fitness partnerships will improve market visibility, lend legitimacy and potentially improve overall user adoption.
Although Wirtual has free Challenges, it does not have a scholarship model, which is where Genopets and STEPN are currently ahead. Having scholarship models will undoubtedly attract users as it lowers the barriers to entry. STEPN, in particular, can be pricey for newcomers as there is no Free-to-Play (F2P) version for would-be NFT holders. Genopets is the most cost-friendly, as it has both a scholarship model and anyone can mint a baby Genopet for free.
More features are continuously added, and it would be premature to assume who comes out on top. Other qualitative factors like entertainment value, marketing strategies, and gameplay are also essential and must be considered.
Conclusion
While we did highlight the key differences between specific M2E projects, we think the biggest takeaway is the viability and growing popularity of the M2E model itself.
Video games are traditionally seen as unhealthy and time-wasting activities. Incorporating an exercise element can turn that controversial image into a beneficial product for society. On the flip side, promoting exercise can also be used to build a game that attracts health-conscious people and other health-related businesses and products. We foresee more user adoption in the space, including a time when users will stack phones, accounts, etc., across different games.
M2E projects will eventually need to consider whether such scenarios are fair game or how they will address it if it is deemed manipulative, as there are direct financial rewards involved (instead of, say, greater chances of capturing a Pokémon).
Innovation is also imminent. OliveX, a listed Australian company (and the company that acquired Zombies, Run! in 2021), is already building a ‘Fitness Metaverse'. Part of this metaverse includes a set of planned fitness games that are powered by their future $DOSE token. One of those games is Dustland Rider, an MMORPG-based cycling game that integrates with a physical bike and Bluetooth sensors. Augmented / virtual reality technologies are also a prime candidate for M2E games.
Undoubtedly, there will be more M2E projects coming into the space. Offering health benefits are uncontroversial and can appeal to a broad audience. We might even see healthcare institutions jumping in the foray, and who knows, M2E might even improve national health rates.
Even if you do not believe in the M2E model, you cannot deny that more exercise is good for everyone. For now, just download the apps, start exercising, and earn!
Benjamin is an ex-consultant who is tapping into his legal roots to explore the world of crypto. Follow the author on Twitter @NeBB399
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