Unpopular Opinion: Move2Earn is a Ponzi Scheme
If you're a huge fan of the whole move to earn thing... I'm sorry.
Move 2 Earn is a Ponzi Scheme
Ok, I know I've probably already upset some of you just by the title, and maybe even the lovely graphic I crafted above. I've been thinking about making this post for quite some time, but it never really felt like the right time. I think now it's more appropriate now that the move 2 earn craze has died down. I know I recently wrote about SweatCoin, but I consider SweatCoin totally different than these new apps claiming to reward you for your movement.
SweatCoin has been doing this for years, without any mention of crypto tokens until recently. They've built an economy around their in-app token that is earned by walking, running, hiking, etc... Now they're integrating a token into the mix, which makes more sense than how these apps like STEPN, JustMove, and MetaGym decided to do it.
I am of the opinion that a lot of these things function like ponzi schemes. Look, I'm not here to tell you not to use them or anything like that. I'm simply making some observations about the way they operate, and giving my opinion. I'll use STEPN just because it's the one I've heard the most about lately when people are talking move to earn.
My first thoughts were... Ok, cool but how does it work? Where does the money you earn come from? How much does it cost to get started? So the first major barrier to entry with STEPN is the required NFT sneaker you have to have to start earning. Looking at the website, there's 4 types of sneaker NFTs and I assume each one works better in terms of earning for different types of activities.
I assume that you can earn doing whatever activity with all of them, but what I'm looking at is the potential for earning. So I decided to check the prices of the Runner sneakers because I think that would be the best move for earning. The runner is going to require you to be running a certain speed or the steps won't count it seems.
As you can see in the image above, the floor price of a runner sneaker is about 8.69 SOL which is roughly $400. Cool, so you spend $400 to get this one sneaker NFT then equip it in the app... and start getting active. But how much do you actually earn and how long will it take to recoup your initial $400 investment while running every day?
I have no idea how the earnings are actually calculated, nor do I care to learn. I found a STEPN strategy that gives a general idea of what the earnings might look like based on a couple different things. I'll use that to get a good estimate. As you can see, the prices of both SOL and GST (STEPN's token) have gone down significantly, but it's all relative.
Based on the numbers in the article linked above, you can earn about $11 per day depending on your sneaker's stats. With our initial investment of $400, it will take about 36 days to recoup that investment. That's not considering the fact that you have to spend some of your earnings repairing and leveling up your NFTs... Let's call it 50 days to account for that. That's only if the price of GST doesn't keep going down.
Just looking at the STEPN litepaper, you can see that the GST token has an unlimited supply. RED FLAG. How can a token that's printed every single day forever maintain any kind of value? This could explain why the token has started to drop hard from it's nearly $8 all time high. Hard to believe a token that can be printed into oblivion like LUNC (LUNA Classic) could be worth that.
The crypto market is absolutely insane. So with an unlimited supply and a super high inflation rate, GST is supposed to continue holding value... but how? The only answer is more investors. Ponzi. These tokenomics literally require there to be constant money flowing in for the GST to sustain any kind of value. Call me crazy, but the only infinite-supply currency that holds its value is fiat dollars. Meaning, one USD is always worth 1 USD because the fed says so.
So what happens when people stop investing in GST or the NFTs? What happens to the value of the token when it's still printing and people aren't pumping money in? Say the token goes to 1 cent... Would you still be earning? Would you just eat the loss and try to sell your sneaker NFT? What happens when no one is willing to pay for the sneaker NFTs because GST is worthless?
This is why I say that the move 2 earn concept is kinda a ponzi scheme. What do you think?
Thanks for reading! Much love.
Wanna learn about all kinds of things you can do with the crypto you earn blogging on Hive? Check out my index - Learn Crypto Stuff for some fun educational crypto stuff.
Posted Using LeoFinance Beta