The Challenges Of The Move-To-Earn Economy And How One Company Is Solving Them
The crypto-powered “move-to-earn” economy has enjoyed a rapid ascent that has seen it emerge as one of the hottest niche segments in Web3, incentivizing people to live more active lifestyles with financial rewards.
But how does move-to-earn work and how is it possible to pay people for keeping fit? Is it really going to become the future of fitness, or will it just prove to be the latest crypto fad?
Those are tough questions and there are no easy answers. That said, there’s reason to believe that move-to-earn might still be around in a few years to come, but only if it’s done right.
Move-to-earn is based on a simple premise: You download an app that works like a fitness tracker, and then you earn rewards paid out in cryptocurrency for being active, whether that’s by running, walking, dancing or something else. These apps, of which there are now many, use technologies such as blockchain, crypto and NFTs, and combine them with the smartphone’s GPS and other sensors to keep track of user’s activity and progress.
From Play-to-Earn to Move-to-Earn
If the concept of move-to-earn sounds familiar, that’s because it builds atop of another recent phenomenon – the play-to-earn video games industry that came to the fore in 2020 at the height of the COVID-19 pandemic. The biggest and most famous play-to-earn game is Axie Infinity, a digital card battle game that’s similar to Pokemon. Users have to acquire NFT-based cards that represent monsters, train them up, and then fight other players and earn rewards for doing so.
Axie Infinity was a smash hit, with some players reporting that they earned hundreds of dollars a week simply from playing the game. The value of the AXS token soared, hitting an all-time high of $160 in November 2021, at the peak of the game’s popularity.
For many gamers the promise of being able to make money from video games sounded too good to be true, and indeed that was how things played out. The play-to-earn landscape underwent a dramatic shift, with Axie Infinity hit with accusations that it was really just a Ponzi scheme that could only grow by adding more players. Its failure to respond to those critics, combined with the onset of crypto winter, meant that the value of its AXS token collapsed, and today it’s worth under $10.
The Rise Of Sweatcoin
Move-to-earn apps have come in for similar criticism and the fate of many has mirrored that of Axie Infinity. So is it possible to create a move-to-earn token that won’t lose its value as its user base grows? While it has yet to stand the test of time, Sweat Economy looks to have developed an especially intriguing model.
Fitness fanatics may have already heard of Sweatcoin, because the app actually made its debut as far back as 2014. Back then it was a Web2 application, a fairly simple fitness tracking tool that was considered fun and easy to use. It grew rapidly and today it counts more than 100 million users, giving it a ready-made mass user base as it transitions to Web3.
Because it is a legacy application, Sweatcoin has the advantage of already having developed a sustainable business model that brings in a steady stream of revenue.
In 2022, Sweatcoin made some big changes, deploying on the Near Protocol blockchain and introducing its in-app cryptocurrency, SWEAT. From the user’s perspective, the app works much like other move-to-earn apps, paying users SWEAT tokens based on how many daily steps they take. However, where it really differentiates itself from its move-to-earn rivals is with its “tokenomics”, or economic model.
Creating Value With Utility
What Sweatcoin has done is integrated its token economy within its existing, successful business model. So users can earn tokens from walking and then use them in a variety of ways, for example by trading them on crypto exchanges, opting in for prize draws and “staking” them in the in-app wallet to earn greater rewards.
Sweatcoin has created two mechanisms that help to balance the supply of SWEAT, namely coin burning and staking. Because new SWEAT coins are constantly being minted by users as they walk, Sweatcoin needs to remove tokens from circulation to ensure a fairly stable supply. It does this by burning tokens when they’re spent – basically the tokens are just destroyed, so nobody can use them anymore.
Meanwhile staking is where users agree to lock their SWEAT tokens in a smart contract for a specific amount of time. By doing this, they can receive interest on their deposit. It has the effect of temporarily removing those coins from circulation, increasing SWEAT’s value. The more SWEAT a user stakes, the higher the interest they can receive.
Sweatcoin has also created the Sweat Foundation, which acts as a kind of treasury for the Sweat Economy. Its primary function is to use its reserves of SWEAT to pay out staking interest.
Future Plans
Looking ahead, Sweat Economy’s litepaper details a long term plan to create additional revenue streams through NFTs and partnerships. One of its immediate aims is to launch a series of NFTs that users can buy to increase their daily rewards and staking interest. These NFTs will only last for a short while, however, until they begin to “decay”, meaning the increased rewards they provide will decline. Users will be able to pay in SWEAT to upgrade their NFTs and prevent this, ensuring they continue to earn greater rewards.
Yet more revenue will be generated via partnerships with leading fitness brands such as FitBit, Apple Watch and Peloton. Sweat Economy aims to partner with these services, giving users the option to pay for their subscriptions with SWEAT. Finally, Sweat Economy plans to allow users to sell their fitness data to third-party advertisers and receive SWEAT tokens for doing so.
Each of these ideas is designed with one thing in mind – to provide utility for SWEAT tokens and ensure that it’s widely circulated. By creating such a lively economy, demand for SWEAT will increase and there will be a constant flow, with new tokens being issued daily and older ones constantly being taken out of circulation. If everything comes together, these mechanics will help to stabilize the price of SWEAT and ensure it always has value.
