The cryptocurrency market is a rapidly changing environment that sees the advent of both promising projects with real-life applications and services that capitalise on the wave of instant and short-lived hype. Among such projects that attract immense interest for speculative purposes or based on forced popularity are many NFT applications.
Despite having some speculative underpinnings, many projects of this kind have real-life use cases that bridge the gap between the digital and physical worlds. We can find examples in NFT-tethered ownership rights to real-life assets like clothing, tickets, and even real estate.
When it comes to selecting projects of interest, their potential often becomes evident at the start of the user journey with the registration process. Users can instantly detect the presence of DeFi elements in such projects. Any reputable DeFi services that require centralized registration immediately raise questions at the registration stage. Centralization results in a specific point of failure in the form of a validating service that sends users a confirmation SMS or validates their email. There is no such thing in DeFi.
Despite this element of centralization, limiting and controlling the audience is the proper condition from the point of view of business and the tokenomic model in general, since the business can thus control the invites of new users entering the system. From the technical side, the issue of reward tokens is not limited, and the mint function can confirm this in the smart contract, which has no restrictions. Issuance is also centralized and managed by a specific wallet, which is not even a multi-sig wallet, as is the case in the BSC network, where one of the addresses that manages issuance is https://bscscan.com/address/0x6238872a0bd9f0e19073695532a7ed77ce93c69e
Unbiased Assessment
With a well-thought-out tokenomic model, a project can exist and develop for a long time. Obviously, funds cannot stream into a closed system, and most people who earn game tokens create a sell-wall by selling their tokens. Therefore, implementing preventive sales containment mechanics is the right way to go.
Centralization is bad since a system without new users will not generate proper revenues. More precisely, there will be revenue, but in tokens, which may not cost anything on the open market, or may not bear any intrinsic value. Without proper management of the tokenomic model, growth is impossible within the scope of a project. An example of a competent tokenomic model can be found in the Binance network, with its BNB circulating within the exchange ecosystem as a means of paying commissions.
We’ve asked Evgeny Khashin, co-founder and CTO of Embily, about the Stepn business model.
– Is it true that in the Stepn app, users buy NFT sneakers for one currency and receive money for running in them in another cryptocurrency? And does the GST token that users get for running have an unlimited supply?
– Yes, absolutely true.
– Is it true that part of the supply of GMT tokens (about 15%) is currently owned by private investors, according to the information on the website https://www.stepn.com/litePaper, and at some point they will be able to “exit” the project? That is, at the time of exit, the value of the token can collapse?
– Yes, that is true. After the end of the vesting period, as in any other currency or in the context of any stock and security, any emotion-triggered sale by a large holder can collapse the exchange rate. It all depends on the intention of the holders – whether they will decide to sell off their assets gradually or not. Or undermine the exchange rates by an instant selloff. The same can be said about any market manipulation, as a player with sufficient capital can bring down any currency, and it is not necessary to have it allocated in the vesting period. A clear example of this is LUNA.
– Are there signs of a scam or a pyramid scheme for this project?
– There are no signs of a scam, but there are signs of a pyramid. Any freely traded speculative asset is a kind of pyramid since any investor who enters a long position closes it later on since someone new enters the asset, and so on. I would suggest investors to focus on the closed mechanics of admitting new users through invites controlled by the company.
– This game is a very centralized business where the creators can completely control the cost of the tokens?
– Indirectly by their actions – yes, the same way as Elon Musk can influence the value of Tesla’s shares with one of his tweets. In a broader sense, the company rather controls the price of the tokens through the integrity of its work. The system is not entirely decentralized.
– What are the options for the project in terms of a period of a year?
– It depends on the implementation of the entire metaverse of the ecosystem. It is safe to say that we will be witnessing a boom of projects, and the market liquidity will be evenly spread out among them.
– As far as I can see, sneaker tokens have lost a lot of value over the last month: https://www.binance.com/en/price/gst. Why is that? If the founders of such projects regularly talk about abnormal demand for the game and claim up to 2-3 million users?
– This is the way the market goes. I guess the project is going through a tipping point. When the media start expressing interest in such projects and the audience gets involved, allowing such projects overstep the gap between followers to the mass market. When they reach a turning point, the market either accepts it or does not, or vice versa.
About Embily
Embily is a global fintech company that provides crypto bank card service to its clients with a hassle-free and straightforward onboarding process. Embily is the crypto bank card of choice for bridging the gap between the traditional financial and crypto industries with zero commissions, VISA and MasterCard support, and compliance with international security standards. A virtual crypto card is available right after the KYC verification. A plastic card will be delivered for free. The launch in Asia is scheduled for summer 2022.