Does STEPN [GMT]is the result of the tokenomics strategy? Here is the evaluation

STAGE [GMT] was recently featured in a recent Messari Twitter thread who evaluated his performance before and after Solana [SOL] network woes. The thread shows how market changes can disrupt and potentially destabilize dapps.

According to the Messari report, Solana accounted for around 20% of the fees generated by Solana users before the crash. It was during the second quarter of 2021 in which STEPN benefited from the robust growth of Solana.

Fast forward to now and STEPN is struggling to gain new users, its profitability is down significantly.

1/ @Stepnofficial once accounted for 20% of daily paying users on @solana.

After its crash, the team took care of adjusting the game to improve user experience and tokenomics.

Can STEPN be corrected? Where was the game model saved?🧵 pic.twitter.com/Lq67x10TJF

—Messari (@MessariCrypto) September 8, 2022

A faulty token model?

Many upcoming crypto projects are taking advantage of the hype around the crypto market. They often adapt their platform mechanics based on user growth and use incoming revenue to pay users as part of their tokenomics strategy. However, this approach often fails to take into account the other side of the coin.

The market is subject to wild swings where prices can drop and interest also drops. This is exactly what happened when the stock market crash happened. This was followed by other challenges, such as Solana’s network downtime. These events hurt STEPN’s user growth and profitability.

2/ During the second quarter, profits peaked at $122.5 million. Daily active users (DAU) have increased by 100.

This explosive growth was followed by an explosive decline.

The DAU fell by 80%, reducing revenue and leaving existing players without new market players to negotiate with. pic.twitter.com/hYOvsmmEM9

—Messari (@MessariCrypto) September 8, 2022

The tokenomics model triggered an overinflation of STEPN’s native GMT token. This result made the ecosystem less attractive. Thus, this affected STEPN’s ability to attract new users, while discouraging most existing users.

Planning a return

STEPN is another project based on an interesting and attractive model. Sadly, this is among many others who have been let down by a poor tokenomics model. STEPN may need to pursue a different symbolic and financial model in pursuit of its future success.

STEPN developers have recognized the need to do things differently and have therefore outlined plans for the future of the platform. The platform aims to generate value for its users by pursuing new revenue streams. A recent STEPN blog post noted that the platform,

“Introduced new revenue streams to create value for our community members – launching our own decentralized exchange, DOOAR, to funnel additional money into the STEPN ecosystem.”

One of the key lessons from STEPN’s journey is the value of having the right tokenomics. An important aspect that dapp developers should consider. Bad tokenomics can hinder success, no matter how good their idea.