Part 2: Non-financial utility and in-game spending on net-negative sinks
Try playing the game, it’s very addicting and encouraging people to get outside and move, (people who normally wouldn’t) Strava and Nike+ are not enticing anyone outside of the running/ exercise community to join them. Although I don’t think you will be earning $1000/day a year from now $50/day will still motivate people to move.
There are a few sinks on the way, at least according to their roadmap. For example marathons where users have to pay GST to participate. If they can continue to build the community then there is a chance people will stay for the intrinsic social value and not just the APY. I think there is a lot of potential but the question is whether they can ship negative sinks fast enough. They are in a race against the clock. It is going to be interesting to see who wins.
Good read ser.
“Is there pure demand for the game?”
Comparing it to Nike + Strava and the barrier to entry is clear. However, people are already walking and running without being monetarily incentivized to on a daily basis. The users are therefore a lot stickier than other P2E games such as Axie.
On the demand side, despite the high sneaker price, growth has exploded with 1 million sign ups (200k DAU) within 3 months. Surely it is easy to envision that this carries on for the near term (3 months) as more users pile on.
An interesting observation about this is that a lot of normies who weren’t into crypto are being enticed by these 1k% yields just for doing what they’re already doing. If yields dropped all the way to 200% or even 20%, would it stop people from using the app to get paid for their daily activities? I don’t think so…
Having said that, your points on long term sustainability from the supply side is spot on. Without a proper sink, inflation can spiral into hyperinflation. However, as growth continues to chug along, the team is afforded some time to roll out new features to address this within the next couple of months. And whether this turns out to be another failed P2E will depend on that.
My understanding may be incomplete so happy to be corrected where I’m wrong!
makes perfect sense.