Why is STEPN Crypto down 9% today?

What happened

Popular game to earn money STEP (GMT -1.42%) has seen incredible volatility lately. Over the past week, GMT tokens have been trading in a very large band between $0.77 and $1.13, settling towards the $0.85 level at the time of writing.

Unfortunately for investors, the recent trend for this project has been negative. During the last 24 hours from 4:00 PM ET on Tuesday, STEPN has fallen 9.6%.

This decline follows a decision made last week by the development team behind STEPN to introduce a new feature for its game, which is played on an app while users move around in real space. The introduction of health points effectively limits the use of sneakers, which are non-fungible tokens (NFTs) used to earn rewards when users exercise, making it more expensive to play this game to earn money.

So what

The whole idea behind STEPN is exciting. For investors who purchase a sneaker NFT (required to play the game with the app), gems can be received as redeemable rewards for moving specific distances. Thus, you can earn money for just working out. That’s a positive incentive if I ever heard one.

However, there are questions about how sustainable STEPN’s model is, given the inflation-promoting nature of rewards, which in reality are minted on a continuous basis. And many have worried about the long-term viability of this project. Aside from selling sneaker NFTs, there isn’t really a source of income from which to pay out these rewards.

Consequently, the STEPN team has decided to force users to upgrade their NFTs periodically (by trading in a “worn” sneaker and buying a new one) or risk them becoming ineffective. The aim is to ensure the sustainability of this project in the long term.

What now

For users who have invested in STEPN NFTs and are now finding their sneakers worn out, this news is reasonably unpopular. The return on investment that was once positive for an NFT may not be as enticing now. Consequently, the final impact on this network’s cryptocurrency is yet to be determined.

Some investors in GMT tokens may see this news as positive, at least in the long term. Rewards need to be sustainable and it’s good to see the STEPN team thinking about this issue. Additionally, despite this latest news, there are indications that NFT sales are still strong in the community. Until there is a dramatic downturn, there may be little to worry about.

Today’s decline appears to be more macro-focused overall. That said, the NFT sales of STEPN sneakers will be a key factor that investors interested in this project will want to monitor going forward (physically and financially).