Making money by walking seemed too easy. I fell for it anyway

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Mrcoin

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A story from Kevin Dungan who joined in “ move-to-earn” which is the fastest-emerging trend in the “wellness metaverse” and in crypto.

Why does somebody pay for my walk?

Very few things have made people poorer faster this year than cryptocurrencies. This field has its own particular way of making and losing lots of money. There was the DeFi summer of 2020, one year later was NFT, and the trend of “play to earn” crypto games, especially the not-very-fun Axie Infinity, which centered around breeding and raising NFT pets had become the hottest trends ever.

So when a new crypto trend called “move to earn” bubbled up this spring, there was all kinds of enthusiasm for it. (At the time, crypto markets were down but it wasn’t yet clear to everyone that it was the early phase of a crash — which is to say, a lot of people were still greedy).

The first mover in the trend appeared to be an app called Stepn, which paid you to walk. As a dumb as it sounds, there was legitimate enthusiasm — some analysts said that, there was long-term value to it and it was “helping people to motivate themselves to exercise.” I didn’t exactly buy that there would be anything valuable about a blockchain-based system for paying people to walk and run, but it had backing from the venture-funding arm of Binance, the world’s largest crypto exchange, and Sequoia Capital, one of the biggest and most-respected VC firms on Sand Hill Road. Plus, when has a dubious core concept ever been a barrier to crypto success?

Because the move-to-earn bubble was just starting to inflate at such an inopportune moment in larger markets, this phenomenon never reached the insane heights of a Bored Ape NFT or a shiba inu coin and probably never will. But it was a window into the state of the crypto industry at the tail end of its glory days.

The appetise about the project still existed despite of there is no answer to some key questions:
  • Why does a Chinese company care about how much I walk per day?​
  • Why would they pay me for it?​
  • And why is there somebody who sponsors for the whole project?​
The most recent crypto bubble has been fueled by nothing if not increasingly absurd promises to make easy money, a way to circumvent an economy that otherwise works you to the bone and makes everything unaffordable anyway. Being paid to walk was too easy — and that was exactly the appeal.

I saw Stepn as my way to experience a part of the world of crypto like most people do: with no research, on the blind impulse of someone who’s looking for an easy way to make money. Instead of directly learning about the project, I chose to read instructions on how to play through a website.

In particular, before you start to earn money, Stepn requires you to buy a special sneaker-themed NFT. This NFT becomes your ticket to earn cryptocurrency from Stepn, which is called Green Satoshi Token (GST).

You could purchase different kinds of sneaker-themed NFT, depending on how fast you are going to go. Walkers sneakers are made for those who expected themselves to walk about 6km per hour, a pretty normal walking speed. This is the kind of sneaker that I had chosen.

The sneaker NFTs come with different “attribute” such as efficiency, luck, comfort, resilience — all of which determine how much money you can make. The cheapest one I found from the marketplace was about 5 SOL (a bit more than $200 USB at the time I bought). It was more than any actual shoes that I have ever bought in my life. The most expensive ones cost hundreds of thousands of dollars.

Finally, I purchased a red, yellow, and green high-top that had an efficiency rating of 25, which was the best I could find in that price range.

So on June 9, a clear and humid day, I decided to walk from home to the office. Almost immediately, I noticed the app’s tracker was off. Just about every single time I checked the app, it clocked me going faster than my 6km per hour— though it was pretty clear to me I was walking slower than that.

This is convenient for Stepn, since I wouldn’t make any money going faster than that (there are other sneaker NFTs for those speeds for me to buy).

When I got to the office, I ended my walking session and saw how much green satoshi token I’d earned: zero. On the company’s Discord chat, I asked why that would have been the case, even after I bought the NFT of the sneaker, and a user told me, essentially, that I didn’t do my research. “Read the white paper. You need energy to earn. 1 shoe = 2 energy,” the user, named PumpaSaurusRexx, told me. But there is no explanation for the meaning of “ 1 shoe = 2 energy “ in practical terms on the Whitepaper. The rules that I’d read in the app made no mention of energy or prescribed times or any rules around when you could start walking.

I told PumpaSaurusRexx that this read as nonsense to me and the nerds closed in. Not only was I supposed to read the white paper, I was supposed to watch a long video of someone explaining all the rules. “Point is,” PumpaSaurusRexx told me, “you’ve started playing a game without understanding even the very basics.”

How humiliating! Turns out that since I only bought one sneaker NFT, I was only entitled to earn money for ten minutes at a time, and I could only start doing so every six hours starting at 3 am.

So not only do you have to pay hundreds of dollars just to start making money, you can only do it in short, specific windows. All of a sudden, the idea that I was making money doing something I wanted to do anyway vanished. If Stepn was telling me when and how quickly I should move, did that make it basically my boss?

Undaunted, I tried again. On June 13 — the day the crypto markets crashed— I walked around for a good ten minutes or so and earned a total of 8.05 green satoshi tokens - about $4USD based on market price then. If I had done that same walk on May 24, when the tokens peaked at $29.10, I would have made $234, or enough to have justified the price of the sneaker NFT.

When I tried to cash out the money, the app informed me that I wouldn’t be able to transfer out anything less than ten of the tokens, so I walked again the next morning, bringing in a far smaller haul of 1.9 tokens. Suddenly, my NFT sneakers were in need of repair, and if I wanted to keep earning so much crypto, I would need to spend more tokens for maintenance.​

Tricks and hidden fees

All the catches, the setbacks, the inscrutable jargon and hidden fees — they reminded me of the worst of the finance industry, preying on people by tricking them.

I have known a kind of bond called structured notes, which tended to be packed with derivatives that tracked the value of some stock but were still sold to retail investors. This was — and probably still is — a market of risky and complicated financial instruments.

Part of my job was to read through prospectuses and figure out how they worked: The typical bond would pay, say, double the gains of Apple if the company’s stock rose past a certain point over a period of time.

But they could also totally wipe out an investor if the value of the underlying company fell too much — a prospect that turned out to be pretty real. It was common to see some that were so mind-bendingly complicated that there was no way anyone but a professional could understand them. Some included actual calculus equations as a way to describe how they worked. There were all kinds of triggers and catches, hidden fees, and special ways to lose.

At one point, the Securities and Exchange Commission forced banks to simplify how they described these bonds and tell people that they were actually worth less than what they bought them for.

With Stepn, there were the same kinds of gimmicks — except now they do it all without regulatory oversight and they call it a game.

What’s amazing about all this is how casually Stepn’s creators have acknowledged how similar the whole enterprise is to a Ponzi scheme, though, of course, they insist they are different and perfectly ethical. (I emailed the company, as well as Sequoia and Binance VC, but got no response.)

Still, if you read Stepn’s Discord channel, it really does look like something weird is going on. People are flooding the board with invitation codes — trying to bring in fresh users with more money — while also complaining about how far the price of the tokens has fallen and how little the NFTs are now worth.

I still haven’t cashed out my 10.04 green satoshi tokens, now worth a little more than a dollar. And why would I? To give some satisfaction to the transfer fee? I’ll probably let those tokens just sit in that in-game wallet until they’ve gone to zero.
 

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