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Move-to-earn crypto games lure VC interest
Game finance gathers momentum but challenges still abound
Daphne Li 19 Aug 2022

Move-to-earn (M2E) projects, a subset of the wider play-to-earn game finance (GameFi) category, have caught the market’s attention as the metaverse and non-fungible token (NFT) bandwagons pick up speed. But questions remain on their sustainability and intrinsic value in relation to the wider stock market.

As the name suggests, M2E is a Web3 application that enables users to earn rewards for jogging, walking or moving around. After completing the in-game tasks, players are rewarded with tradable in-game crypto assets which can be exchanged for other crypto and fiat currencies. Other game features such as marketplace wallets and decentralized exchanges have fostered the adoption of cryptocurrencies.

For now, most investments in GameFi and metaverse are concentrated at the seed funding stage, accounting for 48% of the total deals, according to research from CoinMarketCap and Footprint Analytics. “[Venture capital] started to focus more on investments in Web3, especially GameFi and metaverse,” the report says. “GameFi and metaverse take up a much larger share of the investment pie at the behest of tooling, trading and lending/borrowing.” VC investment into these two categories has jumped to US$2.4 billion in 2022, from US$874 million in 2021.

M2E platforms such as STEPN have seen increased adoption. Launched in September 2021, STEPN rewards users with cryptocurrencies and NFTs upon completion of fitness tasks. The running app raked in US$122.5 million in profits through its platform fees in the second quarter of this year alone.

After the platform’s native token value plunged from its all-time highs in April, the company announced that 5% of the profits will be allocated to start a buyback-and-burn programme. STEPN will allocate capital reserves to enhance existing features and build out the team, it says. As of May, the game has garnered 2.3 million monthly users and over 700,000 daily users.

Other M2E apps such as SweatCoin and Step App are now up and running, with the latter having announced that it is partnering with retired sprint champion Usain Bolt in a bid to expand its global adoption to 10 million users.

The rising tide of last year’s bull market raised Web3 and cryptocurrency-themed boats. However, recent industry headwinds such as increased cyber-attacks, regulatory clampdowns and fluctuations in crypto-asset value may reduce investors’ appetite for play-to-earn projects. The still-strong correlation between the global stock market and crypto assets also implies a rough road ahead for the nascent asset class.

But as the Web3 trend gathers pace, with crypto assets inextricably intertwined in the ecosystem, gaming is likely to attract more interest from the investment community.

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18 Aug 2022