Stepn (CRYPTO: GMT) was one of the big breakout hits for crypto this year. When STEPN started trading in March, it immediately popularized the concept of the move-to-earn game. But there is trouble on the horizon for STEPN. While the price of STEPN is still up 261% for the year, it is down nearly 87% from its all-time-high and 15% over the past 30 days.

Of primary concern is the emergence of more competition in the move-to-earn category, including the arrival of a growing number of STEPN look-alikes. There is speculation that the company behind STEPN is laying off staff and pivoting to a new strategy. In addition, monthly active users for STEPN have fallen off a cliff since July. So is it time to be worried about STEPN?

STEPN clones

When STEPN launched in public beta on Solana back in December 2021, it was the only game in town. Sure, there were other fitness-based apps that encouraged people to work out to win in-game rewards, but STEPN was the only game that promised to pay you in valuable crypto tokens. When the crypto market was still strong in early 2022, these rewards were particularly desirable. So, when the STEPN token started trading in March, there was plenty of excitement and pent-up demand. On YouTube, crypto influencers began to post videos detailing how they were making anywhere from $50 to $200 per day simply by playing STEPN.

Runner on a stadium track.

Image source: Getty Images.

But STEPN rivals are starting to appear everywhere. This summer, Avalanche announced that it was collaborating with legendary Olympic champion Usain Bolt on a new move-to-earn game. And, most recently, NEAR Protocol championed a move-to-earn game for its blockchain called Sweatcoin. This game originally launched a few years ago but finally got its own crypto token called SWEAT in September. As more and more of these move-to-earn rivals proliferate, it's only natural that STEPN is going to lose some of its core user base.

Monthly active users

Speaking of core user base, the most recent data show that the number of monthly active users for STEPN peaked at about 700,000 in May. That number is down a lot since July. STEPN now lists 99,000 monthly active users but only 5,800 daily active users. 

There are a number of factors that might explain this, including the arrival of all those STEPN clones. Another factor is the general malaise surrounding crypto and growing frustration about actually making any significant crypto earnings with the game. And, finally, you have to take into account seasonality. STEPN launched in the spring and peaked in mid-summer: That's basically the best time to be going outside and exercising. 

At the end of the day, STEPN is just a very unique form of blockchain-based game, and the lifeblood of any blockchain game is users. We've seen this time and time again in the crypto market -- a game catches on, gains users at a nearly exponential clip, and eventually falls out of favor. As soon as that happens, the price of the crypto token for the game collapses. Is that what is happening with STEPN now?

Layoff rumors

Given all this, it's perhaps not surprising that whispers and speculation now swirl around STEPN. In mid-October, for example, reports began to circulate that Find Satoshi Lab, the creator of STEPN, was experiencing financial issues and that it would begin to lay off contractors and potentially even salaried employees. These contractors include moderators and ambassadors who help to improve the overall playing experience. Find Satoshi Lab says that there have been no layoffs, but it acknowledges some attrition. This is potential cause for concern, especially amid other reports that STEPN is looking to shift to different strategy.

Is STEPN a buy?

For now, I'm taking a wait-and-see position on STEPN. There are plenty of warning signs out there that need to be monitored, including the steep loss of users and the arrival of STEPN clones. From what I've read and heard online, even passionate STEPN users are cooling on the future prospects of the game. On the other hand, STEPN is still the acknowledged leader in the move-to-earn niche. STEPN may be down 87% from its all-time-high, but it is still up for the year.

That said, I'm looking forward to seeing what's next in the move-to-earn market in 2023. I hope STEPN can be part of it. STEPN is one of the few bright spots in the crypto industry this year, but the crypto market is infamously fickle and volatile. Trends come and go, and it's up to STEPN to figure out how to stay one step ahead of its competitors.