Earn Crypto by Walking – 5 Million Users Can’t Be Wrong with Yawn Rong

Transcript

Nick Abrahams:

Now ladies and gentlemen, if walking and getting paid for it sounds too good to be true. Well, I’m just here to tell you today you’re going to learn that it is absolutely true. I’m delighted to welcome the co-founder of STEPN, Yawn Rong to the podcast.

Yawn Rong:

Hi Nick.

Nick Abrahams:

Hi. Well look, thank you very much for taking the time. As I said, I and I completely oversimplified was a complex proposition. I do apologize, but could you guess tell us a little bit more about Stepn?

Yawn Rong:

Sure, sure. So we built Stepn about a year ago. So it is a Web3 product, seem to be a hype word nowadays for Web3, but it is a… So we are a mobile and application build on, [inaudible 00:01:01]. Blockchain. And we have a token and FT Ecosystems where people can trade token and FT sneakers freely, basically this is the P2P, player to player so that player can generate asset in the apps and then sell it or trade it with other players. So effectively, sorry to interrupt but effectively how it works is that people have to buy, let’s say one FT sneakers and then they can earn tokens and the token will be spent by leveling up the sneakers or open up mystery boxes. So there’s a various of ways that you can spend the tokens if once you are comfortable with your sneakers and then you can sell some of tokens into [inaudible 00:01:50]. Currencies or stable coins and you are basically selling to another player. Yeah, yeah so that’s roughly how it works, very oversimplified version.

Nick Abrahams:

Sorry. Yeah, no it sounds amazing. And just so I understand, so I buy my Stepn virtual sneakers and so obviously there’s an upfront cost for that and then I earn, there’s a number of ways I can earn tokens, but as I understand it, one of the ways that I can earn it is by physically walking in real life? That, that generates token rewards?

Yawn Rong:

And do have to do it outdoors. So there are different type of sneakers. There’s a runner, there’s walker. So basically it’s designed for different level of physical strengths basically. So basically for people that are wearing a runner, they earn a bit more because of running versus let’s say walking.

Nick Abrahams:

Right. Okay. So literally, and this is through the app presumably just sitting on my phone and it’s able to detect sort of motion and records… I’ve done some walking and I earned some-

Yawn Rong:

Yeah, yeah. We spend almost more than half of our energy on [inaudible 00:03:14]. Which hasn’t been really down by any of these modern tracking business because there’s no need, right? But because now we involve a token actually do pay off, so they will be people. It has been always been people trying to exploit in the system. So we basically just constant upgrading our [inaudible 00:03:35]. Mechanics.

Nick Abrahams:

Interesting. So I can’t just sort of grab the app and jump in the car and-

Yawn Rong:

You can try and you got flagged as a boss.

Nick Abrahams:

So for anyone thinking of doing that, certainly I wasn’t but for anyone thinking of doing that, you can’t cheat the system. So maybe just to roll it back a little bit, and I do love the sort of founder story here because evidently you and your co-founder were neighbors in Adelaide, is that correct?

Yawn Rong:

That’s correct, yes. Before I start the project, I’m actually investing in let’s say the Web3 before there was cryptos for many years. And I was almost roughly half retired. And sold that my neighbor, so Jerry, he had a pretty successful server development company and he sold the company and then he moved to Australia and then he happened to move to the street I’m living and then he knows that somebody’s also into this web series space. And then he came to me and says, with bottle of wine basically, so become friends. So actually that’s how we know other, and then I just go to his house, have beer every couple days and then we say, “Hold on a second, this is boring.” Nothing to do basically. So how about we start project together? So roughly that’s how we start the conversation.

Nick Abrahams:

That is a great story And it just strikes me that the business After Pay, so After Pay, the two founders of After Pay were neighbors as well, which makes me just think that I’ve got to keep my eyes peeled around the neighborhood because that must be the thing that’s keeping me from great success with technology companies. But it is amazing to great companies both founded by neighbors. Maybe just with Stepn and perhaps a little bit more detail and particularly what I’m interested in is because I think with Web3 we’ve got the… There’s the on-chain world and so folks who are already crypto natives and so forth. But when you’re explaining Stepn to people who may not be crypto native, can you just give us a little bit more detail about what the value proposition is?

Yawn Rong:

Okay, so the focus is… So we start the project roughly, we have the idea roughly when we’re having the lockdowns, right? And the thought is [inaudible 00:06:18]. Is that we want to encourage people to go outside more, to do more exercise. And second is a portion of the earning actually go back to the carbon settings. And because that also when roughly we have the bush fires, so carbon reduction and physical exercise because at one time, because I was in tradings and primary market investment, so I still have my desktop over 10 hours a day and just do tradings and just to get a feel of how the markets, So we have to be constant stay in the business and that not really good for health. And for many years in the crypto web reward, there’s no stop. It’s 24/7. So yeah, I can’t have a food and sleep. I always wake up twice during the night to check on the market.

Nick Abrahams:

No way. You wake up to check on the trading?

Yawn Rong:

That sort of become a habit. I can’t go looking at the market more than four hours, but it’s not good, really good for my health. And I would say maybe I need to be more active in exercising so that’s sort of the original idea of how we design Stepn.

Nick Abrahams:

Wow, okay. Very interesting. So is it a full, just in terms of what people can expect when they go within the actual app? Is it a full Metaverse environment, so avatar based and so forth? Or is it more you’ve acquired a set of shoes and then there’s…

Yawn Rong:

I mean Metaverse is very vague term and so we want to be more practical. So well, just look like… Okay, how we design it is we want to design something game like application. So it is an application, it motivates you to go for exercising. And then we also have a pretty vibrant offline communities, people do meetups, socials, it’s really about to encourage people to go out. So it’s very practical. You feel like a game, but in fact it’s to get people kickstart getting fitter because the main audience really we were really surprised is not people that really exercising. It’s really other people like me, like traders-

Nick Abrahams:

Spend too much time watching the screen.

Yawn Rong:

Pretty much. Yeah, exactly. So they say, “Oh this is great, I finally have excuse to go outside.” And when you are going outside, you have this exclusive time, you can listen to music, you can talk to their friend, family. It’s actually a much, much better way to spend their time.

Nick Abrahams:

Right. Well it’s interesting. And who is in the target market, I mean who is using it? Is it sort of split by age group? How…

Yawn Rong:

If we talk about demographics, we are looking at a major market in Japan, Russia, Turkey.

Nick Abrahams:

Oh really?

Yawn Rong:

US, French and UK so that’s roughly the top several. So when we first start, pretty much are the really crypto native people. And actually many of them are actually benefiting from this. Some of them find girlfriend and now become [inaudible 00:10:01]. Yeah, sometimes.

Nick Abrahams:

Oh wow. No way. So there’s love on Stepn as well.

Yawn Rong:

There’s also socials involved because they-

Yawn Rong:

Exactly. So there are people that cured on their depressions, some of them lost a lot of weight and they really find the benefit of it. And then they actually send a referral to their non crypto friend or even families. So that’s roughly how we expand from only a handful, couple thousand users when we first start in last November now to, we have about 5 million registered user.

Nick Abrahams:

Wow.

Yawn Rong:

Roughly 1.5 million [inaudible 00:10:39]. Active and about 650,000 daily active users. Now.

Nick Abrahams:

650,000 daily active users. That-

Yawn Rong:

Pretty much, yeah,

Nick Abrahams:

That is fantastic. Gosh, there… That’s extraordinary. And then I understand the business has done very well. I did pick up, there was some profit numbers floating around in the financial review. Can you talk to us about something that’s behind the business?

Yawn Rong:

Again, normally when you talk about this you have to do the disclaimer. This is not financial advices, things like that.

Nick Abrahams:

It’s just you and me.

Yawn Rong:

Yes. So the earning actually fluctuates a lot. And it’s actually very hard for me to explain because there are different ways-

Nick Abrahams:

Of course, and so many different revenue streams.

Yawn Rong:

Because how we design the app or the game is that we want to have people into a special field. So there will be people specializing in [inaudible 00:11:38]. Sneakers. So their own business, they do not go out for working or earning, they just buy tokens.

Nick Abrahams:

[inaudible 00:11:46]. Got another business.

Yawn Rong:

Just buy tokens and then they mint. And then once they mint, they put the sneaker on market to sell. And if the minting have a perfect, they will start doing that. And you will see a lot of sneakers on the market because they will tend to overproduce and then the sneaker price goes down and then they will start minting, right? They’ll say, “Okay, that’s it. There’s no profit for me I’m [inaudible 00:12:07].” And now you have a lot of sneakers. And they were also be, let’s say wells in terms is that people have a lot of money and these people will buy all these sneakers. And then they were starting to doing what we call enhancement, which is to burn these sneakers and have a very low chance to, during the process of burning, you get a special rainbow sneaker and this rainbow sneaker can earn GMT. And so we have two tokens.

So for the entry level people they earn the GST, you have one sneaker, you earn GST. That’s it. Okay. Is very simple. And for the much high levels players, they earn GMT. And in order to earn GMT they have to burn thousands pair of sneakers sometimes. So effectively people asking where the money come from, the short term answer is the money come from the well player that are earning GMT. They have to buy a lot of GST… Sorry, they have to buy a lot of sneakers. And to produce sneaker, you need a lot of GST. Okay. You see the chain-

Nick Abrahams:

[inaudible 00:13:21]. Beautiful.

Yawn Rong:

So all we need to do is to find additional use cases for GMT. So the GMT attractive for the wells to continue earning because the rainbow sneaker they have, have a lifespan. So you can only earn GMT under a limited time. So once the time elapse, the sneaker is broken, you cannot repair it. Then they have to repeat that process again by a thousand of sneakers. And then once you buy a thousand sneakers, the sneaker price goes up, people doing minting have profits, start to mint. And then to do that they have to buy a lot of GST and that’s where people earning $5 to $10 a day, that’s where that earning come from to sell their GSTs for the minter to mint, and to sell these to the wells, wells burn all these sneakers, have a rainbow sneaker, earn GMT. And for us is to continuously provide utilities and use cases for GMT. You see that’s roughly how the cycle goes.

Nick Abrahams:

Yeah. Yeah. I mean it is interesting. The tokenomics behind many of these businesses is fascinating and I’m sure it’s far simpler once you get involved in it, but there’s quite a lot of thinking that has to go behind the tokenomics and how-

Yawn Rong:

A lot of thinking, Yeah, we spend a whole year to pretty much make the perfect balance.

Nick Abrahams:

Right. Okay. Very interesting. And do you think people talk about [inaudible 00:15:00]. Creating the world’s first Metaverse workers as sort of a bit of a media sort of story there that are folks in the Philippines who do nothing but play [inaudible 00:15:11]. All day and that’s their job as… I mean, do you have any examples of that happening on your platform or right at the moment? Is it more of you’ve got your whales and sort of other folks?

Yawn Rong:

We’re going on two different route with [inaudible 00:15:27]. Right? So because our focus is… I hate to say this, but our main target audience are people in the developed country because those are the people that do have a intrinsic need to exercise, right? Because-

Nick Abrahams:

Interesting. I see.

Yawn Rong:

And they are capable of spending a lot of money. They have much greater spend power versus let’s say people playing [inaudible 00:15:50]. In Philippines. So no offense, but this is the truth and that’s because… So that’s one. And second is people, if you play a game, eventually get tired of it, right?

Nick Abrahams:

Yes.

Yawn Rong:

But with accessing outdoors, if you doing for long enough, you sort of develop habit. You say, “All right-”

Nick Abrahams:

[inaudible 00:16:14].

Yawn Rong:

“It’s two o’clock in the afternoon, I need to go for a walk.” Right? That’s my routine. And you can see the body transformation as well. So it’s very interesting because the whole crypto world has suffered a drastic drop just like a stock market. So we control from 650,000 US dollar to 19,000 US dollar. Yeah. 70% drop. So when that happened, we also got hit a lot and we have lost over I think something like 60% our user base because people just can’t handle the loss because everything just crashed. But once we started to stabilize, we started to see the user coming back because, so for what we see on the community is that there’s nothing else we can do and seem to get back to the exercise and habit. Well get me a healthier body, healthier mind, especially in the bear market because bear market is toxic.

So we’re starting to see the user base starting to come back and the mentality change initially people just chase after the returns, [inaudible 00:17:29]. “Making money and I make my money back in x days and how do I maximize my earnings?” And once they come back, of course there will be people fighting, but when majority of people come back, they become much calmer. They say, “So I accept this is the bear market, I accept that I potentially might lose money, but you’re actually a good product so you actually get me to walking. And I feel weird if I don’t earn anything, if I’m walking outside and as I was say, “I’m coming back, I just buy a few pair of sneakers, what the hell? It doesn’t matter if I lose money, I want to have my health.”

And so that’s sort of the mentality we have now. So it’s much healthier. I think people were very in this bear market, everybody was on edge to say, “Okay, go after the best ROI project.” But once they accept we are a project, we are what we call lifestyle app is really trying to motivate people to have a healthier lifestyle, they now believe in that, right? So before that they see this as a financial instrument.

Nick Abrahams:

Yes. Yeah. Fantastic. Getting people hooked on fitness and then it’s sort… I mean I guess Michelle Bridges the Australian sort of fitness lady. I mean she had a huge breakthrough with 12 week body transformation and that was sort of I guess one of the big early online fitness apps. But this sounds like it’s sort of the Web3 version of it. And it’s interesting too, the way you describe it sort of plays very well to the way that the crypto natives think. So it’s very interesting, just you’ve got some interesting mainstream partnerships. What sort of deals are being done with mainstream organizations?

Yawn Rong:

So we partner with [inaudible 00:19:35]. Which is the sneaker brand, [inaudible 00:19:38]. Brand? We did several batch of partnerships. So initially we did co-branded athlete sneakers release trading on the [inaudible 00:19:51]. And then just about couple days ago we did the second batch of partnerships. So we released our co-branded sneaker with [inaudible 00:20:01]. And people can buy it on the internet, it’s about 20 bucks pair and shipping next year. So its exclusive-

Nick Abrahams:

But also it’s a digital-

Yawn Rong:

Physical. Physical.

Nick Abrahams:

Oh, fantastic.

Yawn Rong:

Okay. And the physical sneaker also come with NFTs, perks. So we are now ready to explore because NFT is a way to have a unique token so it can link with the physical product. So we are now exploring in which way we can link the physical and virtual world so that’s another sort of thing we are trying to build. Same thing we did with [inaudible 00:20:44]. Madrid, which is the soccer club.

Nick Abrahams:

Okay.

Yawn Rong:

Spanish one. So we also did the co-branded sneaker release and with this sneaker, I think it is a rare sneaker where people can have the football player signed Jersey and also they can also go to the VIP lounge, watch the match if you show them the sneakers. So it’s become like a VIP pass, right?

Nick Abrahams:

Okay.

Yawn Rong:

So we working with [inaudible 00:21:13]. Which is a Web3 company with a deal with [inaudible 00:21:20]. And we partner with two of the biggest crypto exchange Finance and FTX as our ecosystem partners. And also we are working with [inaudible 00:21:32]. Which is, I think it’s the biggest telecommunication company in Japan. Very, very big presence in the Southeast Asia. So they are equivalent of [inaudible 00:21:45]. In China and WhatsApp in the US, or Telegram basically. So yeah, that’s roughly our mainstream. We’re partially mainstream partners.

Nick Abrahams:

That’s fantastic. And now I think maybe if we can just maybe pull back the focus a little bit to and co-founder had a bigger vision I guess obviously Stepn is sort of stage one, but can you talk, so the bigger business, I guess the holding company, so [inaudible 00:22:15]. Can you talk a little bit about what’s happening there?

Yawn Rong:

Okay, sure. So… I’ll still go back to the Stepn and for just one second.

Nick Abrahams:

Yeah, sure.

Yawn Rong:

Let’s say for the pretty much nine months down the track, we only does the GSE earning, which is the basic game token earnings. And we just recently start the GMT earning, which is a finite number of the governance token earnings. And now people can earn it depends on which sneaker they have, they can earn GMTs, meaning that the GMT are now gradually vested to the market. And so we see now people have more GMTs and we need to find additional use cases for GMTs so that people can use it, can spend it basically. So we try this about half year ago with a system called Realm System, which basically you can have seven different type of layer one. So layer one means the public chain such as Ethereum, [inaudible 00:23:23].

So these all layer ones. And we say if we can have our product on different layer one blockchains, why not we can’t build a bigger ecosystems on various of blockchains and on various of ecosystems so that’s sort of when we first have the thought. And then we started to build additional product. So we build a product called [inaudible 00:23:53]. Which is a decentralized exchange and in August this year, and we just build our third product called [inaudible 00:24:03]. Which is [inaudible 00:24:04]. Marketplace and launchpad. So you can see that what we’re trying to do is to expand our user base, not only the Stepn users. Because the decks, the decentralized exchange, non Stepn user can also use it. They can swap tokens, they can add liquidities to earn LP tokens reward though like crypto jargons. But people can find out what is LP token.

And also for the launch pad, we are now inviting people to submit their project to be launched through us. So you can see that within our ecosystems, GMT is a denominated currency, meaning that for people that external parties, partnerships, they want to do anything on our platforms, they have to utilize GMT one way or the other. So with the launch path, for example, people have to use GMT for voting. If you want to participate, you have to buy off the market and where to buy it, you know can go to the decks to buy it. But we’re trying to build this ecosystem where for people want to participate. Since we build, we basically offer a platforms, we also stage for people to launch their project or to traders on FTs. So meaning that we are generating external revenues where you go back to the whole GMT or Stepn ecosystems so that’s what I mean by burning the externalities in the beginning. So to bring outside partners ecosystems business to spend or to build their product on our platforms.

Nick Abrahams:

So that drives up the demand for the tokens and that makes the ecosystem healthy?

Yawn Rong:

And have more impact and have more influences. And gradually we can become… We always want to build something like a semi enclosed ecosystem. So we control the quality and when people value our quality and they can join us basically.

Nick Abrahams:

Oh, fantastic. And I guess just maybe just getting back to Stepn for a moment, and you’ll have to excuse the terrible pun, but what’s the carbon footprint of Stepn?

Yawn Rong:

We roughly offset 6,000, around 7,000 now, 7,000 metric tens of carbon.

Nick Abrahams:

Oh wow.

Yawn Rong:

Sorry, hold on a second. Sorry. 70,000.

Nick Abrahams:

Okay. That’s built into the way the system operates, is it?

Yawn Rong:

Yeah, it’s done by two parts. One is that we actively buy carbon credit on the blockchain and then we burn it. We roughly burn a hundred thousand dollars worth of carbon credit on monthly basis. And then they are also people that substituting walking versus driving.

Nick Abrahams:

Oh right-

Yawn Rong:

So we see how much people are running, walking, right. That’s roughly how much carbon has been offset. So two plus two, so we have the number. Yeah.

Nick Abrahams:

Fantastic. It’s a great story. And maybe just as a final thing for people, if they want to get involved in Stepn, how can they do that?

Yawn Rong:

It’s very easy. So we are available on the app store so people can search Stepn and then can find where to download. But for the non [inaudible 00:27:59]. Native, they need [inaudible 00:28:06]. Ethereum or [inaudible 00:28:07]. To buy sneakers. So they need to register through a exchange either FDX or [inaudible 00:28:17]. Or other crypto exchanges in Australia such as independent research… Sorry, Independent Reserve, or what is the other one? [inaudible 00:28:25]. Things like that. So yeah, they can then convert their certain dollar into cryptos and because it’s still a website product, we don’t-

Nick Abrahams:

Yup.

Yawn Rong:

[inaudible 00:28:34]. So that’s sort of the extra step they have to go through. But other than that, once they have the tokens, they can just trade on the marketplace and the tax is pretty straightforward. Yep.

Nick Abrahams:

Brilliant. Thank you very much for your time. It’s a fascinating business and congratulations. I mean, it’s been just an stratospheric rise in what has been relatively short space of time. So particularly those daily active user numbers are very impressive and it sounds like your understanding of the tokenomics behind the whole solution is very deep and looks like there’ll be further success. So thank you very much for spending the time with us today.

Yawn Rong:

Thank you Nick.