Weekly Update 25

August 12, 2022

TGIF, everyone! We've made it through another week.

Domino's Pizza's ambitious plan to "introduce" pizza with an American twist to Italians (of all people) has come crashing down. Here's more on that and our other top reads this week:

• Domino's Pizza leaves Italy as locals shun American pies

• This is the only major US city where home prices are falling

• Gen Z trusts this TikTok finfluencer more than Warren Buffett

#MoveToEarnPonzi

🏃 Move-to-earn apps like StepN, Genopets, and others are transforming the fitness industry by allowing people to earn while working out.

💸 The 'to-earn' economics relies on continuous demand and the ability to monetize this demand so that people keep investing in the app.

⚠️ This has prompted accusations of fraud as sustainable economies can't pay out more than the value brought in.

🏋️ Ponzi schemes are investment frauds that pay existing investors with new investors' funds. GymPact and StepN are accused of following models similar to that of a Ponzi scheme.

The case of StepN

👟 StepN requires users to purchase NFT shoes with fiat money, which gives crypto rewards when they walk with the app switched on.

👣 App users also need to invest in maintaining these shoes, spending more if they want to earn more.

💰 Critics say this is a Ponzi scheme because the system, to be profitable, requires old users to not cash out en masse and a constant flow of new users.

🏅 StepN is trying hard to show that it isn't a Ponzi — it adjusts the minting costs of its digital shoes based on its fluctuating token price.

🔺Thus, the app may not be using extra tokens from new users to pay back earlier investors.

How can a 'to-earn' app not be a Ponzi scheme

🤑 Most 'to-earn' games begin with a liquidity pool that pegs its token to a stablecoin.

♻️ This liquidity pool should become self-sustainable over time. Relying only on new investments is what would make it similar to a Ponzi.

⚡️ It requires good tokenomics – stopping the pool from draining by keeping players invested.

🎮 Games can also move away from the Ponzi structure by appreciating their NFTs' values, thereby increasing earning potential with no new investment.

If you have any feedback, drop it here. Have a great weekend!