The Web3 game Gas Hero developed by the Stepn development team seems to be a shot in the arm for the rising GMT on GMT.
Author: MapleLeafCap, Founder of Folius Ventures
Translation: Felix, PANews
On January 3, the public beta version of the Web3 game Gas Hero, produced by the Stepn development team Find Satoshi Lab (FSL), was officially launched. The game uses Stepn's GMT as its token and provides its own market and player voting opportunities for decentralized decision-making in the game. Since the game went live, the GMT token has been soaring, reaching a high of about $0.444. MapleLeafCap, founder of Folius Ventures, interpreted how Gas Hero continues to drive the GMT token to new heights. The following is the full content:
Note: Folius Ventures holds a large amount of GMT tokens, and the founder is an advisor to FSL.
Current GMT Selling Pressure
Before the launch of Gas Hero, we estimated that the monthly circulation of GMT was about 1.15 billion, decreasing to 1.09 billion per month starting from December; one-third was allocated to investors and advisors, one-third to the team and Treasury, and one-third to M2E rewards. The team does not sell, the issuance of advisors is small, and the Treasury issuance is controllable. Therefore, the greatest selling pressure comes mainly from M2E (assuming 80% of 1 million per day is sold, but about half is destroyed internally by Stepn, so the actual net sales are about 300,000 per day) and investor sales.
Before October 23, about 75% of GMT was sold to private investors. If we include advisor sales, almost 1-1.1 million GMT is sold every day.
Therefore, since March 2023, the daily selling pressure has been about 1.5-1.6 million, nearly $500,000. No wonder the GMT ratio calculated in USD and BTC/ETH has declined.
But recent events have had a significant impact on the GMT/Beta ratio:
Since the start of the mini bull market in October, the selling speed of investors has slowed, dropping from the previous 75% to about 40%. Therefore, the daily sales volume has decreased from 1.6 million to 1.1 million. With the increase in alternative liquidity, this has had a direct positive impact on the ratio.
In addition, around December 1, 20 million GMT was transferred from FTX to Wintermute; all of this was completed before December 15. This move added about 1 million per day in selling pressure. During this time, this ratio was significantly suppressed, and it began to rise after the transfer was completed on FTX.
If we assume that only 40% of investor shares will be sold in the coming months, it is expected that about 1 million GMT will be sold per day, but here, we assume that 1-1.5 million GMT will be sold per day.
When FSL launched the Gas Hero game on January 3, 2024, everything changed.
How Gas Hero Works?
In short, players of the game need to purchase BCV trucks + heroes to start mining resources (the mined resources are NFTs rather than tokens). Heroes can carry weapons and pets (buff attributes), all of which need to be bound with a soul to enter battle (cannot be resold after binding), and will die after 20-60 days of use (except for the founding heroes, of which there are only 2084). All resources can be traded in the game market. There are 3 ways to obtain resources: farming (in battle), bidding auctions (actually purchased from the system), and buying in the market (actually purchased from other players P2P).
GMT, as the base currency, will be used for key functions (breeding, upgrading, etc.) and pricing transactions (market, auction, prize pool). Importantly, 50% of the GMT used for functions will be destroyed (the rest belongs to FSL), 2% of the market tax belongs to FSL, and half of the auction revenue belongs to FSL, with the other half being destroyed. This internal tax, along with the initial period prize pool supply, should drive large-scale GMT lockups shortly after the game is released.
Typical low-end players play the game to achieve ROI (i.e., recover heroes and put resources into the market), while major players mainly compete for the prize pool—the prize money will be distributed to PVP winners or regional officials. To win in PVP battles, players need to spend a lot of money to equip their hero lineup, and to become officials, they need to use similar hero lineups in smaller regions, but in larger regions, they need more and more donations/votes. The prize pool = the tax base of the Gas Hero ecosystem (i.e., market and auction tax)—importantly, there will be no additional GMT currency inflation in Gas Hero, and this game only undergoes net destruction.
The cleverness of the economic design should be immediately apparent. In the short term, the entry of new users + reinvestment by existing users ensures the return on investment; but over time, the spending of major players aiming to win the prize pool = the demand to purchase resources = the return on investment of small players. In the prize pool competition, many recurrently unsuccessful players effectively sink costs into "consumption" that pays for everyone's ROI. The key to the success of Gas Hero is:
(a) Accumulating a substantial prize pool, expected to reach several million dollars
(b) Continuously attracting (new) whale players who consume and compete
To some extent, Gas Hero has indeed become a game with 100,000–1,000,000 DAU (all players share the same global state + the inherent social nature of Gas Hero), providing a triple satisfaction of global recognition (reputation), control of one's faction (power), and substantial monetary rewards (wealth), which should bring a huge dopamine impact, surpassing any SLG game seen so far.
Its positive flywheel is as follows: initial fomo (current stage) -> more new users and reinvestment -> more transactions and tax revenue -> larger prize pool -> more PvP and donation investment competition + more attention to the game -> more new users and reinvestment (cycle).
In addition, the existence of asset life + old players choosing to restart the economic cycle will continuously destroy excess capacity. Assuming that user attention and wallet share are relatively stable, excess assets + declining return on investment can be resolved over time (oversupply -> declining return on investment and prices -> let heroes die -> NFT production decreases -> if demand remains constant, prices will rise). A new season means adjustments to the rules, bringing new hope and incentives for player reinvestment.
With Gas Hero quickly reaching 10,000 users (currently at 65,000) + internal test data + current prices (all of which can be observed on Mooar), it is believed that the rewards for becoming the global champion will easily reach $200,000 to $400,000, which means 500,000 GMT can be destroyed every day + 1 million GMT is locked by FSL every day. This is equivalent to about 1.5 million GMT not entering circulation every day. Currently, Dune data analysis supports our estimates. The first batch of supply obtained through the prize pool will take at least 14 days to enter the market, after which, the metagame (PVP + regular heroes dying on the 20th day) should contribute to more destruction.
Future Predictions
Therefore, the supply and demand situation of GMT will change from daily selling pressure of 1-1.5 million to net "deflation". As Gas Hero accumulates more and more users, this significant shift will only accelerate. If a frenzy like the one Stepn experienced in March to early May 2022 is sparked, it is expected that GMT destruction will occur even more rapidly. Obtaining more users in Gas Hero = more destruction = GMT rise = more attention = Gas Hero obtaining more users. An additional benefit is that even Stepn+Mooar may accumulate more DAU in this process and increase the destruction of GMT.
I believe that Western crypto funds are severely under-allocated to GMT. I have not seen any posts about "game beta testing" on CT that include GMT. From conversations with most of Stepn's private investors, I have learned that none of them are paying attention to GMT anymore, and some don't even know what Gas Hero is. This lack of awareness among Western players, driven by DPI, and in "automatic selling" mode, is rare. Once Gas Hero gains the attention of Western players, the flywheel is expected to spin even faster.
When Gas Hero reaches 50,000 DAU + a high enough GMT price, the highest prize pool will reach several million dollars, and that's when the story starts to get interesting. No SLG game in the Web2 world has encountered such a situation (except for game companies, no one really makes money from SLG games). If the FSL team markets this well, it is expected that this game will gain huge appeal from the traditional Web2 SLG community and become the first popular Web3 game in 2024.
The current price of GMT is $0.35, with a circulation of about 1.6 billion, but the actual market value of GMT is 1/6 of IMX, less than 1/2 of AXS/SAND/MANA/BEAM. GMT has not received much attention from the public beta, but it will catch up in the future (in my opinion, this is the best public beta in Asia today, and we have closely collaborated with FSL on several other game/application investments in the region). The launch of Gas Hero provides a narrative and fundamentals for this catch-up (perhaps a bit fast)—Westerners recognize this story (just as the Chinese love SOL, or Westerners love Ordinals).
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