On January 3, the open beta version of the Web3 game Gas Hero, produced by Stepn's development team Find Satoshi Lab (FSL), was officially launched. The game uses Stepn's GMT as its token and provides its own marketplace and player voting opportunities for decentralized decision-making in the game. Since the game's launch, the GMT token has been soaring, reaching a maximum of about $0.444. MapleLeafCap, founder of Folius Ventures, published an article explaining how Gas Hero incentivizes the GMT token to continue to move higher. The following is the full text:
Note: Folius Ventures owns a large number of GMT tokens and the founders are advisors to FSL.
It's been 4-5 days since Gas Hero (GH) went live, and I can now publish this article with confidence, as the reality matches my model – GMT is reversing its historically poor issuance status (100-1.5 million GMT per day), and every 10,000 DAU (daily active users) added by Gas Hero in the future = 100-1.5 million GMT locked at the current price per day. If Gas Hero can grow towards 100,000+ users and maintain the current Gas Hero asset price, then the FSL ecosystem may achieve a 15 million GMT lock per day, repeating the craze from March to May 2022. With high hopes for this new game, I personally believe that the GMT token can return to the top 25-75 of the crypto market capitalization ranking again in 2-3 months, with a short-term target of $1 (3 times at this time).
The current GMT sell-off state
Prior to the emergence of Gas Hero, we estimated that GMT issuance was around 115 million per month, dropping to 109 million per month starting in December, with 1/3 allocated to investors and advisors, 1/3 to teams and Treasury, and 1/3 to M2E rewards. The team does not sell, the issuance of advisors is small, and the issuance of Treasury is controllable. Therefore, the biggest offering pressure is mainly M2E (assuming 80% sales at 1 million/day, but about half of them are burned internally in Stepn, so the actual net sales are about 300,000/day) and investor sales.
By October 23, about 75% of GMT was sold when private investors acquired it. If you count the advisor sell-off, 100-1.1 million GMT is sold almost every day.
As a result, the selling pressure is about 1.5 million to 1.6 million per day since March 2023, or nearly $500,000. It's no wonder that the GMT ratio in USD and BTC/ETH has declined.
However, recent events have had a significant impact on the GMT/Beta ratio:
Since the start of the bull market in October, investors have slowed the pace of selling, with the sell-off rate falling to about 40% from 75% previously. As a result, the number of sales in a single day dropped from 1.6 million to 1.1 million. This has a direct positive effect on the ratio as the liquidity of alternatives increases.
In addition, around December 1, 20 million GMT was transferred from FTX to Wintermute, all of which was completed by December 15. This move increased selling pressure by about 1 million/day. During this time, the ratio was very significantly suppressed, and it began to rise after FTX completed the transfer.
If we assume that only 40% of the investor share is sold off in the next few months, we expect around 1 million GMT to be sold per day, but here we assume that there will be 1 million to 1.5 million GMT per day.
That all changed when FSL launched the Gas Hero game on January 3, 2024.
How does Gas Hero work?
In short, players of this game need to purchase BCV Truck + Hero to start mining resources (the mined resources are NFTs instead of tokens). Heroes can carry weapons and pets (buff attributes), all of which require a soul binding to enter the battle (cannot be resold after binding) and will die after 20-60 days of use (except for genesis heroes, which, by the way, are only 2084). All resources can be traded in the game market. The 3 ways to get resources are farming (in battle), bidding in auctions (actually buying from the system), and buying in the market (actually buying P2P from other players).
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 feature usage is burned (the rest goes to FSL), 2% of the market royalties go to FSL, and 50% of the auction proceeds go half to FSL and half to burn. This in-app tax, combined with the supply of prize pools in the first cycle, should drive massive lock-ups in GMT shortly after the game's launch.
Typical low-end players play the game to earn ROI (i.e., recycle heroes and put resources into the market), while big players mainly compete for prize pools – prize money is distributed to PVP winners or regional officials. To win in PVP battles, players need to spend a lot of money to equip a roster of heroes, and to become an official they need to use a similar roster of heroes in smaller areas, but in larger areas more and more donations/votes are required. Prize pool = tax base of the Gas Hero ecosystem (i.e. taxes on marketplaces and auction houses) – importantly, there is no additional GMT inflation in Gas Hero, and this game only goes on a net burn.
The ingenuity of the economic design should be immediate. In the short term, the entry of new users + the reinvestment of existing users guarantees ROI, but over time, the payout of big players aiming to win the prize pool = the need to buy resources = the ROI of small players. In prize pool competition, the effective sunk cost of many players who often fail becomes a "drain" to pay for everyone's ROI. The keys to Gas Hero's success are:
- (a) Accumulate a sizable prize pool that is expected to reach millions of dollars
- and (b) continue to attract (new) whale players who are constantly consuming and competing
In a way, Gas Hero does turn out to be a 100,000–1 million DAU game (all players share the same global status + Gas Hero's innate sociability), and the triple satisfaction of global recognition (fame), control over one's own faction (power), and a sizable monetary reward (wealth) should deliver a huge dopamine blast than any SLG game seen so far.
Here's what the positive flywheel looks like: initial FOMO (current phase) - > more new users and reinvestment - > more transactions and taxes - > bigger prize pool - > more PvP and donation investment competition + more focus on the game - > more new users and reinvestment (and so on).
In addition, the existence of asset life + old players choosing to restart the economic cycle will continue to destroy excess capacity. Assuming that user attention and wallet share are relatively stable, then the excess of assets + the decline in ROI can be solved over time (oversupply -> ROI and price decline -> let the hero die -> NFT production decreases ->if the demand remains the same, the price will rise). The new season means a change in the rules, which brings new hope and incentives for players to reinvest.
With Gas Hero soon reaching 10,000 users (currently 65,000) + internal test data + current price (all of which can be observed on Mooar), it is believed that the reward for becoming a global champion could easily reach $20-400,000, i.e. 500,000 GMT can be burned per day + 1 million GMT per day is locked by FSL. This equates to about 1.5 million GMT not entering circulation every day. Our estimates are supported by the current analysis of Dune data. The first supply obtained through the prize pool will take at least 14 days to reach the market, after which the metagame (PVP + normal heroes die on day 20) should add more burns.
Future predictions
As a result, the supply and demand situation for GMT will shift from a selling pressure of 1 million to 1.5 million per day to a net "deflation". As Gas Hero accumulates more and more users, this apparent shift will only accelerate. If there is a boom like Stepn in March-early May 2022, it is expected that GMT burn will be more rapid. Get more users in Gas Hero = More burns = GMT rises = More attention = Gas Hero gets more users. The added benefit is that even Stepn+Mooar may accumulate more DAU in the process and increase the amount of GMT burned.
I think that Western crypto funds are seriously underallocated to GMT. GMT is not in any of the so-called "game beta" posts I read on CT. From talking to most of Stepn's private equity investors, I know that none of them spend any more time paying attention to GMT, and some don't even know what Gas Hero is. This kind of DPI-driven, "auto-selling" project, which is not yet known to Western players, is no longer a rarity. Once Gas Hero gets the attention of Western players, expect the flywheel to spin faster.
When Gas Hero reaches 50,000 DAU+ GMT, the top prize pool will reach millions of dollars, and that's when the story starts to get interesting. Not a single SLG game in the Web2 world has seen this happen (no one really makes money from SLG games except for game companies). If the FSL team markets well in this regard, it is expected that the game will gain huge traction from the traditional Web2 SLG community and become the first hit Web3 game in 2024.
GMT is currently priced at $0.35 and has a circulating supply of about 1.6 billion, but GMT's market cap is actually 1/6 of IMX, less than 1/2 of AXS/SAND/MANA/BEAM. GMT didn't get much traction from the open beta, but the future will catch up (in my opinion, this is the best open beta for games in Asia today, and we work closely with FSL on multiple other game/app investments in the region). The launch of Gas Hero provides the narrative and fundamentals for this catch-up (perhaps a little quick) – Westerners recognize the story (just as Chinese love SOL, or Westerners love Ordinals).