“We want to make a billion people more active”: Sweatcoin and the rise of move-to-earn
AltFi explores the concept of move-to-earn with Sweatcoin, and why crypto had always been in the company’s sights.
Move-to-earn (MTE) may sound too good to be true, but there is method behind the madness. Or so says Sweatcoin, whose business was born out of a desire to make society more active, and whose founders have discovered ways to turn their vision into a profitable venture.
“The whole idea really came from curiosity as to why we behave in certain ways and why we find it so difficult to motivate ourselves to be physically active,” says Anton Derlyatka, co-founder and CEO of MTE app, Sweatcoin. “I have been relatively active all my life and yet I would hit spots where I would find it impossible to get out for a run or even a walk.”
One of these times coincided with a point during which behavioural economics had piqued Derlyatka’s interest. He read books like Daniel Kahneman’s Thinking Fast and Slow and started to reimagine ways of tackling lack of motivation. He found that it all came down to overcoming the human tendency towards the ‘present bias’.
“People underestimate the importance of future events, and overestimate how hard it is now,” he says. “You have to sweat and suffer now, but the health benefits come later. The way to fight the present bias is by instant gratification – grabbing some of that value and bringing it from the future into the present – making it an immediate reward.”
“I had thought of it as a loyalty programme for health, but we then decided to take it all the way and make it a currency.”
His strategy seems to be working – Sweatcoin app users have now exceeded 80 million and continue to climb. Increased traction more recently has been partly attributable to the company’s foray into the crypto space, with the launch of SWEAT tokens in April, and the promise of a token giveaway at an event hosted by the company in July.
But Derlyatka says that crypto only forms one element of Sweatcoin’s success story, with the MTE concept itself being the true draw.
“You know what, it’s not because of crypto really – we are just accelerating with the main proposition, and that is that your steps have value,” he says. “We are not doing this for the sake of crypto – it is just a powerful tool that helps us achieve our mission.”
The future is crypto
Starting out with a centralised currency offering and then adding a decentralised concept was always in the game plan for Sweatcoin.
“It was clear from the get-go that one day we would be crypto,” Derlyatka says. “We actually met with Vitalik Buterin [the creator of Ethereum] to talk about how Sweatcoin could be on the blockchain. We realised early on that it would be too heavy and transaction speed would be too low, so we decided to start as a centralised asset.”
Derlyatka is also quite critical of the barriers to entry into traditional crypto markets, seeking to remove these in his own product.
“Two of the biggest issues with crypto for a user is firstly the complexity – opening a crypto wallet is a painful process,” he says. “Secondly, the fact that users must pay something for crypto assets to get into it. We think those users have already earned something and it’s only fair to give it to them.”
The company’s move into the crypto space is ultimately to expand the utility of its product. Sweatcoin is a centralised currency that can only be used in-app. SWEAT tokens introduce value outside of Sweatcoin’s own ecosystem, as customers can exchange SWEAT for other crypto, liquidity provision and staking.
“The creation of a decentralised asset will add value for the user,” Derlyatka says. “It will provide extra utility to our users by being a liquid asset that gives access to NFTs and other DeFi.”
No such thing as a free...token?
Even with hoards of users signing up for the crypto giveaway, you’d be forgiven for thinking that MTE still sounds a bit counterintuitive for the providers themselves. How can giving rewards in exchange for users’ steps ever be a profitable game?
Yet other providers are beginning to crowd the space too. MTE start-ups, Stepn and FitFi, are variations on the same theme, providing incentives to get people to move.
According to Derlyatka, there are multiple ways to monetise an MTE business. The obvious way would be to use the rich data that comes with tracking the movement and behaviours of millions of users. Yet Sweatcoin is resolute that it will not yet use customers’ data to this end.
“While you are a centralised business, it would be very untransparent to sell data – but when we go decentralised and have a way of giving users back their data, we will do that,” he says. “Long term, data is a valuable asset, but in the short term, it would create transparency issues and we don’t want to go down that route.”
Instead, Sweatcoin says that value lies in the change in physical activity itself.
“Up to now, there’s been a perception that you must pay to be active,” says Derlyatka. “We believe this is wrong and there’s economic value created through being physically active. We wanted to create a system where that value is extracted and given back to the users.”
The company partners with the NHS and Bupa, the former funding an additional range of prizes for individuals on the Diabetes Prevention Programme.
“There are institutions, like the NHS, that are interested in individuals becoming more active,” Derlyatka continues. “Your insurer is likely also interested.”
Another feature of MTE that makes it profitable is the pure value that retailers attach to user engagement. Once individuals are engaged on a platform, they become attractive to brands and partners, particularly ones focused on activities or lifestyle.
Sweatcoin’s marketplace features partnerships with over 600 brands – with rewards ranging from music subscriptions to pet food. The brands provide Sweatcoin with products for free (as well as paying some additional commercial fees), in exchange for being featured on Sweatcoin’s platform. The company says it’s different from other MTE providers in how it derives value.
“Our magnitude differentiates us,” says Derlyatka. “We also rely on exogenous sources of value. We want to find those sources of value and inject them into the ecosystem.”
The great giveaway
The company’s Token Generation Event (TGE) in July – during which Sweatcoin will match one SWEAT to every Sweatcoin held by users in their Sweat Wallets – could constitute the largest cryptocurrency giveaway in history.
Sweatcoin is well aware that with 80m users and counting, the TGE could mean taking a hit to its profits. But Derlyatka says Sweatcoin embraces this as a by-product of coming closer to the company’s overall mission.
“We are not going to generate any profit on the TGE – and we are not seeking it,” he says. “We are seeking to establish a currency that is related to a physical activity and our philosophy has always been to engage as many people as possible. We want to make a billion people more active.”
Having to pay people to keep themselves active may seem like a damning indictment of where our society now finds itself. But amid the myriad conveniences now available to us, perhaps Sweatcoin is onto something.
“[Humans] like to create products that make our life more convenient,” Derlyatka says. “You don’t have to step out to buy groceries, you don’t have to go out to buy food in a restaurant. You can do it all sitting on your sofa. That is not where I want to be – I want to build a slightly different planet.”