Sweat Economy

About Sweat Economy

The past decade has seen an explosion in digital health and fitness applications aimed at helping people exercise more, eat healthier foods and generally live better lives. One of the latest innovations in this space is Sweat Economy, a new project leveraging blockchain technology to incentivize fitness. In this article, we’ll explore how the Sweat Economy works and its potential to disrupt the fitness industry.

What is the Sweat Economy?

Sweat Economy is a blockchain-based crypto ecosystem and mobile application that supports the move-to-earn (M2E) incentive framework. Essentially, it acts as the web3 version of the already popular web2 Sweatcoin app, which, according to the developers, was the top health and fitness app in 58 countries in 2022.

Launched in 2016, Sweatcoin has garnered a remarkable 120 million downloads globally, spanning both web2 and web3 platforms. The team behind Sweatcoin aims to transform the fitness industry by leveraging the M2E model to benefit all participants. They have implemented several strategies to manage the token’s supply effectively while ensuring the platform remains appealing to its users, as evidenced by the planned distribution of SWEAT tokens.

What is Sweatcoin?

Sweatcoin, launched in 2016 by Oleg Fomenko and Anton Derlyatka, is a platform designed to encourage physical activity. Motivated by a desire to boost physical health, the founders developed a reward system that incentivizes users to exercise. By accumulating a certain amount of steps, users can earn tokens, redeemable for various rewards.

Initially skeptical about their audience’s readiness for a cryptocurrency-based reward system, it wasn’t until six years into the project that the creators decided to pivot towards offering crypto rewards. The platform’s own currency, SWEAT tokens, is supported by both the Ethereum and NEAR blockchain networks.

With over 63 million users who have collectively made nearly 20 trillion moves, Sweatcoin introduced the SWEAT token, allowing early adopters to convert their previously earned rewards into the new cryptocurrency. This transition marked the biggest airdrop event to active participants, drawing in an additional 150,000 users within the first 24 hours of launching the crypto rewards. Now, the user base has nearly doubled to 300,000.

In contrast to traditional cryptocurrencies, which may require costly mining rigs or staking for earnings, Sweatcoin offers a simpler model. Users can earn SWEAT tokens simply by moving, eliminating the need for substantial financial investment in equipment or staking digital assets.

Understanding Move-to-Earn (M2E)

The Move-to-Earn (M2E) concept is designed to promote physical activity by offering rewards and incentives for engaging in real-world movement and exercise.

In the realm of digital assets, the crypto industry has introduced various innovative economic models, yet the M2E approach stands out in promoting physical fitness. By providing cryptocurrency and additional rewards, a range of M2E applications have surfaced, aiming to make staying fit both enjoyable and financially beneficial.

The M2E phenomenon gained momentum with the launch of STEPN, a fitness application that compensates users with cryptocurrency for their physical activity, coinciding with the decrease in COVID-19 cases globally. Besides STEPN, there are other web3 applications that adopt the M2E framework, including GenoPets, Dustland, Step App, DOSE, and the recently introduced Sweat Economy by Sweatcoin.

How Does Sweat Economy Work?

The Sweat Economy integrates with the Sweatcoin app to reward users for fitness activities like walking or running. Rewards earned can be used for internal purchases, converted into SWEAT tokens, or saved in a web3 wallet. The app employs GPS and motion sensors to verify physical activity and uses algorithms to detect and prevent fraudulent behavior, ensuring only genuine activities are rewarded on the blockchain. Users have the flexibility to use their tokens for various purposes, including gaming, unlocking features, or trading for other digital currencies. SWEAT tokens are also available for purchase on cryptocurrency exchanges.

Currently, SweatCo Ltd is the sole validator for the Sweat Economy, with plans to decentralize validation to include activity trackers, insurers, and healthcare providers, allowing them to manage nodes and earn from transaction fees.

The earning rate for SWEAT tokens is initially set at one token for every 1,000 moves, but this rate decreases over time. For example, a year after launch, the same number of moves will earn 0.33 SWEAT, decreasing further in subsequent years, to encourage sustainability as the platform grows. This approach also introduces a deflationary aspect to the token as the ecosystem expands.

To prevent exploitation and maintain the ecosystem’s longevity, a daily earning cap is in place, starting at five SWEAT tokens, with opportunities to increase this cap through token staking. The Sweat Economy is powered by the NEAR protocol, noted for its scalability and efficiency, marking it as the first move-to-earn application developed on this platform.

SWEAT Token

The SWEAT token is the cornerstone of the Sweat Economy, acting as both the reward mechanism and the principal medium of exchange within this ecosystem. It’s uniquely positioned as the sole token for redeeming rewards such as vouchers, discounts on various brands, sports event tickets, and prizes in stablecoins. Additionally, by staking SWEAT tokens, users can increase their daily token generation cap.

The token’s distribution strategy includes a Buy and Burn model, initially setting the supply at 25.8 million sweatcoins. At the token generation event (TGE), 21 billion SWEAT tokens were created, and 4.8 billion were subsequently destroyed to manage the supply.

At the TGE, 10% of the total SWEAT supply became available, with the balance set to be gradually released over two years.

The economy introduces a scaling difficulty in token minting, indicating that while 1,000 steps initially produced 1 SWEAT token, by 2023, this effort yields only 0.33 SWEAT, illustrating a planned scarcity to manage the token’s value over time.

The distribution of SWEAT tokens sees the largest share, 27.71%, held by the SWEAT Foundation Treasury. This is followed by a 25% allocation to the lockdrop participants, 22% to Sweatcoin Ltd, and 10.92% to the project’s team and advisors. An additional 7.02% supports the ecosystem, with the remaining shares designated for private and seed investors, as well as public sales.

Benefits of Sweat Economy

Sweat Economy unlocks multitude of benefits for users, partners and the industry:

• Motivation – People who actively track fitness tend to exercise more consistently. The added financial incentive further boosts motivation and accountability.
• Flexibility – Unlike loyalty programs like air miles, SWEAT tokens can be earned across any fitness activity or platform.
• Rewards – Traditional programs offer minimal rewards on fitness purchases. SWEAT enables greater value redemption on both digital and physical products and services.
• Community – App users connect on message boards to share tips, challenges and workouts. Shared fitness journeys foster meaningful connections.
• Growth of Industry – Attracting new demographics like gamers and crypto users can expand the fitness market.

Challenges Facing Sweat Economy

While the concept shows promise, Sweat Economy faces hurdles in both technology and business model:

• Limited partners – The network needs to onboard major fitness and technology players to drive adoption. This takes substantial business development efforts.
• User experience – Syncing apps and wallets has to work seamlessly or users will get frustrated. The UI must also clearly display reward earnings.
• Fraud prevention – Bad actors could falsify activity data to earn tokens. Advanced algorithms are required to detect cheating.
• Volatile tokens – Like other cryptocurrencies, SWEAT price will likely fluctuate, making redemption values unpredictable.
• Funding – Sweat Economy raised $25.7 million in venture capital but will need more to scale globally and achieve profitability.

The Future of Sweat Economy

Sweat Economy has an intriguing vision to merge fitness and Web3 to create an open tokenized economy. While still early stage, it offers a glimpse into how blockchain could recast loyalty programs into community incentive systems.

However, Sweat Economy or copycat projects still have much work to achieve mainstream adoption and change industry paradigms. Overcoming technological and real-world business challenges around user experience, fraud prevention and volatile tokens will be critical.

Nonetheless, Sweat Economy represents the type of disruptive innovation that has potential to reshape industries. The project and its progress will certainly be one to watch closely in the years ahead. Its success or failure may provide key insights into developing tokenized ecosystems and decentralized networks governed by community consensus.