This edition of the newsletter analyses consumer dApps that focus on everyday users and how it has evolved from early experiments like CryptoKitties to "X-to-earn" models like STEPN, which initially attract users with token incentives but often struggle with long-term sustainability when token values decline. The key challenge for consumer dApps remains creating balanced tokenomics with effective token sinks to counter inflation, while future success will depend on developing product-led flywheels where unique features drive user engagement beyond mere financial incentives.. We'll also share some interesting articles, portfolio updates and market highlights.

1. Research

a) Replace the EVM with RISC-V
• Ethereum co-founder Vitalik Buterin has proposed replacing the Ethereum Virtual Machine (EVM) with RISC-V instruction set architecture, which could make executing and proving code in zero-knowledge environments over 100 times more efficient.
• While this proposal represents a significant theoretical breakthrough for Ethereum's long-term scaling strategy, it has little immediate impact on Ethereum's development roadmap or value proposition, functioning more as a moonshot idea similar to the earlier Beam Chain proposal for overhauling Ethereum's consensus layer.

Replace the EVM with RISC-V

This is to Ethereum's execution what the Beam Chain is to consensus

https://christinedkim.substack.com

b) Money Moves
• The article explores how blockchain technology is transforming digital economies by drastically reducing transaction costs and increasing the velocity of money movement, comparing traditional payment networks like Visa (which processed $13.2 trillion last year) with stablecoins (which moved $33 trillion through 5.4 billion transactions).
• The author argues that successful crypto business models will emerge at the intersection of capital velocity, fee extraction, and user experience simplification, with different fee models emerging based on transaction frequency: high-velocity products like trading platforms can charge lower fees due to volume, while low-velocity products like staking or lending services maintain higher fees (typically 10% of yield), and specialized assets like tokenized gold gain value from their ability to move between markets faster than physical counterparts.

Money Moves 💸

On Monetary Velocity & Fee Models

https://www.decentralised.co

c) Combined Metrics for Tracking Smart Contract Networks
• This article proposes a methodology for combining multiple blockchain metrics (Total Value Locked, Fees, Stablecoin Market Cap, DEX Volume, and Net Bridge Flows) into comprehensive scores that measure both network size ("market share") and growth rates, allowing for easier comparison across smart contract platforms.
• The combined metrics reveal that while Ethereum, Solana, Base, BNB, and Tron consistently dominate market share (with over 90% combined), weekly growth rates are highly volatile due to factors like token price fluctuations, liquidity incentives, and memecoin activity, with newer networks like Berachain and Sonic occasionally showing strong early traction despite their smaller overall footprint.

Combined Metrics for Tracking Smart Contract Networks

One of the key advantages of blockchain networks over other digital platforms is that data about assets and transactions hosted on a blockchain is publicly available. This allows for close to...

https://mariolaul.medium.com

2. Portfolio

a) Iota
• The IOTA Rebased mainnet upgrade is scheduled for May 5, 2025, at 9 AM CEST, involving a migration from the Stardust network that will require no token migration for IOTA holders but will introduce a new browser extension wallet to replace Firefly.
• The upgrade will follow a five-step Genesis Ceremony conducted by the IOTA Foundation and 12 other validators, temporarily pausing deposits and withdrawals on exchanges while launching with enhanced infrastructure including explorers, EVM compatibility, and plans to grow the validator network from 13 to approximately 150 over the coming months.

The IOTA Rebased Mainnet Upgrade

IOTA's Rebased upgrade launches on 5.5.2025. This guide covers what happens during the upgrade, how to access your assets, and what's next for IOTA.

https://blog.iota.org

b) Infrared Finance
• Infrared Points is a new rewards program that automatically tracks user engagement with Infrared products, with points accumulated by staking into PoL vaults, claiming iBGT, staking iBGT, or staking BERA for iBERA, with certain vaults offering multipliers between 1.25x-1.375x.
• The program is designed to recognize community contributions while positioning participants for future opportunities as the ecosystem grows, with points already being backdated for early mainnet users and plans to introduce additional earning methods through upcoming partner integrations.

Infrared

@InfraredFinance

x.com/i/article/1915…

460

7:04 PM • Apr 23, 2025

3. The Evolution of Consumer dApps

What Are Consumer dApps?
As the name suggests, consumer decentralised applications (dApps) are aimed at everyday users, offering utility or entertainment beyond pure finance. Unlike Decentralised Finance (DeFi) protocols or blockchain infrastructure services, consumer dApps focus on user-friendly experiences in areas like gaming, social media, health, and lifestyle. They often hide blockchain complexity under the hood, making the experience feel as seamless as a traditional app. These apps are considered crucial for bringing crypto to the masses. Consumer dApps strive to onboard new users into crypto, with the aim of providing a competitive experience to their Web2 counterparts.

The early days
In the present day, there is a lot of emphasis on design and user experience (UX), especially the necessity of a mobile-first user interface (UI). Although modern consumer dApps are still not completely polished, earlier dApps definitely had many more rough edges.

One of the first protocols that can be considered as a consumer dApp is CryptoKitties. First launched in 2017, CryptoKitties was a pioneer, offering digital cat (Non-Fungible Tokens) NFTs on Ethereum. It attracted so much traffic that it congested the Ethereum network, proving demand for fun consumer use cases. Unfortunately, interest waned quickly once the novelty faded. 

Similar early projects set the stage for the “X-to-earn” model in modern consumer dApps, where some real-world or digital action is incentivised with tokens. Some well-known examples of X-to-earn dApps include STEPN and Sweatcoin, which led the move-to-earn narrative. During that time, tons of other X-to-earn ideas started emerging: play-to-earn, learn-to-earn, even sleep-to-earn. However, these dApps faced a similar growth trajectory. While many of these dApps saw explosive growth in the early stages, they often struggled to retain users.

Today, the X-to-earn trend has cooled off a bit, but new experiments are still popping up, with some going in pretty unconventional directions. Before we dive into those protocols, it’s important to understand why so many of these consumer dApps lose steam after the initial hype. The success of these dApps hinges on the presence of strong incentives and sustainable token sinks to keep the ecosystem running long-term

Tokenomics and the X-to-Earn Model: Why Sinks Matter
Tokenomics refers to the economic design of a crypto token, including how it’s distributed, issued and used within the protocol’s ecosystem. For consumer X-to-Earn dApps, tokenomics are especially important. While the token incentives must be substantial to attract users, tokenomics design must also be sustainable in the long-term. 

The core challenge is balancing token supply and demand. X-to-earn apps typically create a constant stream of token emissions as user rewards. If nothing curtails this growing supply, the token’s value will trend downward. To counteract inflation, the app needs token sinks which refer to a token use case that results in a portion of token supply being burnt. In essence, users must have reasons to use the token beyond selling it for profit. If dApps fail to establish strong sinks, it becomes a ponzi-like scenario where existing holders can profit only as long as new users arrive to buy the tokens. Early on, hype and growth can sustain high eventually causing a death spiral.

In theory, a well-designed consumer dApp tokenomics model will include token sinks and mechanisms to direct dApp revenue to token holders. A popular implementation of this concept is to use dApp revenue to buy and burn protocol tokens. Another strategy is to burn protocol tokens whenever they are spent on in-dApp purchases.

Case Study: STEPN
STEPN is a move-to-earn mobile app launched in Dec 2021 that gamifies physical exercise. It lets users earn crypto by walking or running. By moving physically, users earn in-game tokens. STEPN’s mission was to incentivise healthier lifestyles by combining fitness tracking with play-to-earn mechanics. STEPN’s simplicity and novelty allowed it to attract millions of users, crowning it as one of the most successful consumer dApps of all time. 

STEPN’s Mobile App Interface

To partake in the STEPN ecosystem, users are required to download the STEPN app, create a wallet, and buy an NFT sneaker with crypto. Each sneaker NFT has different traits and attributes that affect how much users earn from moving. The app then uses GPS to track distance and speed, ensuring users are moving physically. Moving spends in-game energy that recharges over time, as well as earns Green Satoshi Token (GST), the primary reward token. GST earnings depend on the sneaker NFT’s levels, upgrades and traits. Additionally, users could level up their sneakers or mint new ones by spending GST. STEPN also had a second token, Green Metaverse Token (GMT) which served as their governance token.

In short, STEPN combined fitness tracking, game mechanics and crypto rewards. The onboarding experience was smooth, with a built-in wallet and marketplace, resulting in a fun experience for many. People formed habits of taking daily runs to farm tokens and sharing progress on social media. This created a positive flywheel effect which onboarded new participants once they found out that it was an easy way to “get paid” for something they do everyday.

STEPN operated a two-token economy. One one hand, GST was STEPN’s reward token which was earned through movement. STEPN incorporated many token sinks for GST. For example, users paid GST to level up, upgrade, repair, and mint new NFT sneakers. All these actions burn GST, creating a sink. On the other hand, STEPN also featured GMT, the governance token, which was envisioned as the token which aligned with longer-term interests of the ecosystem. Only 30% of GMT was allocated to move-to-earn rewards, with the rest to ecosystem treasury, team, investors, etc.

Price Chart of STEPN’s GST (SOL)

With these token sinks in place, STEPN’s tokenomics appeared to be sound and healthy. However, in May 2022, the crypto markets crashed hard, Bitcoin and altcoins altogether. Fundamentally, STEPN’s ecosystem still heavily relied on continuous demand for GST. By June 2022, GST suffered a >99% drop from its highs, while GMT also fell by 85% later that October. With the incentive structure no longer being as lucrative, STEPN’s user count consequently collapsed. From over half a million daily users at its apex, active users dropped to under 6,000 by the fall of 2022.

Emerging Consumer dApps: New Frontiers
Even as many X-to-earn models struggle, innovators in crypto continue to propose ever-more creative ways to tie tokens to human behavior. A unique consumer dApp that stands out is Sleepagotchi, a protocol that packages a “sleep-to-earn” mechanic in an interactive mobile game.

Firstly, the convenient mobile interface is one of the most important features for a good consumer dApp. Secondly, by building the dApp around sleep, a required activity for all, Sleepagotchi casts a wide net, targeting a larger addressable market. Thirdly, the adoption of a “sleep-to-earn” mechanic gives the project a sense of novelty. 

Crypto consumer apps hold a distinct advantage with the "X-to-earn" model, which serves as a powerful incentive for onboarding users. However, competing head-to-head with established Web2 consumer apps, especially in dominant sectors like social media or e-commerce, presents significant challenges. Instead of trying to replicate these models, Sleepagotchi takes a different route by targeting a niche market, sleep. This targeted approach enables the app to tap into a specific, underserved need and build a dedicated user base. By carving out a space in an area like sleep, Sleepagotchi can create an engaged, loyal community before scaling and potentially branching out into other areas of health and wellness.

What the future holds for consumer dApps
Many protocols have tried, and failed, to create a sustainable consumer dApp. While token sinks are important, tokenomic design alone is insufficient to guarantee the sustainability of a protocol’s ecosystem. These hurdles speak for why there has been a drop in X-to-earn projects lately. Thus, it is encouraging to see consumer dApps continue to emerge in this challenging vertical.

That said, the key issue still remains. The longevity of an X-to-earn dApp ultimately depends on whether it can retain its user base, especially when user incentives start to drop, either due to unforeseen circumstances or an influx of users that dilutes the token earnings. As we've seen, there’s clear demand for X-to-earn dApps, and incentives play a big role in attracting new users. When users realise they can earn rewards by engaging with the app, they’re motivated to join. With referral programs as a common go-to-market (GTM) strategy, these users often spread the word on social media, bringing in a second wave of users, so on and so forth.

The challenge, however, is keeping this loop running. Incentive-driven flywheels are a double-edged sword. Once the incentives decrease, user engagement drops, leading to the eventual collapse of the ecosystem. What future X-to-earn protocols need to focus on is creating a more sustainable flywheel, one that doesn't rely solely on token incentives. A product-led flywheel, where the app's unique features themselves drive user engagement and retention, is a promising solution. This approach better establishes product-market fit and fosters a more loyal user base, with token incentives playing a secondary role in retention. This serves as a more sustainable and scalable strategy.

Concluding Thoughts
The evolution of consumer dApps reflects both the promise and the challenges of bringing blockchain to the masses. While novelty and rewards can drive short-term adoption, sustainable value requires more than just incentives. Tokenomics play a central role, especially the presence of strong token sinks that balance emissions and keep ecosystems healthy.

It is also important to point out that crypto is a fundamentally different industry when it comes to marketing and GTM strategies. Instead of relying on traditional methods like SEO or paid ads, successful crypto protocols build bottom-up: earning trust, engaging users directly, and forming tight-knit communities. As the space continues to mature, it will be exciting to see how these dApps balance innovation with sustainability. The next wave of consumer dApps will likely be defined by their ability to not just attract users, but to keep them.

*Disclosure: Signum Capital holds positions in the aforementioned company. The information provided on this newsletter is for general informational purposes only and does not constitute professional nor investment advice.