decrypt.co
Popular health and fitness app Sweatcoin is making a major transition from its Web2 surroundings into the world of Web3 by expanding its existing “Sweat Economy” ecosystem to offer crypto rewards for user engagement.
The leap is also fueled by $13 million in funding backed by several prominent blockchain investors, including Electric Capital, Spartan Capital, Jump, GSR, and the NEAR Foundation.
Other participants in the round include high-profile figures such as Polkadot co-founder Bjorn Wagner, Polygon co-founder Sandeep Nailwal, and Vinny Lingham, the founder of Civic.
Sweatcoin’s Web2 incarnation, which gave users a Sweatcoin for every 1,000 steps they took (redeemable for branded products, digital services, and charitable donations), boasts over 100 million users who already use the app to bring value to their daily movement.
Now, with fresh funding in hand, the team hopes to attract even more users through its existing step-counting model and the launch of a new cryptocurrency called SWEAT.
Supported by the SWEAT Foundation, the makeover will also mark the launch of its own decentralized autonomous organization (DAO) responsible for governance issues.
Built on NEAR, available on Ethereum
Initially built on the NEAR blockchain, SWEAT will be available as both an ERC-20 (Ethereum) token and a NEP-141 (NEAR) token, with other EVM-compatible token formats supported through a dedicated bridge.
According to the team, there is no initial payment or purchase of an NFT required for users to get started. Simply download the app, after which users' steps are counted, validated, and converted into Sweatcoins (not SWEAT tokens).
On September 12, all Sweatcoins held by users will be matched with the SWEAT token. These holdings can then be staked to “take advantage of of a number of Web3 offers, deals, and incentives from a selection of partners,” including an NFT offering, according to marketing materials seen by Decrypt.
“Users do not require an NFT to earn SWEAT for their steps, but NFTs will come with plenty of rewards and bonuses,” Sweat Economy co-founder Oleg Fomenko told Decrypt. “Users will be able to purchase an NFT which corresponds to tiers of rewards.”
He explained that a higher tier of rewards will bring more perks, such as higher daily minting limits and discounts on services in the new app.
“Owning an NFT will allow users to partake in SWEAT-related games, such as head-to-head step challenges, where users place a wager on who can complete more steps in a given period of time,” said Fomenko. “Winner takes all!”
Stop moving, stop earning SWEAT
The Sweat Economy co-founder, however, stressed that the NFTs within the SWEAT ecosystem will be dynamic: “if you do not feed it with SWEAT because you stopped moving, it will decay.”
Unpacking this particular feature, Decrypt turned to SWEAT’s Litepaper, which says that “to encourage movement in perpetuity, the [SWEAT] Foundation will introduce an inactivity fee,” meaning that the DAO will charge users a fee if their activity consistently falls below a given threshold.
“Not only does this align with our mission of promoting consistent habits, it will also contribute to the exponentially decreasing rate of inflation,” reads the Litepaper.
When asked under which circumstances users would be hit by an inactivity fee given the reasons for inactivity can be different—from staying sick at home to taking long-distance air flights—Fomenko stressed that the exact details of the fee “will be subject to community DAO vote, so we will leave it up to them.”
He still insists that “until the DAO is formed, we will be implementing [the fee] as it is key to our overall mission—to get the world moving more.”
“It discourages inactivity [and] encourages people to move a bit every day—the threshold won't be very high and the penalties are negligible if people just move less for a day or two,” Fomenko told Decrypt.
Introducing the SWEAT wallet
To support its Web3 push, Sweatcoin is also launching a separate non-custodial crypto wallet where all actions with the SWEAT token will occur.
“We chose not to integrate the crypto offering into the existing app because it is an entirely new product,” Fomenko said. “The Sweatcoin app remains the movement-validator app, but the Sweat Wallet App will provide a new portal to Web3. it will offer people a host of crypto services, from purchasing popular cryptos with fiat, to crypto-to-crypto exchange, NFTs, gamification, and more.”
According to the Sweat Economy co-founder, the team also wants to keep Sweatcoin “running as normal, for people who either can’t access crypto in their area, or who prefer sweatcoins to SWEAT.”
Still, as many as 11 million people, according to Sweatcoin, “have already opted-in to create their non-custodial wallet associated with the app.”