The issue with compensation services

Lately, it has become very common for anyone to easily access reward based platforms. The introduction of Play to Earn (P2E) later gave birth to many Move to Earn(M2E) platforms with their own reward system. The traditional way of gaming which was pay-to-play evolved into play-to-earn. Likewise in fitness, while some are paying to use the cardio machines in a fitness center, some earn digital assets by walking outdoors. Moreover, the reward amounts are strongly high. It is almost too good to be true. Surely, our team is not the only one doubting this fantasy business model. The issue with the credibility of such business models have been arising dramatically.

Pocket Project also uses its own reward system as its business model. That is why our team has come up with clear solutions to the issues with the reward system business models.

Paradox of Reward

‘Reward’ stands for something received for a specific action taken. Reward may be a sum of money or any other valuable thing for the person who is receiving. Whether it is money or something tangible, it needs to have some sort of value to the receiver. Reward also may be used as a motivation factor, which is commonly used in many M2E platforms as a motivator.

However, there is a trap lying under so called ‘reward’, that cannot be overlooked.

When a new user starts getting rewarded through specific actions taken on reward based platforms, the user is very likely to associate the reward with the value of the action. Therefore, for all the continuing actions the user may take, the amount of reward will be the biggest determinant of the user’s loyalty. If the reward decreases, the action will not be worth it anymore and the reward will not function as a motivator. If the reward system is not built accordingly, the reward which is intended to be motivator factor could control the faith of the platform. We call this the Paradox of Reward.

Issues of existing M2E projects in Crypto industry

There are many platforms which uses legal tender as rewards, that have shown good success. However those platforms who has adopted ‘cryptocurrency’ as their reward currency provide much bigger amounts of rewards. That is why many Move to Earn platforms not only embraced cryptocurrency but also made their own tokens to build credible Tokenomics.

"Move to Earn" literally means "move to make money." As the term suggests, it's about generating revenue. It attracts users outright. Recent popular M2E models combine simple "walking" exercise with NFT "sneakers" and put countless complex features in it, arguing that for a user to make more money he/she has to invest more. In terms of terminology, it would be "Invest More to Earn More."

These are the core issues;

Issue 1. What defense strategies are there against oversupply of tokens?

Users who were introduced at the beginning of the project were able to maintain a high reward rate with the investment of many latecomers through the popularity of the M2E model. However, as the number of users increases, the supply of reward tokens will inevitably increase. Although there is a burn model, burn is used for a higher reward rate, accelerating the supply of tokens in the medium to long term.

When the token supply accelerates, the “paradox of reward” may come into play.

Excessive supply of tokens causes the price of tokens to fall. Then, existing users are forced to receive less rewards for the same activity than before. If those users stick to the service just to make money, they will not stay long. Unless there is another reason to stay, there is a high possibility that users who have recovered their investments will sell or leak the sneakers NFTs.

The solution of “token demand creation by continuous influx of latecomers” proposed by existing M2E platforms is also a negative content that has been encountered a lot in news and media. There is no way to find a defense against both of the price drops of “sneakers NFT” due to the oversupply of NFTs caused by the paradox of reward.

Issue 2. Is Tokenomics reasonable?

As mentioned earlier in "The Paradox of Compensation," the design of the reward system is very important. Existing M2E platforms compensates for an unlimited supply of tokens just by walking. The doubt that our team had here was that only the "Incentive" of rewards existed, and the "Disincentive" did not exist. In other words, it has a structure in which tokens are unconditionally paid if you walk without any conditions. There are several token incineration structures, but they're all focused on Earn More, and they're not really incineration.

Issue 3. Is the existing “Walking M2E” platform a fitness service?

According to our team's research, the definition of fitness was different. What was interesting was that there were many people who approached it not only from common sense "exercise" or "activity" but also from a well-being perspective. In that sense, it is questionable how much one simple activity called "walking" can meet the different "Fitness needs" of many people, and there was no service value other than just the value of "Move to Earn."

General Conclusion

Our project is not a project created to counter existing “M2E” projects. As explained earlier, Pocket Project was created with the premise of “Achieving the fitness goals of as many people as possible” by gathering fitness and healthcare experts.

However, since the context is the same in that the “reward system” is used, a comparison must be done in order to apply the ‘solution characteristic of the project. In this regard, the solution proposed by “Pocket Project” is as follows.

Issue 1. What defense strategies are there against oversupply of tokens?

• Create a platform structure that can generate revenue within a service

In principle, the fee for the quest alone, which is a popular content of Pocket Gym, is free. This eliminates the entry barrier to "pre-investment" and secures high user inflow conditions.

All quests in "Pocket Gym" are certified at least twice a week and at most five times a week.

You must watch the advertisement at the time of authentication to complete the process, and you must complete the authentication to receive compensation. At this time, advertising revenue is a source of high compensation. If you don't want to watch ads, or want more rewards and content services, you can purchase "booster" through membership subscription, and you can use 10 boosters a month. “booster” make users to design their own quests and rewards.

Membership can be purchased not only by token payment but also by in-app payment. Token payment of membership naturally plays a role in generating demand for tokens, and in-app payment income is used to cover costs to maintain the service platform and to maintain a stable reward ecosystem when users purchase affiliate products or services as reward points. In conclusion, a platform service structure that can generate revenue creates a stable token circumstance.

• Securing reliable user inflow channels

The project has secured a potential "User Pool" for 21 million Samsung Health users in South Korea and 500 million worldwide through a strategic partnership with Samsung Health, an imbedded application for Samsung Electronics' Galaxy phones. Users who have used the "Samsung Health" app without compensation have a chance to "reward" through this project.

With this secure channel of stable membership, we can attract external funds such as strategic alliances, sponsorships, and advertising to create a more stable and sustainable token ecosystem.

Issue 2. Is Tokenomics reasonable?

• Incineration system as a disincentive

The service of this project can be defined as a Q2E service that can be rewarded by fulfilling the quest. However, the exact meaning of Quest to Earn is “Quest success to Earn”. In other words, there is no reward for those who fail the Quest. Therefore, the user token investment part from those who fail acts purely as token incineration.

• Leverage token incineration system through partner products or services

The products in the point mall of Pocket Gym and the services linked to point use are all composed of affiliates through contracts. Pocket Gym is receiving products or services from its affiliates at a lower price than the actual selling price. In fact, sportswear affiliate "Puma" has offered some products up to 80% below the selling price. As a result, when users use compensated points for affiliate products or services, they can achieve a discounted token incineration. We call this “ A leveraged token incineration system”.

Issue 3. Is the existing “Walking M2E” platform a fitness service?

• Value-driven fitness platform

The goal of this project is to “enable as many people as possible to achieve their fitness goals”. Making people with different inclinations and characteristics reach their goals is not simple. As explained earlier, there are many factors such as “preference”, “expectations”, “goal achievement”, “competition”, and “identity” that affect the goal achievement process. Our project only uses “reward” as a “method” to achieve many of these elements in a more enjoyable and effective way. It is not created for the purpose of earning.

The value of the fitness service proposed by our project can be implied as 4A

Act in daily life : Fitness service in everyday life that you don't have to take time out of it

Act in fit me : Fitness services that take into account individual preferences and difficulties

Act in real effect : Fitness service that allows users to actually see the effectiveness of their activities

Act in reward : Fitness service where rewards can be health soon