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On July 4th, I got a LinkedIn notification from Andrew, an old friend from my previous career.
Andrew has a good taste with what I find interesting in web3, so I checked out the post by Oleg Fomenko.
Not gonna lie, the post was a little cringe and promotional for my taste, but Oleg’s company caught my eye. Who’s Oleg?
This made me actually read the post and reach out to him (we’ll get to why in a bit). What’s Sweatcoin? It’s a step counter app that converts your physical activity in the form of steps into ‘sweatcoins’. Steps are converted to sweatcoin at a rate of 1,000 steps to 1 sweatcoin.
I need to walk more. The downside of working from home 😂
Sweatcoin can be used to enter giveaways, redeem offers, bid on auctions of items or gift cards, or donate towards charitable causes.
For users, this is a compelling value prop:
We all walk already, so there isn’t much incremental effort needed
Walking is a healthy activity
The app works in the background. I could go about my life without opening the Sweatcoin app for days and my steps/Sweatcoin would be accumulated passively.
Who doesn’t like (a chance at) free stuff?
As a result, the app has 120+ million registered users.
How does the business work? Well, with the size of that user base, Sweatcoin is a lucrative user acquisition channel for advertisers that present offers and conduct giveaways, strengthening the app’s engagement loops.
Large consumer brands such as Noom, Apple, Gopuff, Uber Eats have advertising (or affiliate) partnerships with Sweatcoin, and there is also a daily reward mechanism providing users a bonus allotment of sweatcoin for watching ads. There’s also a paid premium plan that provides additional benefits.
Now that we know the basics about Sweatcoin, we’re all gonna turn into a competitive speedwalking version of Chris Paul in that State Farm commercial to get those steps in 😂
Why did Sweatcoin catch my eye, besides the fact that they were doing web3 things?
I actually signed up for Sweatcoin back in 2018 while working at a previous company. I wanted to test out the app and was considering launching a campaign with them for user acquisition.
We didn’t end up running a campaign with Sweatcoin and the app drained my battery (they fixed that issue and it’s much better now) so I deleted the app, forgetting about it until that fateful LinkedIn post a few months ago.
Two things stuck out to me from my initial impression of Sweatcoin over 5 years ago:
They have a great business model, which is clearly shown by the numbers that they’ve publicly shared and their continued relevance today
I thought the name Sweatcoin was odd. Why not call it Sweat and have the in-app currency be called Sweatpoints or something?
Big shoutout to Oleg for taking the time to chat with me. Our call ran so long that he actually had to hop off for another call and because we were on a roll, we got on a second call later that day to finish the conversation.
The idea of Sweatcoin was conceived in 2014 and publicly launched in 2016, with the thesis that physical activity could become an asset class that could incentivize and influence behavior in a positive way:
This sounds ridiculous as a concept because physical activity isn’t normally viewed as an asset like gold or corn is. However, health outcomes can be and are quantified in various ways. One of the best examples of this in the US is with corporate wellness and health insurance programs.
United Healthcare has UHC Rewards, a program that incentivizes healthy behavior.
My old employer Manulife has Vitality, an insurance plan with a rewards program promoting a healthier lifestyle.
The list goes on and on.
Physical activity ➡️ healthier lifestyles ➡️ better health outcomes ➡️ better financial outcomes for employers and insurance providers. Everyone wins!
In a sense, Sweatcoin is a permissionless version of that. As long as you have a smartphone that can track steps, you could ‘enroll’ in Sweatcoin, regardless of where you live, how active you are, or where you work.
Sweatcoin understands this, and actually conducted a study with the University of Warwick and launched a pilot program with the NHS (UK’s healthcare system), which is now being rolled out to a larger population.
Awesome stuff.
Back to the original thesis of physical activity becoming an asset class. How could that even work? Oleg and Sweatcoin’s original vision was that this physical activity (steps) could be tokenized on the blockchain 🤯
Dude, is it really that big of a deal TPan?
I get it, not really for you. But it was a big moment for me because as I mentioned earlier:
I thought that the name Sweatcoin was odd. Why not call it Sweat and have the in-app currency be called Sweatpoints or something?
Ever since the idea of Sweatcoin began almost 10 years ago, the whole point was to tokenize physical activity, allowing it to become an asset class.
But 10 years ago, heck even a few years ago, that wasn’t possible.
Oleg and his team explored Bitcoin and Ethereum early on, but the sheer volume of transactions and costs associated going onchain would have been unsustainable. As additional scaling solutions and blockchains popped up over recent years, it was finally possible and Sweatcoin decided to bring their onchain efforts through NEAR to launch $SWEAT.
A few months after that, Sweatcoin announced a $13 million round of fundraising from some notable names to fuel the onchain transition.
Did you walk 10,000 steps today? You probably haven’t, so reduce that guilt by sharing or subscribing!
Ok TPan this is FINALLY getting more interesting (and relevant).
I know, I know. I always enjoy providing a backstory when I have one 😉
Ya we know. We have a love/hate relationship with that. So…why are you covering Sweatcoin now even though you chatted with Oleg months ago?
Sweat Economy and its corresponding token, $SWEAT, launched in September 2022 with a Token Generation Event (TGE) of 1 Sweatcoin = 1 $SWEAT. On October 17th (next week), the token will be launching in the US and several other countries.
Back in June 2023, Sweat Economy held the largest DAO governance vote in history, with 355,506 wallets deciding what to do with 2.4 billion $SWEAT tokens that were reserved for inactive users. If you want to learn more about how the vote went down, check out the Medium posts (quite interesting):
TLDR:
There was 2.4 billion $SWEAT that was unclaimed and the DAO voted on whether or not to reclaim the idle token allocation
After the proposal was passed, the DAO voted on what to do with the reclaimed tokens
The DAO voted to burn ~1.8 billion $SWEAT and allocate the remaining 690 million $SWEAT to support the US launch next week
Oh great another token! Time to get that airdrop, dump it, and watch the token go to 0.
That’s certainly possible, but Sweat Economy and $SWEAT have advantages that many other tokenized projects don’t have. Sweat Economy:
Is built off the back of Sweatcoin, a sustainable product and ecosystem
Has an established network of users and partners
Is focused on the core mission and foundation of positive health outcomes (financial outcomes also play a part and that’s ok)
The $SWEAT tokenomics and utility are interesting (overview, Litepaper), creating an already bustling…wait for it…Sweat Economy 😉:
SWEAT can only be minted through movement
Sweat Foundation generates revenue through different sources like ads, DeFi transaction fees, and NFTs within the Sweat Ecosystem. 50% of profits are used to purchase the token and burn it, with the remainder going to Sweat DAO governance
Sweat Economy plans to decentralize the movement validation process (step counting) to enable third parties (eg: FitBit, Apple Watch, Peloton, and more) to become Movement Validators. In order to be a validator, these parties need to stake SWEAT and will receive a % fee back for the transactions they process over time.
Sweatcoin and Sweat Foundation do not sell or monetize user data. However, Sweat Foundation will create a platform for $SWEAT holders to monetize their data if they choose to.
Other existing features
Growth Jars - A form of staking that allows users to be eligible for other rewards on top of earning more $SWEAT
Sweat Hero - A NFT-enabled game based on steps taken and skill-based gameplay
Learn and Earn - Users can earn $SWEAT by learning about other web3 projects and taking quizzes
What’s the result of all this? Sweat Economy is the #8 dApp based on UAWs (unique active wallets), with 672k wallets in the past 30 days 👀
When I chatted with Oleg, he mentioned that there 13 million registered US users. He also mentioned that there were 100M registered users and 25M active users in 2021, so a ratio of ~25%. Separately, Oleg has shared on a Spaces that 15-20% of Sweatcoin users opt-in to Sweat Economy.
Making a conservative assumption:
13 million registered users
2.6 milion active users (20% of registered)
390k US users opt-in to Sweat Economy (15% of active)
This would bring Sweat Economy’s UAW metric to 1M+, not including the other countries that will be able to opt-in as well. We’ll know what that number looks like soon enough to see if my rough math checks out. Gotta love the transparency of the blockchain!
It’s natural for crypto and web3 natives (myself included) to immediately think token = $. However, the overarching goal of Sweatcoin and Sweat Economy is to promote positive health outcomes with aligned incentives. And just as health insurance programs incorporate various financial incentives, Sweat Economy is doing the same, but in a more dynamic and open way.
Also, WTF is it legal for a healthcare provider to say ‘Don’t pass up on free money!’ If this were crypto in the US, the SEC would be all over this like syrup on pancakes. Anyway…
Over time, it will be harder for potential partners to ignore the opportunity Sweat Economy has as a potential customer base at a minimum. As a simple example, let’s say Apple participated in Sweat Economy (that would be dope). They’re already an advertiser on Sweatcoin.
They could eventually become a Movement Validator, encouraging Sweat Economy users to purchase Apple Watches to qualify for the additional rewards that could be earned through other forms of physical activity.
On top of that, what if they actually accepted $SWEAT as a form of payment for Apple Watches? 😳 Sounds unlikely, but more reasonable under certain scenarios:
Apple would accept only up to 50% of the price of the Apple Watch via $SWEAT
Apple Watches are a companion device, so those redeeming $SWEAT for an Apple Watch are more likely to be an existing Apple user (eg: or make the offer available to iPhone users only, which can be validated by the app itself)
The offer can only be available for older Apple Watch models which are already discounted. For example, the Apple Watch below is already discounted 20%, so a 50% discount is not as far fetched as it sounds. Or Apple could just match the 20% discount and keep the full $399 retail price. 🪄 And if Apple wanted to reduce the regulatory risk, they could just have Sweat Economy somehow handle the $SWEAT and request it be burned after redemption, or something similar.
This scenario actually reminds me of where I believe Reddit is headed with Community Points and the potential of that emerging ecosystem
An even more directly aligned example of this is with existing health insurance and employer wellness programs. $SWEAT represents steps taken and can be redeemed for different perks and rewards. The organizations can integrate with Sweat Economy, or augment their stale (or potentially illegally marketed? looking at you Sunflower Health Plan lol) programs instead of creating something from the ground up or spending months hammering out a deal through a never-ending email thread.
And what if a user buys $SWEAT off an exchange? Orgs can verify steps taken by the actual user. A $SWEAT balance doesn’t mean it was all earned by that individual, and they can request additional info from the user to validate. ‘Sign-in with Sweat Wallet’ isn’t that far-fetched.
Crypto and web3 have been criticized for being a ‘solution looking for a problem to solve’, and much of that critique is valid.
However, we’re starting to see applications that
use blockchain at scale while
maintaining a sustainable foundation and
a positive mission that all of us can agree upon.
It feels like Sweat Economy can be a leading example of this.
See you next week!
