Mike Townsend: Thanks for tuning in to another episode of Around The Coin. Today's guest is Oleg Fomenko. Oleg is the co-founder of Sweatcoin. Oleg is a serial entrepreneur whohas launched a number of successful businesses, including a music subscriptionservice that grew to 1.3 million users. Oleg played a key role in definingSweatcoin as a health currency driven by his extensive experience and knowledgeof behavioral change. Oleg believes that technology can positively impact auser's health habits by leveraging human biology and sustainably alteringbehavior. Sweat Economy and the Sweat Token has come out of the momentum of Sweatcoin with over 110 million registered users.

Mike Townsend: So I hope you enjoy this conversation. Here is Oleg Fomenko.

Mike Townsend: All right. Oleg, I'm excited to chat with you. You're running a project calledSweatcoin which is running off the momentum of sweat, the company, sweat.comwhich is a massively successful project. Tell me about this transition from thebusiness to Sweatcoin and how you, how the whole thing kind of went down.

Oleg Fomenko: Greatto be here, Mike. Thank you very much for having me here. Couple of really sortof small corrections. Actually the original web two business was calledSweatcoin. And the reason why we called it Sweatcoin is because already in2015, we wanted to be on blockchain and we were hoping to be crypto.

Oleg Fomenko: Youknow, since then, what happens subsequently is we realized that there was onlyone blockchain back then Bitcoin. And it was very difficult to build on it. Andit had very low throughput, which hasn't changed until now of like eighttransactions per second maximum. So we've decided that we're going to do ourminimum viable products centralized without the blockchain, and we'll move toblockchain.

Oleg Fomenko: As soonas we. Fast forward to sort of 2016, we're launching and our proposition, whichis to make the world more physically active. We basically pay you to walk andwe pay you in Sweatcoins as name suggest. As I mentioned, we'll we launchedcentralized. The proposition was really loved by the market and users.

Oleg Fomenko: And byearly 2017, we were already process. Several hundred transactions per second,the peak. So our decision of not building on blockchain was really kind of avery important decision that saved our lives ever since then, every year wewere looking into blockchain space and we're hoping to find new, faster, bettertechnologies to.

Oleg Fomenko: But itwas impossible until last year, when all of a sudden like buses in London, theystarted coming in threes. So all of a sudden there was Salina, there was nearthere. We have lunch, there was polygon, there were, you know, kinda lots oflayer twos that were very exciting. So after doing our scouting and analysis,we realized that the time was right and now we can start.

Oleg Fomenko: So we'vedone a lot of user research conversations with our users also want soquantitative studies to understand that, you know, it's not that justanecdotally our users want us to become quick, but it's overwhelming desire ofour user base. And we selected a partner sure. That we're gonna get to it alittle bit lighter.

Oleg Fomenko: We'vechosen near to build on. And we've started building. So we now have twobusinesses effectively, a web to business called Sweatcoin with more than ahundred million users, 35 million actives, and it's profitable. And we'reconstructing second part of the business, which is web three and it's calledsweat economy and it is going to bring into the world, our new token called.

Oleg Fomenko: Thatwill coexist alongside Sweatcoin that will remain the center of our web twohealth and fitness app. Sweatcoin, sweat will be decentralized. It will bedeflationary and it will be completely open. So you'll be able to use itanywhere where you'd be able to use crypto.

Mike Townsend: Okay,great, great description.

Mike Townsend: Andyou you've raised roughly 13 million for. Is it Sweatcoin or is that for the...

Oleg Fomenko: This isa token sale so this is the money that we raised just pre-selling our tokensbefore then we raised more than 6 million into our web, but to centralizedbusiness. So all in, we raised about 20 million.

Mike Townsend: Andmillions of users that I imagine is the pro, is the company profitable todayand using much of the proceeds that build on web three or near?

Oleg Fomenko: Yes,absolutely. We're one of the very unusual and very rare health and fitness appsin web two that managed not only to require a lot of users, but also to, youknow, build a sustainable business. We've been profitable for more than twoyears.

Mike Townsend: Andhow did you guys do it? Like what did you realize before other people realizedor what strategy worked best to get you guys there?

Oleg Fomenko: Yeah.You know, very, very good question. I think that we've we've had a thinking ofa web three company from very early days and we're very excited to move intoweb three, but I'm sure that we'll come to it a little bit later.

Oleg Fomenko: Why.But we started thinking immediately sort of holistically and not only as sortof most health and fitness apps would do where they would have a free modeland, you know, they would have products for free and then it would be sellingpremium subscriptions and, you know, hopefully their premium subscriptionswould would cover.

Oleg Fomenko: We'vestarted in a completely different place. And we've started with our userswanting to be more physically active and wanting to, you know, gain somethingin exchange for being more physically active than they were before. And havingsweat warning allowed us to basically create a marketplace where brandsservices, you know, can anything to do with health.

Oleg Fomenko: Fitnessfashion, vanity you know, kind of makeup accessories, dog accessories, becausea lot of our users own dogs and, you know, they work quite a lot. All thesebrands were very, very interested to get in front of our users and all of asudden. Advertising as well as sort of user acquisition or bringing in users tobrands that are interested in physically active audience or in people who wantto be more physically active, you know, we could give them really, reallycompelling propositions.

Oleg Fomenko: So weended up having three revenue streams, advertising partnerships, and premiumsubscriptions, which allowed us to generate very healthy.

Mike Townsend: And doyou feel that sweat somehow cracked the code on getting direct advertisersbetter? And that was the key, cause I would imagine that that comes subsequent,you know, comes after you have, you know, a ton of users.

Mike Townsend: Likeit's not, I would imagine other health apps are probably like, well, you know,if I had 20 million active users, yeah. I could go reach out to, you know,Lululemon and they'd be interested. But is it, do you feel like it's some, isit a soft combination? Good user experience for onboarding like some communityaspect of it, maybe celebrity influencer, or like, is there a strategy thatkind of hit home that got you to the point when you then had leverage to go andget the advertisers?

Oleg Fomenko: Verygood question. Very perceptive. Yes, of course. You know, it wasn't smoothsailing and we needed to do a lot of other. but I think the key wereproposition that is very simple, very straightforward, and is very interestingand compelling for people to even talk about to other people. You know, we makeyou more physically active.

Oleg Fomenko: We payyou to walk. People loved talking about us with, you know, kind of with theirfriends and. Have you heard of this app pays for, what do you mean? You know,how is that possible? Somebody can pay or, or just go and figure it, you know,kind of try it for yourself. People come in, you know, kind, a lot of peoplewould come in and its like, well that's impossible.

Oleg Fomenko: Youknow, you must be selling data or something. So they would come in in a bit ofa kind of iced out. But then they'd realize that actually these works and worksyear after year and the products are improving and there is more and moreoffer. So at the very beginning, of course it was hard. But even when we hadlike 10,000 users, we were able to have a compelling reposition to brands for10,000 users was like, oh my God, this is fantastic.

Oleg Fomenko: Sowe're working with micro brands with really, really small businesses. And as wegrowing the businesses that we're partnering with have been also growing and,you know, kind of proposition gradual growth in our partner. But there isanother thing. Of course, we are totally obsessed with product and with userexperience and making sure that it is really, really kind of good lookingmagical and functions extremely well.

Oleg Fomenko: Andthere is an aspect in the product that also helped us to separate ourselvesfrom a lot of copycat that emerged in sort of 20 16, 20 17, which is we've beentotally obsessed with accuracy of data and. The need to verify movement becauseas soon as you start rewarding people for physical activity, one of the firstthings that people do not even the, you know, can to, to, to kind of gain you,but to just check, you know, people will check the phone and will try to sortof get some steps and convert them into sweat.

Oleg Fomenko: Andthis is one of the first things that we needed to solve. Like all the shaking,all these bumps, all these cradles that shake your phone, you know, putting thephone on your dog and letting dog run on the park, putting your phone on top ofa dishwasher, or, you know, you name it, you know, they've tried it.

Oleg Fomenko: Thereis a website that's called UNFI bits.com that has like dozens of ways oftricking your wearable or your phone, and to believing that you physicallyacted when you are. So all of those things we had to solve for collect data andmake sure that nobody can trick us into believing that they're active whenthey're not.

Oleg Fomenko: Andthis has been a bit of an obsession and a lot of businesses that tried to copyus. They really didn't pay attention to this. So they simply accepted this facevalue, whatever phone reported. And as soon as you kind of earn some tokens orcoins by shaking your phone, it immediately destroys your trust that thesethings are valuable because if I can shake and earn everyone else can, so thisis worthless.

Oleg Fomenko: This isnot worth engaging with our experience was completely different. People werelike, ah, you sold this one. Okay. So that means I genuinely have to sweat forthis. Yes. Okay. All of a sudden. They started believing that these Sweatcoinshave value, that it is worth collecting them and worth spending them.

Oleg Fomenko: So, youknow, kind of, this is something that's been there from the very, verybeginning, because our vision is not to create a, just sort of sticky app. Ourvision is to create a currency that is the expression of physical activityvalue. What would be totally amazing is to turn this. Physical activity thateveryone knows and understands have value because you know, I'm saying physicalduty has value.

Oleg Fomenko: Youwill nodding. Everyone is nodding because we do know that if we're morephysically active, we're gonna live longer. We're in a better mood. We fitter,you know, can your doctor would be very happy. Your family's extremely happy ifyou physically fit your insurer, your employer, your country. So, you know,kind, we know it's.

Oleg Fomenko: Thefunny thing is that everyone knows it's valuable, but nobody knows how valuableit is. It's really quite bizarre that we have a universal agreement, that thereis value, but it does not have a numerical expression. You cannot collect it.You cannot power those interactions that should exist there. You should be ableto get a discount on your health and life insurance.

Oleg Fomenko: Ifyou're more physically. It, you should be able to demonstrate to your doctor orto your trainer that, you know, you've been physically active. Your employer isalready motivating people to be more physically active. So all of theseinteractions can start existing and you know, can really make sense if we'recreating this unit of physical activity.

Oleg Fomenko: Andthis is where sweat comes in because we now are finally at scale. Moving intothe world. And web three allows us to build this unit of currency that isbacked, that is generated by you being physically active. And that is fieldwith that value. So few years down the line, I am dreaming, grooming off the,you know, press sort of coverage that says physical activity has done 20% uplast.

Oleg Fomenko: Thatwould be amazing because people will start thinking more and more aboutphysical activity as something of value that will help them to put one foot infront of another more times per day, that will create such an immense wealthfor humanity through those things that I've already described, you know, can throughhealth, through increasing life expect.

Oleg Fomenko: Throughimproving mood and productivity, et cetera, et cetera, reducing healthcarecosts. There's just countless examples of positive impact. And if we do thatand if we capture even just percentages of that value, God, you know, justsedentary behavior alone costs the world $2 trillion a year, 2 trillion.

Oleg Fomenko: Thisis, you know, kinda, it's an amazing opportunity, huge for the world. And for,you know, kinda each individual person and of course for us as a business.

Mike Townsend:Interesting. So yeah, you mentioned a few things. So I think of the hardwarecomponent, like if I picture Fitbit or apple watch or the phone as beingdifferent pipes of data, so.

Mike Townsend: Iwould imagine if you're going through a third party, like a apple watch orFitbit or something, these guys have their own algorithms to do this process offraud detection effectively, for lack of a better word. Right. So it, it isthat the case where you are, you're just do you take in the raw data fromFitbit and apple watch and then process it or do.

Mike Townsend: Pipeit to you and say, this is how many steps kind of in a interpreted algorithmicformat. Cause I'd imagine if you're taking it raw from the phone, then you haveto do the work technically if determining what's legitimate versus what's not,but is it, is it like what percentage of the market is phone versus some sortof device.

Oleg Fomenko: verygood question. I don't think that I'm gonna be able to answer what percentageof all the data that we have is coming from wearables. But I would imagine thatit's going to be in sort of low double digit percentages. So phones are a lotmore ubiquitous and to be honest are also a lot more precise because phones.

Oleg Fomenko: A lotmore sensors that allow to triangulate and verify accuracy of that information.So we're definitely not accepting data supplied by devices. At face value, weare collecting a lot more detailed, raw info that allows us to. , you know,basically make a decision, ah, this is not walking.

Oleg Fomenko: This isshaking. This is not walking. This is, you know, CRA because you'd see, thereare a lot of web three move to earn projects that, you know, if they haven'tdone really thorough job at you know, kind of verifying and validating movementit's yeah, way too easy by using those sort of foam farms in sort of far.

Oleg Fomenko: Tobasically feast them and, you know, extract a lot of value by doing very, verylittle, which destroys trust and destroys the, you know, destroys them as abusiness

Mike Townsend: Right.Right. Okay. And I imagine you have some intelligent way of capping it. So ifsomebody was like, okay, this guy's running a marathon every day.

Mike Townsend: Maybethat's legitimate. Maybe it's not, but is there, is there like a converging capon, I mean, you can't be make a million dollars on this app by yeah, yeah,absolutely.

Oleg Fomenko: Yeah,yeah, no, we do have and, and it's not even as elaborate as that, we actuallyhave a simple, straightforward cap of 10,000 steps.

Oleg Fomenko: Thatyou would be able to convert per today. This is a world, you know, kindarenowned and accepted sort of daily walking norm that world health organizationis recommending. So we are sticking to it right now. If you want. You canconvert more and we have in premium level, you can actually convert up to50,000 steps, but, you know, can there we, you know, can we are using all ofthat know-how and that we call it electrification model that that has sort offour different levels of protection to make sure that nothing, unless it'sgenuine movement can can go through.

Oleg Fomenko: Youknow, for majority of users, the cap is 10,000. And even if someone for a veryshort period of time until our model really sort of figures out what what'sgoing on here, even if they figure out how to, you know, kind of trick ourmodel in believing that this is genuine movement, they're not gonna be able toscale this horizontally because as soon as multiple accounts, you know,appearing.

Oleg Fomenko: This isimmediately really, really visible. And, you know, we pick it up in, you know,kinda in a snap.

Mike Townsend: Andhow much would someone make if they walk 10,000 steps in a day?

Oleg Fomenko: So, youknow, we with Sweatcoin, the token economics, and this is the centralizedcurrency and it's inflationary once with coin is 1000 steps and it doesn'treally have.

Oleg Fomenko: Andestablished exchange rate because, you know, it's centralized, it'sinflationary and it has utility only inside our app. But despite this, thereare, you know, informal exchanges and some people are trading in and out. Westrongly discourage that because this is just so right for scamming, you know,people report that, oh, you know, somebody told me that, you know, kind ofthey'll pay me money and they didn't.

Oleg Fomenko: Somm-hmm you know, please, please, please. If you're listening. Don't fall forthis, but it's very curious that people are already trading in a currency thatis not given crypto is not a token and it's not on blockchain. Gotcha. That isone of the biggest reasons why we want to create sweats to make sure that weprotect kind users who want to trade in their physical activity.

Oleg Fomenko: Becausewith sweat being on near and being on blockchain is going to be a lot harder toto scan.

Mike Townsend: Got it.So previously it was closed garden. You couldn't do anything. It's kinda likeloyalty points for an app that you probably can upgrade, see differentinstructors, videos, or have badges on your profile.

Mike Townsend: Ththat sort of thing. And then now with the coin web three, you can say, this isactually, you can actually look at this as a revenue generator. Is that theintention or maybe subsequent unintended outcome of this. And I, it does that.And does that, does that make sense? Like if I think of somebody.

Mike Townsend:Incentive to be healthy. You know, I would imagine there's gotta be a directcorrelation between if you're, if you're gonna gimme one biometric like onepiece of data about someone correlates to negative health is probably gonna beweight. You know, if you're overweight, like the United States, especially someparts of the country, it's like 30%, 35% obesity rates and, and there's othercountries close, like Mexico is close.

Mike Townsend: And ithas to do, I'm sure with the sedentary lifestyle, people are on their phonesand the computers. Like 75% of the day they're waking hours. And then also thefood is like, you know, highly caloric and high in sugar and everything else.So there's like this perfect storm where people are quite unhealthy.

Mike Townsend: Andthen you also add to that the health insurance model is set up to like youremployer pays for it. So you don't actually experience the direct cost. So it'slike this confusing cloud of exactly cost. And, and I would imagine people,this is something I don't understand. And I'm curious if you have an insight.

Mike Townsend: There,there, there has to be a human drive to be maybe not optimal health, but likephysically capable of moving your body without pain and doing basic kind ofactivities you want to do. There's a certain intrinsic reward for that, thatthat feels to me intuitive. But I, I wonder what, what it is, what is it thatsome people.

Mike Townsend: feelthey need more than that. They need to be paid to move. Like talk to me alittle bit about this, what your view is on the psychology. The demographic ofpeople that are most motivated, not by the intrinsic reward of being healthy,but by like, we have to make money and, and secondary is, oh, by the way I loseweight is like, who, who are these kind of people?

Mike Townsend: Whyare like, what are you seeing in the market?

Oleg Fomenko: Very soperceptive and very interesting commentary that goes quite deep into kind ofpsychology. And that sends me back all the way to creation of the businessbecause you touched on a topic or a subject that basically brought our idea orkind of our hypothe.

Oleg Fomenko: Into aproduct. And what we found really interesting when we started talking to peopleabout motivation to move, why aren't we able to be as active as we want? We'vediscovered that absolutely everyone, a hundred percent of people, no matter ifthey are like ultramarathon runner and, you know, runs every day down tosomebody who is barely moving and is overweight.

Oleg Fomenko: Theyshared this feeling that they should be moving more and they would love to bemore active, but something was stopping them. And when you stumble into auniversal sort behavior, then it typically means that you're into something.There is, there is a very interesting and sometimes unexpected explanation asto why.

Oleg Fomenko: Ahundred percent of humanity is experiencing this and being sort of trainedpsychologist and spending time studying, not just psychology, but alsobehavioral economics. We quickly realized that the reason why we're not asactive as we want to be is because nature doesn't want you to be active naturedid not build you to be active nature, built you to survive.

Oleg Fomenko: andthat means that you are sitting, preserving those precious calories that youmanage to acquire as opposed to being sort of active and burn because beingfit, but calorie less is a lot more dangerous and is likely to lead your tribeto death. Then you sort of being sedentary and waiting for the next Maas toshow stuff, to show.

Oleg Fomenko: Andnature had to really, really drive that home. So nature created this behavioralfeature back then, but right now it's working more like behavioral, but calledpresent bias. So we only focus on right here right now, avoiding pain, avoidingpunishment, or sort of getting food and reward. So before, you know, kind of,we would run when there is marathon horizon, and we need to.

Oleg Fomenko: Or whenthere is a sample to tiger about to eat us. Otherwise we would sit around thefire and preserve those calories. If you are just following nature's guidance,that's exactly what we continue doing right now. the trouble is back then. Foodwas scars. Calories were really rare right now. They come, mammoth shows upthree times a day on the plate.

Oleg Fomenko: So ifyou sit between those meals, you, you know, you balloon. So what was a survivalfeature right now is, you know, kind of terrible bug and technology that we'vebuilt, this Sweatcoin. Is helping you to actually overcome it because it givesyou instant gratification in exchange for every step that you take.

Oleg Fomenko: Whathappens is that you start looking at it, not as an expenditure of calories, butas an enrichment mechanism, therefore you're putting one foot in front ofanother more times, you're burning more calories and so on and so forth. Soit's a very, very basic. Kind of psychological, I wouldn't even say chemicalexplanation because you're changing.

Oleg Fomenko: We arehelping you to change your relationship with the movement from a waste tool innature's perception to gainful from nature's perception and means that naturehelps you to find that motivation, to find that energy, to find that sort ofsubtle drive, to put more physical activity into your daily.

Oleg Fomenko: And weknow that it works because we've done very, very large scale research withuniversity of Warwick. That is one of the most respected universities in sortof digital medicine in the UK that has proven that our users are 20% moreactive after installing our app than we were before. So this intervention,this, you know, can this help this motivation is definitely.

Oleg Fomenko: Andright now with more than a hundred million users, we know that it's working atscale that nobody expected. You know, we definitely can push it, you know, alot further than this.

Mike Townsend:Fascinating, fascinating. And how did you structure the ICO? So you saidinitially that you had this idea for web three, the technology came about, youlooked at different projects.

Mike Townsend: Thisis like let's build on near layer. Did you know this was gonna be, did youprivate list it, like did you try to go to investors or did you bring oninstitutional investors first? Or was it like, Hey, we want to go open marketICO route. Like, what were some of the most important decisions that you had tomake when when, when creating the token and how did you think through those.

Oleg Fomenko: Wow.There's a local impact there.

Mike Townsend: Giveyou, let me give you a little bit, let me get a little bit more guidance here.So I, one thing I wanna ask you about is the, the structure of theorganization. So you say, I'm not sure if you guys have a nonprofit, typicallyit'll have like a nonprofit that manages.

Mike Townsend: Wehave a foundation, right? So foundation foundation, typically the decisionpoints I've observed. Does the foundation, does the private entity dissolveover time? A lot of projects start with the LLC dissolve that go decentralizeis the ultimate goal. Maybe, maybe it's different in your case. Maybe you likeneed the dev shop to build the app or something. Okay. Then

Oleg Fomenko: nowthis is, you know, gonna let me yeah, I can, I can definitely address this. Ithink one of the toughest things for us, given that we started in 2015 was to.You know, can, oh, it does you, you know, that it is your vision you know, thatusers wanted. And you know, as soon as these two, you know, sort of things cametogether that technology enabled and users, you know, still wanted it.

Oleg Fomenko: And weunderstood that we can actually deliver on it. That was the, you know, kind ofthe very exciting. How did we actually approach it? Let me start with selectionof the partner, because there is a very interesting story there in itself. Sowe know that our scale is something that demands sort of unparalleledthroughput speed.

Oleg Fomenko: Oftransactions per second. And also given the fact that we are sort of creatingvalue of movement. We're not talking about whale, we're not talking aboutpeople that, you know, have 1 billion in wealth. So we're talking about hugenumber of users with fairly low balances that are very, very active and, youknow, get involved.

Oleg Fomenko: So weneeded a chain that was fast. That was. And was also ecologically friendlybecause last thing you'd wanna do is to persuade the world and people be morephysically active and then burn heck of a lot of fossil fuels that, you know,can you manage to help them save by sort of helping them to jump out the busesand out of the cars and, you know, off their bikes.

Oleg Fomenko: So wewanted to continue sort. Ecological direction. And when we were looking at thechains, of course, technology was one of the items, but actually it was itemnumber three. The first one was vision. The second one was the team. The thirdone was technology. And what we were looking for are the teams that reallydifferent take on what they were.

Oleg Fomenko: andthankfully we've encountered a number of them. And the typical approach thatsort of protocols or layer ones use, or the measure of success is TDL. Totalvalue locked. Just the use of that word. Locked is just fundamentally wrong.Things need to work rather than being locked, being stashed away.

Oleg Fomenko: This.Not a, you know, kinda sign of success. This is a sign of control more thananything. And we felt that this is actually more gearing towards few people,controlling huge amounts of money. So this is a whale friendly, or this is akind well focused strategy. Now near on the other hand. Are talking about sortof making web three mass market and bringing 1 billion people into web three.

Oleg Fomenko: Ourvision is to make 1 billion people more physically active. You know, therecould be, you know, it's very hard to imagine that there could be morestrategic client in between sort of us and another work, three protocols. Sowe're really, really excited about that. The team. Alex, the founders of nearand the team that they've assembled and you know, pulled together is absolutelyincredible to work with.

Oleg Fomenko: It'sfantastic. And I sort of know that some people are not going to like what I'mgoing to say, but I far prefer people who are not using word. And are throwingaround, you know, kind of these sort of stories of kind of wasteful time spanand, you know, kind of what tokens, you know, kind they've done, but actuallyinvesting their time into building something that will change the world.

Oleg Fomenko: Andthese guys are of that type. And it's absolutely fantastic to work with them.You know, it's absolute, pure pleasure. And as I mentioned, then there is atechnology ecologically friendly, fast, and. So that's why we've chosen near asa partner. And the last bit is how are we approaching our I guess it's not ICO.

Oleg Fomenko: We areusing term you know, kinda iOS initial change offering when you getting listed.So kind of our approach to it was the following. As I mentioned to. We'rebuilding the currency that will become the unit of physical activity value. Andthat means that it needs to be born out of your physical activity, but in orderto make sure that we are not repeating the sort of mistake, I guess, of sweatswift coding design, we needed to make sure that it's not inflation.

Oleg Fomenko:Continuously and in order to deliver this we've we, we, we use an approach thatBitcoin uses where there is a continuous increase in meeting difficulty. So,you know, we'll start again at 1000 steps to one sweat, but very, very quicklythe difficulty to mint one sweat is going to go up. And by the end of the firstyear, you'll need to walk two to 3000 steps.

Oleg Fomenko: And soon and so forth. So the, that would mean that, I dunno, like in five yearstime, you're gonna need to walk 10 to 15,000 steps, which basically in economictheory means increase increasing marginal cost of production. And that meansthat there is more physical activity packed in this unit of currency.

Oleg Fomenko: Andbecause of this over time, This unit is becoming more and more representativeof the value of physical activity. No, no matter how small it's, even if valueof one step is I dunno, 15 zeros. One, what will happen over time is that thevalue of sweat as a token is going to consist of more and more of these steps.

Oleg Fomenko: Andtherefore it is going to become that sort of expression of physical activity.And it. Going to be perceived as a unit of physical activity value the wayworld sees it. So this is on supply side. There are a couple of other things,you know, like inactivity fee, which is really exciting for us because, youknow, can we do understand psychology very well.

Oleg Fomenko: Youprobably know, or heard of lost aversion, you know, when people behave almostrationally in order to avoid loss, even though it's tiny. So in our world,because we're trying to make the world more physically active. There will besmall burns of sweat if you stop being physically active. So that will help ustogether with, with this tightening of sort of conversion rate of steps tosweat, create a inflation that is approaching zero and.

Oleg Fomenko: Inactivity fee, we will even make it deflationary now on the demand side. Andthis is where it gets really, really exciting because, you know, in web two,we've already stressed out. As I mentioned to you, three revenue streams,advertising partnerships, and sort of user premium subscription. All of theserevenue streams are perfectly replicable in web three.

Oleg Fomenko: And infact, Per user, they generate even higher revenues in web three than in webtwo. But in addition, web three and business model around, it allows us to, youknow to, to generate even more revenue. Just to name, to name, just a few thatyou know, are already in development and will be rolled out quite soon afterTGE NFT.

Oleg Fomenko: Thatare linked to your level of physical activity, but also represent your sort ofpersonality in the system that will be game mechanic around that that willallow you to evolve and change your NFT because it's going to be dynamic. Sothat, you know, can, it will be your presentation in the, kind of in the worldof sweat Corning.

Oleg Fomenko: And weknow that, you know, people engage with it, if not a hundred percent of people,but for a considerable number, this is a very, very interesting engagementmechanism. And we are designing it again to make people more physically active.Then with trading fees, we do know that our users want to trade sweat for othercrypto token.

Oleg Fomenko: Andthrough partnership, we can offer really, really slick and interestingexperience to our users that will generate trading fees for the business. So onand so forth, there are kind of multitudes of different revenue streams thatwill be testing. And now we're getting to two that I'm most excited about, butthey'll take a little bit longer to build.

Oleg Fomenko: One iscalled alternative movement valid. So right now, we only do convert yourwalking or running because you know, this is the type of physical activity thatwe focus on steps and detection of steps and verification of steps. There arebusinesses that are focusing on swimming, focusing on cycling, focusing on highintensity training, Zumba, et cetera.

Oleg Fomenko: A lotof these businesses are working with us already and interested in the partner.That would enable them to track this physical activity, validated and issuesweat to the users of their applications, allowing them to participate in thewhole kind of ecosystem. that will require of course, taking some sweats tomake sure that there is no kind nefarious behavior there is, you know, kinda noincentive to push Iranians data through through the system.

Oleg Fomenko: Sothese partnerships are really, really exciting for us and create additionaldemand for sweat in probably time span about one and a half to three years. Ithink we're gonna start seeing some some some of these. but the most excitingto me personally is we as a centralized business right now, sitting onterabytes of really interesting and valuable physical activity data.

Oleg Fomenko: Theonly thing that we do with it right now is we use it to validate if yourphysical activity is genuine or not. We are European. We are governed by GDPR.We do not monetize. We do not pass this information to nobody under nocircumstances. We do believe it's yours. Now, when we are shifting our gears towardsdecentralization and you know, kind of going into Dell, That answers sort ofyour question that is vector of our movement from foundation, we would like tomove to Dow and Dow takes over everything associated with the sweat, sweateconomy and and the app, sweat wallet that is going to be sort of the center ofusing this this token, when that becomes Dow.

Oleg Fomenko: We willbe able to pass this movement data into Dow so that you will be able to flipthe switch and enable access to your data. And therefore you will be ablethrough the use of Dow as a platform to monetize your data. And Dow will justcollect a small kind of small fee for that. We know that this data is extremelyvaluable because there are very little sources of this information to give youan example.

Oleg Fomenko: WhenCOVID hit and Spain declared that they were going to lockdown. Spanish lockdownwas by far the worse in the whole of Europe. And we saw that within 48 hourscountry lost 85%, all physical activity. If you start seeing this, so preciselyyou can estimate the extra weight gained by your population.

Oleg Fomenko: You canestimate extra healthcare costs that you're gonna have to pump into the systemin order to help these people. You can estimate the, you know, can life expectancy,impact, et cetera, etc. And this information simply does not exist right nowfor insurers, for healthcare providers, for governments and statisticians.

Oleg Fomenko: So weknow that there is a huge market, huge need for this information, cuz we willget constantly bugged and asked if we would share this data. And the answer isalways no, but in the future you would be able to make this decision millionsof people by making this collective decision will create a market and will beable to earn.

Mike Townsend: Allright. Well, there's a lot there. You threw out the deflationary aspects of, ofthe token which I, which is a curious design. I, I think it, what you describedmakes sense. You described the transaction fees and the NFT process and thenyou talked about data. So I think all that's exciting. I think moving to theDow is exciting.

Mike Townsend: I, onething I would just ask you quickly on this is if you create a a a deflationarycoin, I would imagine that people are very incentivized in the beginning daysto move, cuz the ROI is higher. But, but after, you know, 5,000 people or amillion people or five years down the road. It's like, it's kinda like mining,right?

Mike Townsend: If youhad a early days, 2010, a Bitcoin minor in your living room is actually apositive ROI to, to have. But now it just doesn't make any sense. It's allconsolidated. It's in like massive server farms and that's the only place youcan make any money. I is. Is there a, is there, is there like a trade off indesign here?

Mike Townsend: Whenyou think about the, the sweat token, where you say, okay, in the beginning wewant people to use the app. We want people to. The ecosystem generate tokens.So like, oh, I walk five miles and I generate $30 worth of sweat tokens. I canthen trade and make money, but that gets harder and harder, harder. So likewhen my kids join in 15 years, it's like, if they walk, if they do a marathon,they make 50 cents.

Mike Townsend: Andit's like, well, why, why bother is there? Is there that trade off that, thatyou acknowledge in the design in deflation? like early incentives. You get alot of early adopters, but then like down the road, you know, it's hard to getpeople on cause the incentives are lower.

Oleg Fomenko: It's avery interesting philosophical conversation because the reality is that therelationship is exactly opposite. So let me give you an example of Bitcoinfollowing your logic mining would become less and less profitable and everyonewould abandon it because with having, you'd be receiving half the value, right?

Mike Townsend: Andthat's true, right. There's like far less minors, but they're far morelucrative for the minors that are mining. Just harder to get in the game. Cuzyou need super computers and millions of dollars.

Oleg Fomenko:Exactly. But the, the thing that happened by introducing this having or.Constantly increasing the marginal cost of production. What happened was thatthe value of Bitcoin has gone up and in order to maintain consistent reward forminors, all it would have to do is to double every four years, but it farexceeded that.

Oleg Fomenko: So. Thepoint here is exactly the same, the principle thing, and the, you know, thefirst thing that it starts with is not sweat, but the movement, your steps thatyou take will not miraculously become cheaper or faster. You can continueconsuming that same amount of calories. And you're not gonna be able to all ofa sudden walk five times faster in sort of in, in two years, you will beputting more value into one unit of sweat.

Oleg Fomenko: Andeconomic theory says that the value of one sweat is going to increase in linewith that, which means that if you gonna be earning whatever, I dunno, $1 or,you know, $10 now, even if it is going to be 0.001. Hundred years down the lineprovided the value of one. Sweat has grown up in line with movement or morethat 0.01 can actually be a lot more lucrative and a lot more valuable to youthan right now.

Oleg Fomenko: Mmgotcha. Gotcha. So what we are doing is that we are creating the unit ofphysical activity value. We're not creating. Sort of thing filled with someethereal stuff, whatever we, you know, we want this, this token to be arepresentation of how much the world is putting value into physical activity.And of course, as any startup, you put strap at the beginning.

Oleg Fomenko: So youput everything that we have, you know, we put all the attention stuff. Yeah.Meditating, this and this and this and this and this. But with. The physicalactivity, you know, the validators, the data starts to take over and become themain driver of value of this token. And ultimately. You know, when you're gonnasee sweat somewhere reported, you're gonna look like, you know, you're gonnalook at it and kind go, oh, okay.

Oleg Fomenko: That's,you know, kind that, that's how the world perceives right now. The value of my,I dunno, 5,000 steps mm-hmm for today. Mm-hmm and we want that to happenbecause then people are going to kind look at and kind of go shit. You knowwhat I need to put, you know, more, more, more steps into my day. Yeah. Theywill create value for themselves.

Oleg Fomenko: Theywill create value for humanity. They will kind of make all. You know, can in abetter place.

Mike Townsend: Yeah.Yeah. When we comment on that and then I'll ask you the last question. So Ithink the key, if I'm in your shoes, I'm thinking you're effectively saying andtell me if this is, this is putting words in your mouth, but the deflationarydesign of the token makes sense.

Mike Townsend: Youwere incentivizing people in the short term, you know, like come now the, theROI is. But down the line, the tokens to S D right, the conversion rate isgonna be, is gonna be higher. So if you hold your tokens, they'll be worth morein the future. And so I would think if I'm in your shoes, the percentage ofpeople, or the percentage of the tokens issued that are exchanged for likeBitcoin or some stablecoin within the first 24 hours of them being mintedissued to the, to the users, that's, that's a, that's probably a key indicatorof the the.

Mike Townsend: The,the perceived future value increase of the token because people hold Bitcoinbecause they believe tomorrow it's gonna be worth more today. And there's likewhole macroeconomic thesis on like the decline of the American empire and thedeep pegging of the us dollar and like the world, like there's a whole thingthat fits into the story of Bitcoin.

Mike Townsend: And Ithink the, the people have to say, okay, sweat is gonna be another reserve, areserve store of value. That that is gonna be worth more in the future than itis to. And I think, I don't know, I don't know the answer, but I , but I knowthat that's, that's kind of like the, that's what people be running in theirhead.

Mike Townsend:They're like, okay. I just made 20 sweat. Okay. Do I just trade it in forBitcoin now or USD? Or do I hold it for the future? And if they, if they dumpit constantly, then it'll be a fight to. Raise the value of the sweat versusUSD, but you know, that's, that's the challenge, right? Nobody, this is all inthe we're on the Western frontier here.

Mike Townsend: So youfigure it out as we go.

Oleg Fomenko: No,absolutely. You know, I totally agree if that happens. However, we do, youknow, kind, one thing that we know for sure is that the people that walk andpeople who earn Sweatcoins, even though they are centralized and inflationary,They value them tremendously because it's the value of their physical activity.

Oleg Fomenko: So I'msure that there will be ups and downs, but there is one huge advantage that wehave over pretty much any other currency. It because it's filled with the valueof your physical activity. It will never go down to zero. People are just notprepared to go that far. And we've seen it already when, you know, when we putthings that cost quite a lot, people are, there's no way that I'm gonna put, Iknow 1 million of my steps into this.

Oleg Fomenko: Thisis, you know, kind of, this is ridiculous. So. It's it's amazing because whatwe are saying is that it's not about to the bone. No, screw that what we aresaying is let's find where the real value of physical activity lies. The reasonwhy we're creating this token and the way we are designing it so that the worldcan actually find the point where the, where the value of physical activity.

Oleg Fomenko: And wecan stop creating economy of movement around it, you know, to insurers can useit. Healthcare providers can use it. We already have a partnership withnational health service of United Kingdom, where we are helping them to helppeople who have diabetic syndrome. Yeah. To find motivation, to be more active.

Oleg Fomenko: So weknow this works and we know that these transactions are needed. And havingsweat and having the way it is kinda it is designed. He's going to, you know,basically enable this economy of movement of the future.

Mike Townsend: Loveit. Also love the cameo. Welcome to join in.

Oleg Fomenko: Sorryabout that.

Mike Townsend: No,no, no, it's great. I love it.

Oleg Fomenko:Teenager. My teenager needed my teenager needed his device.

Mike Townsend: .Good, good, good. That's great. Okay. Keep, keep the show authentic. We'rewe're not a, we're not a mainstream news. Even that there's a, did you ever seethat one when the I feel like it was in the early days of COVID when it waslike at CNN or some mainstream, BBC, yeah, BBC. And then, and then the girl,the wife runs in with the baby. That was one of the best moments in, in humanhistory. Oh, man.

Oleg Fomenko: It wasfantastic. I, you know, I remember that it made me really smile and laugh.Mm-hmm really feel sorry for the guy, because he was just, oh my God. He was hewas looking the camera kind go,

Mike Townsend: Wasprobably so embarrassed. We could all picture ourselves in the same shoes.Either way I'll say this I think what you're doing is just you're, you'reheaded. I don't know the answer. I can't imagine, you know how this is allgonna go, but ultimately there is a, a major crisis of physical and mentalhealth and targeting one of those, you know, particularly the physical aspectof it driving.

Mike Townsend: Andit's a new incentive system using web three in new ways. Like yeah, you stumbleand fumble and figure it out. And some, some ha like just going down this road,And have being on podcasts, writing about what you guys are learning, help pavethe way for understanding the psychology of how people are incentivized, whatmotivates people, how this web three framework fits into all that.

Mike Townsend: Andit's just like, I just commend what you're doing. I really was looking forwardto having you on the show today, cuz it, it does feel like one of theseprojects that has a, has a, has a awesome mission behind it, as opposed tojust. You know, something, make money, do this, blah, blah, blah Oleg. Whereare you online?

Mike Townsend: Thankyou. Are you, are you writing, tweeting any personal places we can throw outthere?

Oleg Fomenko: Yeah. I'mon Twitter, but I can say that I'm terribly active because. I'm a typicalbloke. I can't multitask. If I go into Twitter, mm-hmm then the night is goneand, you know, can you know, kinda, I didn't see.

Oleg Fomenko: SoTwitter would be, would be the best. The best way to find me is telegram aswell. Don't write me emails. I'm terrible. On email. My inbox is completelyoverflowing

Mike Townsend: Tellme this what's one book that has influenced you the most or, or a lot thatcomes to mind.

Oleg Fomenko: That isvery, very difficult to say. Oh yeah, no, I did know. Richard Barch theJonathan Livingston Seagull.

Mike Townsend: Okay.Awesome. Well, thank you so much, sir. It was a pleasure chatting with yougetting to know you getting to know what you're working on. I really enjoyed itand hope you guys keep crushing.

Oleg Fomenko: Thankyou very much, Mike, and absolute pleasure being here and, you know, thank youfor great questions. I really, really, really enjoyed answering them.

Mike Townsend: Sweet.

Oleg Fomenko: Have avery good one.

Mike Townsend: Seeya. Cheers.

Oleg Fomenko:Bye-bye.

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