The rapid rise of tap-to-earn games on Telegram, powered by The Open Network (TON) blockchain, has attracted significant attention (and funding) from venture capitalists. Investors are betting substantially on Telegram’s tap-to-earn games such as Notcoin, Hamster Kombat and Catizen, seeing them as the future of Web3 gaming.
But what exactly drives these investment decisions, and how do investors see the future of tap-to-ear? BeInCrypto recently interviewed Animoca Brands, one of the largest TON validators, and Hashkey Capital, which has made significant investments and partnerships with Catizen.
Investors see social experiences as the future of tap-to-earn games
One of the main reasons why venture capitalists are attracted to Telegram’s tap-to-earn ecosystem is undoubtedly its massive and engaged user base. With 950 million active users as of July 2024, the platform provides an unparalleled audience for developers looking to launch and scale games. This kind of organic reach dramatically reduces user acquisition costs, which is a key selling point for investors.
Furthermore, Telegram’s crypto-native infrastructure sets it apart from other platforms in the Web3 gaming space. The integration of TON blockchain ensures seamless transactions, reducing friction between the gaming experience and the user’s wallet. This ease of use is a major draw for developers and investors alike, as it allows for instant monetization without the hurdles typically associated with blockchain adoption.
“Telegram is one of the few platforms where Web3 mechanics are baked into the experience. The ability to move from gameplay to crypto transactions without leaving the app is a huge competitive advantage,” explains Junbo Yang, Investment Manager at Hashkey Capital.
For investors, this integrated experience makes Telegram an excellent candidate for further investments. The platform’s low transaction fees, scalability, and growing list of mini-apps allow developers to continue innovating and retaining users without the technical barriers that often plague Web3 adoption.
As the TON ecosystem and tap-to-earn plays grow, investors remain optimistic about the future of this segment. For example, Hamster Kombat alone has attracted over 300 million users in 190 countries, with the upcoming HMSTR airdrop set to be one of the largest in the crypto space.
Meanwhile, Catizen has successfully built a loyal user base while optimizing its monetization strategy. Similarly, Notcoin attracted over 40 million global users and performed one of the largest airdrops of the year, cementing its position as a major player in the TON ecosystem.
Both Hashkey Capital and Animoca Brands see the success of these games as just the beginning. They believe that as developers improve game mechanics, they will also discover new ways to retain users, moving beyond simple rewards to social and immersive experiences.
Why Telegram Could Cause the Next Web3 Boom?
Additionally, the investors view these games as a proof of concept, demonstrating the scalability of the tap-to-earn model and its ability to retain users beyond initial incentives. This success reveals significant potential for growth and expansion in the tap-to-earn space.
In a recent exclusive interview with BeInCrypto, Yat Siu, the co-founder and executive chairman of Animoca Brands, strongly advocated the integration of blockchain gaming into Telegram. He sees the built-in audience allowing games to scale quickly without expensive marketing campaigns – a crucial factor for venture capitalists looking for high returns.
“The next 100 to 200 million users in Web3 will come from Telegram and its gaming ecosystem,” Siu notes.
Investors are primarily focused on three factors: user acquisition, scalability and retention. However, they are also particularly excited about the long-term monetization potential. For example, Catizen stands out for its ability to retain users and optimize their lifetime value (LTV), demonstrating sustainable growth and a profitable tap-to-earn model.
Junbo Yang highlights how Catizen and similar games are paving the way for future development by prioritizing monetization and long-term user engagement.
“Catizen’s early success in monetizing its user base provides a blueprint for how other developers can scale their games,” Yang notes.
The perspectives of these investors align with the long-term visions of the gaming teams. In an email to BeInCrypto, the Hamster Kombat team revealed their plan to evolve into a multi-game platform.
“Following the initial airdrop, we are launching the second season with a massive expansion, allowing players to choose from multiple games to play. This begins Hamster Kombat’s transformation from a game to a gaming platform, similar to how Valve went from launching games with cult status to Steam, the largest gaming marketplace for PCs,” they explained.
Turning setbacks into growth: why investors remain optimistic despite TON’s hiccups
While the tap-to-earn model has proven its ability to attract users, the main challenge is keeping them engaged beyond the initial airdrops and rewards. Some critics have raised concerns about mercenaries – those who participate in games solely to earn tokens – but investors see this as a short-term challenge.
However, investors believe that as developers increasingly embrace the tap-to-earn model, they will also find ways to extend user lifecycles, increasing their sustainability. Yat Siu believes that the tap-to-ear model, while currently based on rewards, lays the foundation for a much larger gaming ecosystem.
“Tap-to-earn is just the beginning. Once users enter the ecosystem, the goal is to build community and social experiences that keep them engaged for reasons beyond just symbolic rewards,” Siu argues.
In addition to sustainability concerns, the Telegram ecosystem has faced recent challenges. For example, earlier in August, BeInCrypto reported that the TON blockchain had an outage, temporarily halting block production for several hours. This incident raised concerns about the network’s ability to handle future spikes in activity, especially with the increasing number of users participating in tap-to-ear games.
In addressing the problem, Yat Siu acknowledged the disruption but remained confident in TON’s resilience. Siu emphasized that TON is still in its early stages and believes such challenges are part of the network’s growth process. He sees the potential for TON to become even bigger than Telegram itself in the future, which will drive the growth of the platform.
“TON itself, like other chains, must remain a censorship-resistant decentralized platform, but the projects and dApps themselves can implement measures to ensure stability,” he said.
Regardless of these challenges, venture capitalists remain confident in the potential of tap-to-ear. The coming years will tell if this model will secure its place as a lasting feature in Web3 gaming, but for now, investors are all in favor of it.
