Not just a game, the economic strategy and future prospects behind Telegrams click-to-earn money

Original author: Ryan S. Gladwin

Original translation: BitpushNews an

One of the biggest winners in the cryptocurrency space as of 2024 is Telegram Games. Before this week’s airdrop, Hamster Kombat had 300 million players, while Notcoin’s tokens had a market cap of nearly $3 billion — the point-and-click game produced one of the world’s top 100 tokens.

All of this revolves around the mechanic of “click to earn”, a simple concept with an increasing number of variations and spin-offs. Has this model really evolved beyond the “play to earn” gaming craze that dominated the last bull run? Or is “click to earn” destined to suffer the same ultimate fate, to be mocked and disdained by the masses?

In 2021, the “play to earn” model was very popular, especially the Pokémon-like monster battle game Axie Infinity, which once had nearly 3 million monthly active users. Players need to buy or borrow three Axie NFTs to start the game—at its peak, this entry cost was $600 or more—and then they can win real cryptocurrency tokens through competition.

The model became so popular that people in low-income countries began playing the game as a full-time job. At one point, 40% of the games players were from the Philippines.

Axie was at the vanguard of a revolution that promised to empower players to earn money for their time, lift people out of poverty, and redefine modern work. Many other games tried to emulate its model. However, Axie’s economy gradually declined, and the prices of all tokenized assets plummeted, effectively stunting the play-to-earn model.

In many ways, Click to Earn Games is similar to Play to Earn Craze. Players are asked to tap the screen and play simple games in exchange for in-game coins or points, which are eventually converted into cryptocurrency tokens sent via airdrops.

So why does the click-to-earn model mark progress in the industry?

“Click-to-earn games offer a promising innovation to the traditional play-to-earn model with their simplicity and user-friendliness,” Robbie Ferguson, CEO of gaming network Immutable, told Decrypt. “These types of games significantly lower the barrier to entry, especially for newcomers to cryptocurrency. They aim to build a more sustainable economy from the outset, which may help circumvent some of the challenges that the play-to-earn model encounters.”

Most play-to-earn games require players to invest money in the game before they can start earning money. This means that players have to invest real money. In contrast, click-to-earn games have no such requirements - players only need a smartphone that can run Telegram, a simple messaging app.

Of course, this low barrier to entry also means that the depth and complexity of the game are usually limited, resulting in the player experience often being shallow and repetitive.

Click-to-earn is an emerging trend that has attracted widespread attention, but it often struggles to maintain long-term user engagement, Andrew Saunders, chief marketing and growth officer at Skale Labs, told Decrypt. To truly drive innovation in Web3 games, developers must combine the instant gratification of click-to-earn with a deeper, more engaging gaming experience to ensure that players remain interested in the game after the initial novelty wears off.

Indeed, most Telegram games require little to no special skills from the player to succeed. In Hamster Kombat, for example, players can passively earn tokens simply by repeatedly tapping the screen and selecting the optimal upgrade options — the same basic gameplay loop used by most click-to-earn games.

Some players don’t even click on the screen themselves, but have found clever ways to automate the game process, such as using massage guns, or using custom software scripts that may not be banned by airdrops. Although many play-to-earn games are also seen as shallow, even so, games like Axie Infinity are still much richer in terms of gameplay than Hamster Kombat.

“On the other hand, the play-to-earn model involves the full gaming experience,” Rob Wolff, founder of Digital Asset News, who is passionate about cryptocurrency gaming, told Decrypt. “It’s more interesting because it provides challenges, strategies, and opportunities for skill building that make the game continue to engage players over time.”

However, this can also be seen as a shortcoming. According to Exploding Topics, casual games are the most popular type of video game in the United States, with 63% of respondents saying they play them regularly. There are more gamers now than ever before, but many of them tend to play simple games. Click-to-earn games cater to this characteristic.

This broad target audience, combined with a low barrier to entry, may explain why Telegram games seem to attract such a large user base. For example, X Empire claims to have around 45 million players, while Notcoin, as a first-run game, has reached 35 million users. This is because almost anyone can join and start playing immediately.

The main advantage of click-to-earn is its potential ability to reach a wider audience, especially in the major mobile gaming market, Karel Vuong, co-founder of crypto gaming platform Treasure, told Decrypt. By lowering the barrier to entry, it provides an opportunity to bring previously unreached populations into the Web3 ecosystem.

Axie Infinity is a typical example, but it is not an isolated case. Another well-known case is the earn while walking game Stepn, which became popular in early 2022. It allows users to earn valuable cryptocurrency tokens by walking and running in the real world by selling NFT sneakers. However, the craze soon faded, and the value of both NFTs and tokens fell sharply, causing some investors to suffer significant losses.

The click-to-earn model is still young and has not yet exposed obvious flaws - although when players dont need to invest any money to start the game, monotonous gameplay and lower-than-expected airdrop distribution dont seem to be a big problem. The click-to-earn model focuses more on user participation rather than monetary investment.

“The economic model of click-to-earn is completely different from the play-to-earn model, which is completely based on advertising,” Alena Shmalko, head of ecosystem at the TON Foundation, told Decrypt. While play-to-earn games rely on new participants to keep their economic system running, as explained in the Axie Infinity white paper, the click-to-earn model funds its operations through advertising.

This is a more sustainable payment method - advertising revenue is how many companies pay for their operating expenses. But the question is, after the initial airdrop, will players still have a reason to continue participating? Will the tokens be able to maintain their value in the long term?

Shmalko added: “Each application needs to create ways for token holders to extract further value and make sure they are willing to pay for it.”

For example, Notcoin has partnered with other gaming projects with the ambition of becoming a Netflix-like platform for launching new cryptocurrency games. Hamster Kombat is also trying new development routes, including expanding beyond Telegram and launching more games. It is too early to tell whether these initiatives will retain players in the long term.

“Time will tell how click-to-earn creates new economic models that prove themselves sustainable,” Shmalko told Decrypt. “Otherwise, they will face the same fate as play-to-earn games — once the hype is over, there will be no demand for the product.”