Noteworthy TON Games
The TON gaming ecosystem has seen significant growth in recent months. Fueled by various TON growth initiatives, the relatively simple HTML5 games, lower development costs, and the large pool of potential players are positioning TON as an attractive option.
Incentivized referrals have become a major driver of their strong growth in social metrics. While this strategy has been effective in attracting many new users to the ecosystem, it has not addressed the inherent monetization challenges of hyper-casual games like Notcoin and Hamster Kombat. This will be a key issue in terms of retention and sustainability.
Clicker games are generally not well-suited for meaningful user monetization, but hybrid, mid-core, and core categories combine the necessary low-barrier entry with deeper revenue potential. Finding the right balance between low-threshold gameplay and enough social competition and entertainment value will determine the long-term success of these mini-games.
Notcoin
Few teams have recently succeeded in capturing the essence of Web3 culture and elements like Notcoin. By allocating 95% of their tokens to users, they’ve built a bridge-like brand that blends memes and community sentiment. As a simple click-to-earn game, players face an extremely low participation threshold. This has led to decentralized distribution, with over 2.44 million on-chain token holders.
Their rapid growth, community-focused distribution, and meme-like culture have made them a catalyst within the TON ecosystem. Incremental games have existed long before Web3. “Cookie Clicker,” first released in 2013, might be the most famous example, reaching about 1.5 million players at its peak in August 2023 and still averaging 15,000 daily concurrent players. A recent example, “Banana,” held second place on Steam’s concurrent players chart for three consecutive weeks.
Their successful interaction across the TON ecosystem has seen various TON games accepting $NOT for in-game purchases, providing utility for the token throughout the ecosystem. Additionally, the Notcoin team negotiates a burn percentage in every transaction. For instance, 10% of every $NOT used in Catizen is burned, reducing supply while increasing buying pressure. However, since the game itself lacks sustainable entertainment value, #Notcoin will need to rely on its cultural significance and be integrated into more ecosystems to provide continued utility.
By launching its TGE via Binance’s launch pool, Notcoin has capitalized on its recent growth and cemented its position as a top gaming token of this cycle. As of June 24, 2024, according to CoinMarketCap, it is now the third-largest gaming token by market cap. Since its May 16 launch, Notcoin’s daily trading volume has averaged between $3 billion and $15 billion, making it the highest-traded gaming token across all ecosystems.
Several other games with millions of users will be discussed later.
Bearish and Bullish Analyses
Some readers might draw parallels between today’s Telegram mini-game ecosystem and WeChat’s early mini-apps, anticipating exponential growth in the coming years. While there is some rationale for this hypothesis, before detailing our bullish outlook, it is important to outline a few clear and insurmountable differences between the two.
Bearish View
It’s unlikely that Telegram will become an all-in-one app like WeChat in the next five to ten years. Therefore, user behavior on both platforms will continue to differ. In China (the world’s second-largest economy), WeChat faces far fewer competitors than Telegram and its global user base.
Additionally, WeChat benefits directly from its highly centralized structure. Tencent, a global tech giant with direct ties to the Chinese government, can rapidly grow its domestic market share in a favorable regulatory environment while benefiting from Tencent’s extensive product and service ecosystem.
WeChat’s highly integrated wallet application is a unique example that is hard to replicate. Given its dominant position in the domestic market, WeChat is directly integrated with almost every Chinese bank, allowing users to perform fewer steps from playing games to purchasing items than downloading apps from app stores. In contrast, with TON, users must first purchase Stars or directly fund with cryptocurrency before engaging in in-game monetization, potentially leading to lower conversion rates from players to payers.
Another key point is user acquisition (UA). While Telegram’s use of Stars can reduce ad spending, it doesn’t change the reality that the ad network on the platform is limited in performance. The best case Telegram mini-game developers can hope for is identifying users who have already opened certain mini-apps. WeChat, on the other hand, is quite the opposite, boasting a wealth of rich data, including financial, credit, and social scores for all users.
While ad networks will improve over time and more third-party integrations (such as WeChat’s collaboration with Douyin) may be introduced, Telegram’s privacy-focused value proposition means that highly detailed data, such as demographic and location information, may still be difficult to access.
Bullish View
Despite the above, Telegram/TON holds some unique characteristics that not only set it apart from WeChat but also from all other Western social apps. TON’s existence immediately makes Telegram one of the main gateways for Web2 users to enter Web3. This positions Telegram’s roughly 900 million monthly active users as the largest pool of “Web2.5 users” and almost a primary distribution channel in virtually all major crypto markets.
More importantly, unlike centralized exchanges such as Coinbase and Binance, Telegram is essentially a social app, meaning user behavior within the app is quite different. In other words, because users log into Coinbase to trade crypto (a highly isolated and serious activity), any feature centered around social enjoyment is less likely to gain traction. Telegram, however, is naturally geared toward social apps, such as games, making it easier to integrate and achieving better product-market fit.
Encouragingly, based on the case studies in this report, Telegram users seem well-suited for applications that combine social interaction with enhanced financial incentives. Even assuming that over 80% of these “users” are bots looking for the next Notcoin, the metrics of these simple games have surpassed those of many large-budget games in this and the previous cycle.
Reflecting on the WeChat growth path, readers should remember that things only really accelerated as more cross-platform UA channels opened up and customer acquisition costs dropped. We expect Telegram to leverage this knowledge and prioritize third-party integrations, though this may pose some user cannibalization risks.
By combining a deeper understanding of native user behavior and type-market fit, Telegram mini-games will present a compelling growth opportunity for professional operations and monetization on the platform.
Alternatively, many developers may continue to treat Telegram as a top-of-funnel UA channel. After all, despite its vast potential, only about 30% of WeChat mini-games are operated by mini-game studios alone. Most run both mini-games and standalone apps to achieve cross-platform user acquisition, cross-platform play (users who engage on multiple platforms tend to spend more), and a larger total addressable market.
Conclusion
TON’s presence in the gaming consciousness over recent months has been impressive. The mini-game ecosystem, led by Catizen, Notcoin, and Hamster Kombat, has played a key role in the sharp increase in on-chain activity. Hundreds of millions of casual users are playing TON games, with tens of millions of dollars already flowing into the ecosystem this year.
Distribution has been the key to TON’s recent success, further highlighting the challenges Web3 game developers face in competing for player liquidity. Growth programs offering grants, technical support, and marketing assistance have accelerated the onboarding of teams into the ecosystem.
The introduction of Stars as Telegram’s native currency for in-app purchases, with near-frictionless liquidity to the Web3 system, promises to help teams improve in-game monetization. Games like Catizen, Notcoin, and Hamster Kombat have positioned themselves well by capitalizing on current trends. Following Notcoin’s success, everyone is waiting for the next launch to assess if this trend can be replicated. While it’s uncertain if their launch success can be duplicated, Catizen and Hamster Kombat have the potential to challenge the top 20 gaming tokens by market cap upon release.
In the short term, many teams will likely take full advantage of TON’s current awareness to drive users into their games or protocols. However, if we assume that developer tools and support become more robust over time, the games that draw experience from platforms like WeChat and apply them to Telegram’s localized approach will be ones to watch in the mid to long term.
The second half of 2024 is critical for TON games. After an initial explosion of users has laid a solid foundation for the ecosystem, the focus now shifts to retention and user lifetime value (LTV). Compared to user acquisition, these two key sustainability metrics rely more on content than viral growth, forcing teams to execute meaningful live operations for continued success.