The economic strategy behind Telegram’s click-to-earn money and its future prospects

Author: Ryan S. Gladwin Compiler: BitpushNews an

As of 2024, one of the biggest winners in the cryptocurrency space is the Telegram game. Before this week's airdrop, "Hamster Kombat" attracted 300 million players, and the market value of the token issued by "Notcoin" was close to $3 billion - this screen-clicking game produced one of the top 100 tokens in the world.

All of this revolves around the mechanism of "click to make money", a simple concept but with an increasing number of variants and derivative forms. Has this model really developed after the "play to earn" game craze that dominated the last bull market? Or is "click to earn money" destined to suffer the same ultimate fate, being ridiculed and disdained by the public?

In 2021, the “play to earn” model was extremely popular, especially for Axie Infinity, a Pokémon-like monster-battling game, which at one point had nearly 3 million monthly active users. Players needed to buy or borrow three Axie NFTs to start the game—at its peak, this entry cost $600 or more—and then they could compete to win real cryptocurrency tokens.

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

Axie was at the vanguard of a revolution that promised to enable players to profit from their time, help 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 are similar to the 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 an improvement for 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 has encountered."

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

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

"Click-to-earn is an emerging trend that has attracted widespread attention, but 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 that ensures players remain interested in the game after the initial novelty wears off."

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

Some players don’t even do the tapping themselves, instead finding clever ways to automate gameplay, such as with massage guns, or using custom software scripts that might not be banned by airdrops. While 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 a full gaming experience," Rob Wolff, founder of Digital Asset News, who is passionate about cryptocurrency games, told Decrypt. "It's more interesting because it provides opportunities for challenge, strategy, and skill building, making the game continue to attract 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 games in the United States, with 63% of respondents saying they play them regularly. There are more players now than ever before, but many of them tend to play simple games. Click-to-earn games cater to this feature.

This broad target audience, combined with a low barrier to entry, may explain why Telegram games seem to be able to attract such a large user base. For example, X Empire claims to have about 45 million players, while Notcoin, as a first-run game, has also reached 35 million users. 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 introduce previously unreached groups into the Web3 ecosystem."

Axie Infinity is a typical example, but it is not an isolated case. Another well-known case is Stepn, a "walk and earn" game that 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 plummeted, causing some investors to suffer significant losses.

The click-to-earn model is still young and has not yet exposed obvious flaws—although monotonous gameplay and lower-than-expected airdrop allocations don't seem to be a big problem when players don't have to invest any money to start the game. The click-to-earn model focuses more on user engagement than monetary investment.

"The economic model of click-to-earn is completely different from the play-to-earn model. It 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 Axie Infinity's 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, will players have a reason to continue participating after the initial airdrop? Will the token be able to retain its value in the long term?

Shmalko added: "Each application needs to create ways for token holders to extract further value and ensure that they are willing to pay for it."

For example, Notcoin has partnered with other gaming projects with ambitions to become 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 can 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."