What did Hamster Kombat do? How TON builds a Web3 gaming giant

Author: Jeff Wilser Source: coindesk Translation: Shan Ouba, Golden Finance

Two months ago, Iranian President Ibrahim Raisi was killed in a helicopter crash. Iran held an election to replace him, but there was a problem: According to a senior Iranian military official, the country's citizens were too distracted to properly vet the candidates. Millions of Iranians were allegedly busy clicking on their phones.

They were obsessed with a crypto game called "Hamster Kombat."

The game seemed to come out of nowhere. In March of this year, it went live on TON (aka The Open Network), a Web3 ecosystem built on Telegram. The game is now so popular that Iran’s deputy military chief, Rear Admiral Habiblah Sayyari, has accused it of being part of a “soft war” waged by the West against the Iranian government. “One of the hallmarks of the enemy’s soft war is the ‘hamster’ game,” Sayyari said, according to the Associated Press.

So, will the United States really use Web3 Hamster against Iran?

It’s an interesting (if slightly crazy) question, but in some ways the answer doesn’t matter. The mere existence of the question is what matters. “This thing has become so big that even politicians are talking about it,” said Inal Kardan, the director of games at the TON Foundation.

The founders of Hamster Kombat remain anonymous; the project declined an interview request. (The CIA, apparently.) But they claim to have over 200 million users; they have 11 million followers on Twitter/X and their YouTube account has 31 million subscribers.

This is just one of several “GameFi” projects on TON that have seen astonishing growth. Web3 gaming is booming.

The cute cartoon “Catizen” (a sponsor of CoinDesk’s GameFi Week) has over 23 million users. TON’s first big success story, “Notcoin,” has over 40 million users.

There are now a total of 500 million users on the TON network, according to the foundation. With a current market cap of $19.4 billion, Toncoin has leapt to become the eighth-largest project in the cryptocurrency space, surpassing mainstream projects like Polkadot, Cardano and NEAR.

But the Iranian military isn’t complaining about Polkadot or Cardano. TON games feel different.

They’re simple and fun, and seem to have broken through the confines of crypto’s echo chamber and found a mainstream audience, much like NFTs did in 2021. “This isn’t just about degenerates,” Kardan said. “This is the first time that regular people are doing something with blockchain.”

One reason for TON’s explosive growth is the global reach of Telegram itself, especially in Europe and Asia. Telegram has more than 900 million users.

But as of December 2023, only 1% of users use Telegram to play games, according to Kardan. Entrepreneurs smell an opportunity.

“We looked at Telegram and TON, and we thought this was virgin territory,” says Tim Wong, president of the Catizen Foundation. As a result, games like Catizen, Notcoin, Yescoin, and Tapswap quickly filled the void, in part because they could be easily (or even mindlessly) played while waiting for an elevator.

“They’re all super casual, very simple games,” Kardan says. “That’s what people like.”

Telegram games are easy to install, easy to play, and easy to connect to cryptocurrencies. (At least internationally — Telegram’s native cryptocurrency wallet is not available in the U.S. due to regulatory issues.) For 15 years, the web3 space has been plagued by clunky interfaces and confusing protocols. TON seemingly solved that problem overnight.

The slick user experience is why DeFi analyst David Zimmerman wrote a research paper concluding that TON is “well-positioned to be the killer app for crypto” because it has “made more progress in these areas (user experience and real-world use cases) than any other crypto market player.”

TON games are simple

In a phone interview, Zimmerman said that in his years covering crypto, whenever he introduced Web3 projects to his “regular friends,” it usually involved a 40-minute tutorial filled with confusing questions. Using TON? He’s already made 10 friends.

Games and Money: The Rise of Play-to-Airdrop

The games themselves are clever, engaging, and fun. You can start playing Catizen in seconds, clicking on kitties and watching coins magically appear (more on that later). You earn rewards for referring friends and sharing on social media — a clever growth driver. In some games, you need to click, in some, you need to swipe, in some, you need to make some bold choices.

Take Hamster Kombat, a game that is deeply self-aware and secondarily references Web3 culture. You play as the CEO of a cryptocurrency exchange and need to make decisions about marketing, PR, and even legal considerations; for example, unlocking the perk of “SEC Transparency” can increase your hourly profit, as can implementing KYC or obtaining a license to operate in the UAE. (In a sense, this is an extremely strange game for the average person to play. It’s hard to imagine Iranian taxi drivers obsessed with SEC transparency.)

While the TON games seemed to have popped up a few weeks ago, many of them have been in development for years. (This echoes 2021’s Summer of NFTs, a trend that industry insiders have been watching since the CryptoPunks of 2017.) Catizen began following Telegram in 2021, Wong said.

Consider this bold prediction from January 2023: “TON will become the largest blockchain by number of users thanks to 1) its technology and 2) Telegram. It’s only a matter of time,” Notcoin founder Sasha wrote in a prescient Twitter thread. “Telegram has 700 million monthly active users and is the main communication tool for crypto people. Telegram founders invented TON and integrated blockchain to sell Telegram usernames and anonymous numbers (NFTs). They announced non-custodial wallet and DEX a month ago.”

That’s exactly what happened. That said, a massive network and a slick interface can only explain so much. The TON game also offered something else: the lure of making money.

After millions of Notcoin users had been clicking away and earning tokens, they were delighted to receive the airdrop, which saw 80 billion Not tokens sent to the community, turning their mindless clicks into something of actual value (at least for now). “Notcoin was a small app on Telegram that attracted 35 million active users in just a few months,” Telegram CEO Pavel Durov wrote in his Telegram channel. “Suddenly, Notcoin users who had originally played the game just for fun could exchange their in-game currency for real money.” (Telegram has officially distanced itself from TON after a regulatory conflict with the U.S. Securities and Exchange Commission.)

Notcoin set a precedent, so now millions of users click on other games in the hope of future rewards. Play-to-Airdrop is the new Play-to-Earn. It’s not subtle; Catizen’s official tagline is even “Play to Airdrop.”

GameFi's Sustainability: Bubble or the Future?

It's hard to find any growth in the Web3 space that isn't tied to price increases, and GameFi is no exception. "I think much of its success in recent months, including the price, is due to the good old-fashioned speculation that we're used to," Zimmerman said. He's also skeptical of the reported user numbers, since humans can have multiple wallets. But even if you discount the numbers, Zimmerman acknowledged that "there are real fundamentals here."

Those fundamentals have caught the eye of other game developers. "I'm very bullish on TON Games," said Des Dickerson, CEO of THNDR, which is developing bitcoin-based games on the Lightning Network. (Dickerson has been involved in mobile crypto gaming since before it became popular; here’s my deep dive into her 2021 projects.) “This trend is evidence that users want games to be part of social interactions,” she says, “and they want these games to have real-world value built into the gameplay.”

But there’s a potential catch to all of this. (In crypto, there always is.) Rightly or wrongly, two words pour cold water on any “make free money!” crypto game that seems too good to be true: Axie Infinity. Axie was the darling of the last crypto hype cycle; now it’s widely seen as a cautionary tale. So what’s different about the TON game?

First, Wong says Axie has “a high barrier to entry, and it’s getting more expensive.” He has a point. The cheapest Axie sold for more than $300 at its peak, and as long as more new users joined than left, the price would rise. That’s unsustainable. “This is not far from a Ponzi scheme,” Wong said. In contrast, Catizen and other TON games require no upfront investment.

Kardan is always asked “How is this not Axie?” “The answer is simple,” he said. “All of these games are about traffic,” he said, explaining that airdrops are essentially marketing campaigns to attract users and traffic, which can be monetized. “It’s all about selling traffic,” he said, so there will be “money flowing in from advertisers.”

Zimmerman is not so sure. “To be honest, we all know these things (games like Hamster Kombat) are not going to last,” he said. “If you want your network to be really successful, you need to have some applications that make money.” He thinks TON is likely approaching one of the “big tops,” like the peak of a market cycle (foreshadowing a crash), and suspects that the real test will be what happens after the “catastrophic crash.” He also thinks TON can survive, and even thrive. “With their real advantage in user experience and distribution,” Zimmerman says, “we’ve never seen this in crypto before.”

This growth may or may not be sustainable. But the growth itself is undeniable and significant — just ask the Iranian military.

The Future of TON: Killer App or Flash in the Pan?

How will TON fare? Will it be the next big thing in crypto, or will it be a flash in the pan like Axie? Only time will tell. But one thing is for sure: TON Games has already caught people’s attention, and has the potential to revolutionize the way people play games and make money.