Telegram gaming has been one of crypto’s biggest winners in 2024. Hamster Kombat pulled in 300 million players ahead of this week’s airdrop, and Notcoin launched a token that neared a $3 billion market cap—a screen-tapping game yielding one of the 100 biggest coins on the planet.

All of this revolves around the tap-to-earn mechanic, a simple concept with a growing list of variations and permutations. But has this model truly evolved upon the fraught play-to-earn gaming craze that dominated the last bull cycle before crashing and burning? Or is tap-to-earn doomed to the same eventual fate of mockery and shrugs from the masses?

In 2021, play-to-earn was all the rage with Pokémon-esque monster battler Axie Infinity peaking just shy of 3 million monthly active users. Gamers were required to purchase or borrow three Axie NFTs before they could start playing—a buy-in cost of $600 or more at peak—and then could start winning real crypto tokens by competing.

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

Axie was the tip of the spear of a promised revolution that would benefit players for their time, lift people out of poverty, and redefine modern work. And many other games tried to mimic its model. Instead, Axie’s economy petered out and all of its tokenized assets plunged in price, effectively stunting the growth of the play-to-earn model.

In many ways, tap-to-earn games are similar to the play-to-earn craze. Players are asked to tap their screens and otherwise play simple games in exchange for in-game coins or points, which are eventually converted into cryptocurrency tokens sent via an airdrop.

So how does tap-to-earn represent a step forward for the industry?

“Tap-to-earn games offer a promising improvement over traditional play-to-earn models through their simplicity and accessibility,” CEO of gaming network Immutable, Robbie Ferguson, told Decrypt. “These games significantly lower the entry barrier, especially for crypto newcomers. This approach aims to create more sustainable economies from the start, potentially avoiding some of the challenges faced by play-to-earn models.”

Most play-to-earn games required players to buy into the game before they started to earn. You had to have real skin in the game. Tap-to-earn games have no such requirement—you just need a smartphone that will run Telegram, a simple messaging app.

Granted, the lower barrier of entry has thus far also been met with a lower ceiling for gameplay depth and complexity, resulting in typically shallow and repetitive experiences.

“Tap-to-earn is the new shiny object generating a surge of interest, but they often fall short in maintaining long-term user engagement,” Andrew Saunders, chief marketing and growth officer at Skale Labs, told Decrypt. “To truly revolutionize Web3 gaming, developers must fuse the instant gratification of tap-to-earn with deeper, more engaging experiences, ensuring that players stay captivated long after the novelty wears off.”

It’s true that most Telegram games require very little-to-no skill to succeed. Hamster Kombat, for example, simply requires you to repeatedly click the screen and select the best upgrades to passively earn tokens—this is the basic loop most tap-to-earn games employ.

Some players don’t even tap the screen themselves, finding crafty ways to automate the game like using a massage gun—or employing custom software scripts that may or may not get them booted from airdrops. Many play-to-earn games were considered shallow too, but even so, something like Axie Infinity is dramatically richer in gameplay than Hamster Kombat.

“Play-to-earn, on the other hand, involves engaging in full gaming experiences,” Rob Wolff, an avid crypto gamer and owner of Digital Asset News, told Decrypt, “This is more fun, as it offers challenges, strategies, and skill-building, which keeps the game engaging over time.”

However, this can also be seen as a downside. Casual games are the most popular type of video game in the US with 63% of people surveyed claiming to regularly play them, according to Exploding Topics. There are more gamers than ever these days, but many of them play simple games. Tap-to-earn gaming fits right into that wheelhouse.

This broader target audience, combined with the lower barrier for entry, may explain why it appears that Telegram gaming has attracted such large crowds. For example, X Empire claims some 45 million players, and Notcoin hit 35 million as the first one out the gate. Just about anyone can hop in and play, almost immediately.

“The main advantage of tap-to-earn is its potential to reach a wider audience, especially in major mobile gaming markets.” Karel Vuong, co-founder of crypto gaming platform Treasure, told Decrypt. “By lowering the entry barrier, it presents an opportunity to onboard users from previously untapped demographics into the web3 ecosystem.”

The public collapse of the Axie Infinity economy undoubtedly damaged the prospects of play-to-earn. It was the gleaming example of what was possible—and now the flashing red alarm showing how swift and brutal the downfall can be when it ultimately proves unsustainable.

Players who had invested sizable cash into valuable NFTs now held near-worthless assets. Those who had turned to Axie as a career were left to start over. Some alleged that the game was a ponzi scheme, and the Philippine national police warned citizens against play-to-earn games. It's still around, but distrust in the model spread industry-wide as a result.

Axie was the biggest example, but not the only one. In another prominent case, move-to-earn game Stepn got hot in early 2022, selling NFT sneakers that let people earn valuable crypto tokens by walking and running in the real world. But the buzz was short-lived, and the NFTs and tokens alike plunged sharply in value, burning some investors in the process.

The tap-to-earn model hasn’t been around long enough to showcase serious downsides—though dull gameplay and smaller-than-expected airdrop allocations don’t seem like quite as big of a deal when you haven’t spent any money to start playing. Tap-to-earn is more about engagement than monetary investment.

“The economic model of tap-to-earn is completely different and is based on advertising—as simple as that,” Alena Shmalko, ecosystem lead at The TON Foundation told Decrypt. While play-to-earn games rely on new entrants to keep the economy running, as explained by the Axie Infinity whitepaper, tap-to-earn uses advertisements to fund its model.

This is a more sustainable way to pay for something—ad revenue is the way many companies pay for their operations. But the issue comes once the initial airdrop has taken place. Will there be any reason to stick around and keep playing? Will the token hold value for long?

“Each app needs to create ways for token holders to further extract value, and make sure they are ready to pay for it,” Shmalko added.

Notcoin, for example, has partnered with other game projects amid ambitions to become a Netflix of sorts for launching new crypto games. Hamster Kombat is trying its own roadmap that includes expanding outside of Telegram—and launching more games, as well. It’s too early to tell whether these types of moves can sustain players for long.

“Time will show how tap-to-earns manage to create new economic models which prove themselves sustainable after the token generation event.” Shmalko told Decrypt, “Otherwise, they will face the same fate as play-to-earns—once the hype is over, there will be no demand for the product.”

Edited by Andrew Hayward