The biggest tap-to-earn games have faced a rude awakening as their tokens continued their strong downward trend.

Catizen, one of the biggest Telegram games, has crashed from a high of $1.1500 to $0.4565, bringing its market cap to over $139 million and its fully diluted valuation (FDV) to over $400 million.

Similarly, Notcoin (NOT), the first Telegram tap-to-earn game has dropped by 74%, lowering its valuation from over $2.5 billion to $770 million. 

Most recently, Hamster Kombat, the biggest player in the industry, has dropped for each day since its airdrop last week. In this, its market cap has fallen from over $600 million to $300 million, while its FDV has dropped to $465 million.

Other popular tap-to-earn tokens like DOGS and Pixelverse have all crashed hard since their listings.

What is Telegram’s tap-to-earn industry?

Tap-to-earn games like Notcoin, Hamster Kombat, DOGS, and Catizen have become some of the fastest games in the crypto industry.

These games solve the key challenge with traditional play-to-earn players like Axie Infinity, Decentraland, Sandbox, and Gala Games. 

The traditional games were relatively unavailable to many people because one needed a computer and an online wallet to get them. Their gameplay was also relatively difficult for most people. 

Telegram games, on the other hand, are simpler mini-applications that are housed in the application, making them available to most people, even those with low-end smartphones.

Their gameplay is also simple since one just needs to press a button to accumulate tokens. People also gain more tokens by doing simple activities like watching their videos, following their social media accounts, and answering some tasks. 

The goal is to accumulate as many tokens as possible and then convert them into fiat currencies when their airdrop happens.

These games have become highly popular this year, with Hamster Kombat gaining over 300 million users in less than six months. Its YouTube channel has over 37.5 million subscribers, while its X page has over 14 million followers.

PixelTap has over 75 million players, while TapSwap, Blum, DOGS, and Notcoin have over 45 million users. Other popular names in the Telegram ecosystem like Gamee, Goats, Lost Dogs, and Cat Gold Miner have added more than 7.7 million users.

These games have become highly popular for several reasons. First, Telegram is a highly popular social media network with over 950 million users, making these games easy to use.

Second, they are all easy-to-play games, meaning that users can accumulate tokens within just a few steps. Third, their is the potential for making a killing when the networks launch their airdrops.

Why Hamster Kombat, Notcoin, DOGS, and Catizen have slumped

There are several reasons why these tap-to-earn games have not translated their success in the gaming industry into the crypto industry.

First, and to be fair, most of the recently launched airdrops have not been successful. For example, Wormhole, ZkSync, Bitcoin Dogs, and EigenLayer have all dropped sharply this year.

Second, these tokens have crashed as many people who accumulated them before their airdrops sold them. Recent data shows that most of Hamster Kombat’s players have sold the HMSTR tokens to take advantage of the current liquidity. The same has happened across other tokens. 

Third, there are concerns about future dilutions since only a handful of tokens were released. Hamster’s maximum supply has been capped at 100 billion, and only 64.3 billion have been released. This means existing holders will experience substantial dilution in the future.

Catizen has a maximum supply of 1 billion CATI, while only 305 million of them are in circulation. Similarly, DOGS has a maximum of 550 billion tokens and a circulating supply of 516 million.

Notcoin is the only one that has unlocked all tokens, meaning that holders will not be diluted.

Lessons from play-to-earn

Tap-to-earn tokens have plunged as investors take a lesson from the play-to-earn tokens that became highly popular in 2021. 

Most of them have all plunged in the past few years. Decentraland and Axie Infinity have had their market capitalisation crash from over $8 billion in 2021 to below $800 million today.

This decline happened because of the weak activity in their games, with some of them having less than 2,000 monthly active users. These users are usually paid in their respective tokens, which have crashed, reducing the incentive for people to play. 

Similarly, there are concerns about what will happen now that Hamster Kombat, Catizen, DOGS, and Notcoin tokens have been launched. 

Analysts expect that these networks will continue seeing weak growth in the future as gamers explore the next big ones. The collapse of tap-to-earn tokens raises questions about what to expect when the Pi Network launches its airdrop in 2025. Most experts believe that Pi will also drop as people convert their coins into cash.

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