invezz.com
Tap-to-earn networks have been the fastest-growing industry in the blockchain industry this year. It has come from nowhere, attracted millions of users, and created tech unicorns like Notcoin which is valued at over $1.6 billion.
Hamster Kombat and TapSwap are the biggest players in the industry with over 230 million and 65 million users, respectively, They have also broken social media records, with Hamster Kombat being the fastest-growing YouTube channel ever as it reached over 36 million subscribers in less than two months.
What are tap-to-earn tokens?
The concept of tap-to-earn is fairly simple. Telegram users just launch the mini-apps and then start earning tokens by tapping a button. It is a process almost similar to Pi Network, where users mine tokens by tapping a button on the apps.
In addition to this, people earn tokens by completing some tasks like following the network’s social media pages, commenting on content, and answering some questions. These activities explain why Hamster Kombat and TapSwap’s social media platforms have so many followers.
After all this, the networks launch their airdrops or shares-to-tokens, where users can change their accumulated tokens into fiat currencies. To do this, most of these companies are using the TON Blockchain, which was created by the team behind Telegram.
After starting trading, the tap-to-earn tokens join the other thousands cryptocurrencies and react to internal and external factors. For example, an external factor is the Federal Reserve, which raises or cuts interest rates. In most cases, these tokens will often do well when the Fed signals that it will cut rates.
For example, Notcoin price rose to a record high of $0.029 shortly after its token was launched and then crashed to $0.0091 as Bitcoin moved below $54,000. It then bounced back as BTC rebounded as well.
Move-to-earn and play-to-earn lessons
The tap-to-earn industry is not the first major innovation in the crypto sector. In 2021, the biggest craze was play-to-earn, where users played games and then got rewards for winning. Some of the biggest companies at the time were Axie Infinity, Decentraland, Sandbox, and Gala Games.
The birth of play-to-earn also led to dedicated blockchains like Immutable X that focused on the industry. All these tokens surged in the past, giving them market capitalizations in billions.
However, over time, demand for play-to-earn dropped and these tokens crashed. Axie Infinity’s market cap has dropped from over $9 billion in 2021 to $880 million today. The number of users in the network has dropped to a few thousand a month.
Decentraland’s market cap has also fallen from almost $7 billion to $651 million today while Sandbox is valued at $730 million.
The other industry that took users by surprise was the move-to-earn, where users earned tokens by just walking, running, and other simple activities.
Sweatcoin attracted over 50 million users, becoming the biggest fitness app in the industry. The same happened with StepN, which accumulated millions of users. Today, the hype has died down and StepN’s GMT market cap has fallen from over $2 billion to $332 million while Sweat Economy is valued at $58 million.
Implications for Hamster Kombat and TapSwap
The move-to-earn and play-to-earn industries have raised red flags for the tap-to-earn sectors. They show that even the most hyped industries lose momentum unless developers create innovative ways to engage users.
Another lesson is that there will always be the next big thing in the crypto industry. For example, while Notcoin was one of the pioneering tap-to-earn networks, the industry has become crowded.
The other fast-growing tap-to-earn platforms in the industry are Pixelverse, Blum, Dogs, YesCoin, Dotcoin, and MemeFi. All these platforms have accumulated millions of users in less than three months.
Other Telegram games in the Telegram ecosystem, like Catizen, Gamee, Cat Gold Miner, and The Pixels, have over 5.2 million users each.
Notcoin price chart
The Notcoin and Pixelverse token listings have provided hints about how TapSwap and Hamster Kombat will trade after listing. As shown above, the Notcoin price jumped to a record high of $0.030 a few days after listing as the hype spread and then lost momentum. At the time of writing, the NOT token was waiting for the next catalyst.
Pixelverse price chart
Similarly, the chart above shows how the Pixelverse price has traded after its token listing last week. It jumped to a record high of $0.0986 on Friday and has now dropped by 58% to the current $0.041.
The other top platforms mentioned above like Axie Infinity and The Sandbox had the same price action. They initially jumped as the hype in the industry spread and then retreated when it ended.
Therefore, analysts recommend that players use a hybrid approach where they sell their HMSTR and TAPS tokens shortly after launch and then hold some in their wallets. Doing so will help them benefit from the initial pop and reduce the overall risk when the prices drop. Holding some tokens will also help users benefit if the price stages a comeback.