The rise and fall of “money-making” projects

People have always been hungry for easy money through games, moves or tapping, but often this ends sadly. Is there a future for making money with daily stocks?

The airdrop of Hamster Kombat has saddened thousands, if not millions, of users. However, this scenario is not new: the crypto community has already seen the rapid rise and fall of various mechanisms that supposedly allow you to make money with simple actions. What have we learned from that?

Early appearance: hope for stable profits

The emergence of web3 games has generated great interest in earning cryptocurrencies through fairly simple actions. Play-to-earn (P2E) games became a new type where users can earn cryptocurrencies and nfts through activities.

Axie Infinity was a pioneer in this area. To start the game, users needed seed capital to purchase Axie, an nft virtual pet. Users can earn tokens by completing tasks, participating in battles with other players, and passing levels in the game. Tokens were exchanged for other digital or fiat currencies, and items could be sold on crypto exchanges and nft marketplaces.

And no joke, being a pioneer, gambling was long considered an option to make real profits. It gained especially resounding popularity in the Philippines. In 2020, when the entire world was covered by a pandemic, borders were closed, and people began to lose their jobs, enterprising Filipino crypto enthusiasts began creating guilds, offering ordinary users the opportunity to earn money from P2E games.

However, Axie Infinity was ruined by game inflation. As a result of its constant growth, the price of its utility token, Smooth Love Potion (SLP), began to decline. To keep the demand for SLP and AXS (the governance token) high, an infinite number of new registrations are needed, including players who have neither..

If the number of monthly active users (MAU) was more than 2.7 million at its peak, in July 2024, this number was just over 310,000. The drop in Axie Infinity indicators occurred during the correction period of the entire digital asset market after bitcoin (btc) reached its previous all-time high (ATH) on November 10, 2021.

The large-scale hack of the game in March 2022 played an essential role in its decline in popularity. The departure and lack of new users led to the fact that existing users could no longer make money. The stories of some users of the platform were even sadder. In an attempt to make money from gambling investments, some players went into debt. They failed to make money from the project.

Healthy habits replace gambling, but not for long

In the context of the decline of the P2E gaming era, a new type of winnings with move-to-win mechanics entered the web3 sphere. The most famous example of this type of game is STEPN.

However, its profitability fell significantly due to the influx of users, and some experts found signs of a financial pyramid in STEPN's own mechanics.

At the same time, suspicions about the project do not change the fact that the first players on the platform managed to make a lot of money. Users were able to recover their investments, while the losses significantly exceeded the gains of those who joined in the hype stage.

Why did a game intended to instill healthy habits fail? The cost maintenance mechanisms established by the project team were not justified. STEPN was ruined by its popularity: instead of using in-game tokens, Green Satoshi Token (GST), users actively converted them into tradable tokens, Green Metaverse Token (GMT), in hopes of further growth, especially after of the spring 2022 rally, when the token reached an ATH of $4.11.

According to Dune, the project also had a significant decrease in MAU: in May 2022, this figure was more than 705,000, then, in September 2024, it was already less than 19,000.

The creators of the project claim on the official website that the play-to-earn format can be seen as an element of a Ponzi scheme, but STEPN has nothing in common with it. According to them, the developers have built strong tokenomics on the platform, ensuring the stability of the project's currency value.

However, in essence, STEPN had no real economy and lived off the money of new users who bought virtual items for thousands of dollars in the hope of recouping their investment in a couple of months while doing imaginary and useless work.

To maintain the necessary audience activity, a constant influx of new players who would purchase in-game currency and nft artifacts from old players is required. With a massive influx of new participants, these types of projects are possible. However, the principle of profit distribution in the “make to earn” business differs from the classic Ponzi scheme and is more like retail trading.

STEPN has been around for a year and its offer of doing something simple and getting paid for it appeals to those who like easy money. At the time of writing, the native GMT token price is $0.1464, down 96% from the ATH.

The mechanics become simpler.

Another branch of evolution in the “to win” segment was the tap to win mechanic. These games made earning money for users even easier than their predecessors. If previous players were offered at least some gameplay, then with tap to win, users can earn money simply by tapping the screen.

One of the most popular projects in this segment was Hamster Kombat: with the support of millions of users, the project received a huge wave of discontent due to the size of the airdrop.

Were there any signs that could hint at Hamster Kombat's downfall? Of course, just look at the project's tokenomics and audience.

Thus, 75% of the token supply is destined for the community. At the same time, a significant part of the audience is newcomers or gift lovers. Such an audience may be inclined to sell tokens quickly, creating intense pressure on the coin's price after listing. Furthermore, the project team has virtually not revealed the long-term value of the coin.

Thanks to its benchmark mechanics, Hamster Kombat created an impressive base of millions of users. However, this also created an additional risk of project collapse as users rushed to dump the tokens after their listing.

Will the community learn from past failures?

Yat Siu, co-founder and CEO of Animoca Brands, explained in a comment to crypto.news that a major problem for blockchain games is the lack of established mass distribution channels. Large platforms like the Apple App Store and Steam often restrict games that include nfts and limit their massive reach.

“However, as more players interact with blockchain through easily accessible Telegram Mini Apps, we can expect the growing popularity of these products to encourage major game developers to invest more boldly in the web3 gaming industry. “This path resembles how early mobile games evolved from a niche despised by much of the traditional gaming industry to a dominant gaming business model.”

Bozena Rezab, co-founder and president of GAMEE, on the other hand, is sure that the phenomenon of this type of games lies mainly in the fact that they stimulate the mass adoption of cryptocurrencies, which is good for the industry. As an example, he recalled that 131 million users received Hamster Kombat tokens; This figure is much higher than web3's previous participation rates, which typically exceeded thousands or perhaps tens of thousands of participants.

“This is a clear indication of the potential of casual gaming and Telegram to drive cryptocurrency adoption.”

Is there any hope of making money?

Who makes money with money-making projects? Normally, only the project creators and the first participants. The user benefit of web3 games in terms of receiving real money is quite debatable. On the one hand, there have been successful cases of in-game currency withdrawal; On the other hand, there are so many active users that the development company cannot cover all the money players earn.

Play-to-win, move-to-win, or tap-to-win projects are eventually destroyed by their rapid popularity. Most of these popular games are dominated by a pyramid scheme: new players fund old players until interest runs out. At this point, the project is doomed to failure.

Are all easy money projects doomed to failure? Of course not. The main disadvantages of this type of game are a poorly thought-out token economy and dependence on a constant influx of new users. Therefore, the future of projects with income generation mechanisms will depend on the ability to implement sustainable business models. However, although the mechanics are predominantly pyramid-based, the world of web3 gaming has seen many high-profile ups and downs.