Last week, the Yescoin team's hostile takeover split event once again brought the spotlight back to the "TON Ecosystem." It had been too long since we heard about the TON chain, and we started reminiscing about this public chain backed by Telegram that was on the verge of taking off three years ago but ultimately only saw a few months of hype.

During its peak, exchanges rushed to list tokens from Telegram's small games. Within a span of over 4 months, the world's largest cryptocurrency exchange, Binance, successively listed 5 tokens from the TON ecosystem. Hundreds of small games emerged in a short period, with over 2,000 in preparation for launch. Notcoin had a monthly revenue of over $300,000, and Catizen achieved revenue exceeding $16 million. The Total Value Locked (TVL) on the TON chain increased by 70 times. TON's price also rose from $2 to a peak of $8. The market's expectations for the TON ecosystem were at an all-time high, and both inside and outside the industry, there was a belief that the "traffic goldmine" of Web3 had finally found a new outbreak point.

However, this seemingly thriving ecosystem was nothing more than a short-lived speculative game. In the summer of 2024, the market suddenly came to a halt—exchanges ceased listing TON ecosystem coins, Telegram's founder was arrested, project teams collectively fell silent, and player communities turned into "ghost towns." Overnight, this so-called "traffic goldmine" track turned into a depleted mine, leaving behind only a data black box, an overdrawn market, and abandoned developers.

What exactly happened during this period? BlockBeats interviewed three former Telegram small game project teams to analyze the true reasons behind the TON ecosystem's "flash in the pan."

False Prosperity; Opaque Traffic

The remarkably low customer acquisition cost of Telegram small games had always been a topic of discussion and was also one of the main reasons why most Telegram small game project teams chose to work on their projects. Looking back today, it is also the root cause of the entire ecosystem's bubble.

"In Web3, the customer acquisition cost of a company such as an exchange or a large-scale blockchain game is usually around $10 to $15, but through Telegram small games, this cost can be much lower, far below $1, around $0.7," said KinKin, a project team member who left Telegram small games half a year ago and has now transitioned to AI Agent research. She further added to BlockBeats, "In some regions, it is even more extreme, like in India, where the customer acquisition cost can be as low as $0.002 to $0.05."

This extremely compressed user acquisition cost has created a paradise for project factories, where real users have become a somewhat optional presence.

“Before listing, I didn't really need real users much. The volume from the studios was enough to reach a volume of 200,000 to 300,000 in a very short time. This volume is a qualifying line for a Telegram mini-game, considered a lightweight and medium volume,” Xiaoguang has orchestrated several token launches for Telegram mini-games. When facing questions from BlockBeats, he did not shy away from discussing the industry's operational mode.

This gameplay has already become standardized and streamlined in the industry. Several studios with long-term partnerships are very experienced, sometimes even outlasting most Web3 projects. “The amount needed in the early stages of the project, how much volume needs to be filled before the TGE (Token Generation Event), everything is discussed between the project team and the studios,” Xiaoguang explained. If boosting volume alone is not enough, they will amplify the data through “volume exchange.”

“After reaching a volume of 200,000 to 300,000, we engage in volume exchange—meaning mutual user acquisition between two games to reach the next level of volume,” Xiaoguang added. Compared to traditional blockchain games, the data volume of Telegram mini-games has far exceeded that of most Web3 projects. However, everything has two sides. The flip side of low cost often means low quality, and the data expansion has also masked the true problems of the ecosystem.

“The data in the TON ecosystem has always been operated like a black box. In the past, for those VC projects, most data could be found on platforms like Dune—how many addresses, how much transaction volume, investors would also do some due diligence. But the real data of Telegram mini-games is not public. Only a few insiders know the approximate number of users and the proportion of real users,” Xiaoguang believes this is the natural soil environment of a project factory.

“Do you know how many real users Notcoin has? You don't know,” Xiaoguang stated bluntly, “All the data outsiders see is what the project team wants you to see.”

The decline in the proportion of real users has further exacerbated the market's false prosperity. “In the early days, a few games like Hamster Kombat were considered relatively good, with roughly around 60% being real people. But as the ecosystem expanded, this proportion continued to decline, and by the end, having 40% is already impressive,” Xiaoguang revealed to BlockBeats.

And even within this 40%, the “airdrop tax” of professional airdrop hunters has not been excluded; their goal is not to play the game but to receive airdrop rewards. “When we count the depositing users, among the remaining real users, 90% of the addresses behind them are the same group of people. They specifically participate for the airdrop, play, and then leave,”

This user structure directly determines the vicious cycle of the Telegram mini-game ecosystem — in the short term, data inflation obscures the real situation, allowing investors and trading platforms to continue footing the bill; but in the long term, the overall ecosystem has extremely poor user quality and very low stickiness.

From the perspective of trading platforms and investors, the surface-level monthly active data of Telegram mini-games is staggering, with massive traffic, but the actual user retention rate and conversion rate are pitifully low. "If it's just to manufacture monthly active data and wallet address numbers to show trading platforms and investors, then this low-cost traffic is sufficient." These words were spoken by Sleepy, the founder of the Small Ghost NFT, who this month announced that they would temporarily suspend mini-game development on Telegram.

"But if you want truly active users, users who are willing to play your game, use your app, then you absolutely cannot acquire them with such low acquisition costs." Sleepy stated. "Now it seems, it's still the same old saying — you get what you pay for."

"Our promotion still relies on Crypto Twitter, community promotion, crypto advertising channels, and mutual exchange of projects." Sleepy said. "But back and forth, we have never been able to break into this circle."

In other words, traffic just flows from one project to another, but the water in the entire pool remains stagnant, with no fresh inflow of active users.

The TON ecosystem has never truly bridged the gap between Telegram's 900 million users and Web3. It seems that the TON Foundation and Telegram have not built a truly effective distribution channel that allows Crypto applications to reach a broader user base. Sleepy said: "Maybe they are trying, but I haven't seen the results yet."

TON and Telegram have never been the same.

TON Foundation: Vacuum of Power and Directional Loss

In the past six months, when talking to industry insiders about the TON Foundation, they always mention the "factional struggle" within the TON Foundation: the Russian team, the Asia-Pacific team, and the Dubai team after TON obtained the Dubai financial license have not brought synergy but instead made the resource allocation in the TON ecosystem extremely uneven — in the TON ecosystem, whether you can get support often depends on your relationship with the Russian team.

The TON Foundation was originally founded by two core members, one of whom is still actively involved in various online and offline activities as the foundation's chairman, Steve Yun, and the other is Andrew Rogozov, who was the former CEO of VK (the predecessor of Telegram, the first social platform created by Telegram's founder, a Russian version of Facebook), and is known as a "core figure" in some people's eyes.

However, at some point, the power structure of the TON Foundation underwent a subtle change—Andrew Rogozov seemed to fade out of the core management of the foundation and founded TOP (The Open Platform). This organization now looks more like a true foundation than the TON Foundation, or like ConsenSys in the TON ecosystem, and even leads the core ecosystem development of TON.

"To be honest, as a foundation, we actually don't get much information from Telegram. Pavel Durov and their team don't discuss anything with us at all. In fact, they only communicate with the wallet team because the wallet is the only real integration point. And that's not our team, it's a completely different company called TOP," said Jack Booth, the marketing director of the TON Foundation, in an interview in July 2024, indirectly confirming the influence of TOP.

TOP's influence has gradually surpassed that of the TON Foundation. They not only invest in and support the most critical projects on TON but also control the infrastructure of the ecosystem. They are responsible for operating the official Telegram wallet TON Space, supporting the most active wallet in the TON ecosystem, Tonkeeper, and the largest DEX in terms of trading volume, Stonfi. Even the only staking protocol, Tonstakers, is also supported by TOP. From the perspective of the key nodes in the TON ecosystem, TOP has become the de facto "core builder" of TON, while the TON Foundation seems more like a public relations agency, with its power gradually being sidelined.

Then, on January 14, 2025, the TON Foundation announced the appointment of board member and Kingsway Capital founder Manuel Stotz as the new CEO, with former CEO Steve Yun continuing to serve on the board.

In the face of such "power erosion," it is understandable why there are rumors that the "TON Foundation, mainly led by the Asia-Pacific team, has almost no say in many matters."

The vulnerability of the Chinese in the TON Foundation's ecosystem resource allocation has become more apparent. "The Asia-Pacific team has little say, and core technical decisions are still in the hands of the Russian team," Xiaoguang pointed out. "If we can have a good relationship with the Russian team, we can receive the most support. For example, Catizen has a very good relationship with the Russian team, received investment, and obtained a large amount of resources." Indeed, Catizen's game developer Pluto Studio is included in TOP's investment list.

Tim Wong, Chairman of the Catizen Foundation, responded to Deloitte: "We have always maintained a good cooperative relationship with the TON Foundation. However, the statement that you can receive resources as long as you have a good relationship may be somewhat onesided. Catizen's ability to receive support is more importantly based on our team's early layout in the TON ecosystem, as well as the efforts and achievements of the project itself. In 2024, we ranked first on The Open League leaderboard of the TON Foundation for four consecutive seasons, which is the result of the team and community's continuous dedication and hard work. The allocation of resources in the TON ecosystem is based on actual results, and we also hope to see more excellent projects grow and succeed in the TON ecosystem through their own strength."

Another sensational small game, Notcoin, was founded by Sasha Plotvinov, who is also the CEO of Open Builders, and Open Builders' products overlap significantly with TOP's and are also part of the "core circle." "DOGS are also done by the people behind Notcoin, all belonging to a plate controlled by the Russians themselves," Xiaoguang said. "There are many similarities in the trends as well." This relationship not only allowed Notcoin to gain an advantage in the TON ecosystem but also made it a benchmark project in the Telegram small game track.

Looking at the trend charts of the three coins from August last year to now, the trends are indeed very similar. Furthermore, looking at March 16th yesterday, influenced by the news that "Telegram founder Pavel Durov was allowed to leave France," some tokens in the TON ecosystem rose, including: TON with a 24-hour increase of 20.7%, now priced at $3.53; NOT with a 24-hour increase of 18.7%, now priced at $0.002543; DOGS with a 24-hour increase of 10%, now priced at $0.0001475. (Prices are as of the drafting time of March 17th)

From top to bottom are: TON, NOT, DOGS

The success of Catizen and Notcoin was, to some extent, not the success of the race, but rather the high centralization of TON's core resources. Both projects were launched half a year earlier than most small games and received full support from the foundation. In other words, the prosperity of the TON small game ecosystem is not a true "open ecosystem" but a game of resource allocation.

Another fatal issue in the TON ecosystem is the confusion and sudden turns in strategic direction—on the resource support level, the focus of the TON Foundation swiftly shifted from Telegram small games to DeFi, directly causing many small game developers to abandon their projects.

"When we interacted with the foundation, we could clearly sense that after a certain point in time, they basically stopped paying attention to all game-related projects and started frantically looking for DeFi projects," said Sleepy. "This shift came too suddenly and was a huge blow to teams that were seriously developing products, causing a significant outflow of developers and users."

Sleepy strongly disagrees with the direction change made by the TON ecosystem: "I think TON should not simply replicate what other public chains are doing. Without relying on Telegram, TON cannot achieve its current user base in terms of performance, language, and development complexity. Therefore, TON's future development should be planned based on the characteristics of social platforms, not by copying other public chains."

"Our initial assessment of TON was that its ecosystem would be similar to WeChat Mini Games or TikTok Mini Games, becoming part of the traffic monetization on social platforms." However, the decisions made by the TON Foundation completely deviated from this direction, "They ventured into stablecoins, DeFi, which were all huge mistakes, just like WeChat developing a stock trading mini-program, would you use a WeChat mini-program for stock trading?" Sleepy bluntly stated.

This strategic mistake by the TON Foundation not only caused the ecosystem to miss the right narrative direction but also directly triggered a crisis—In August 2024, TON founder Pavel Durov was arrested in France. This event dealt a huge blow to the TON ecosystem and plunged the foundation into chaos.

"The reason is actually because they added a feature similar to fiat-to-stablecoin, which involved compliance and political factors, especially against the backdrop of the Russia-Ukraine war," Xiaoguang revealed to BlockBeats. Prior to this, BlockBeats had also heard similar views from other sources, indicating that a stablecoin-related feature attracted regulatory attention.

The original TON ecosystem has fallen into chaos due to strategic oscillation and uneven power distribution, and the sudden event involving the founder has further deprived this ecosystem of its last support.

“Death Accelerator”: Project Factories and Exchange Platforms

In addition to traffic black boxes, factional fights within the TON Foundation, and sudden shifts in resource support, project factories and exchange platforms have also been key factors accelerating the demise of Telegram's mini-games track. The frenzy in this ecosystem is fundamentally a short-lived capital game, with true user growth having long been stagnant.

In this track, the game development process is highly industrialized, with project factories mass-producing various mini-games in a streamlined manner, conducting trial and error in the market, and inevitably, a few projects manage to succeed. “For example, the game developer behind Catizen, Pluto Studio, initially released over a dozen games and eventually found that the cat-breeding model worked best, deciding to focus on it,” KinKin explained.

In other words, Catizen's success was not accidental but rather a result of intensive project experimentation and selection. This model is essentially characterized by high turnover, low cost, and rapid trial and error.

“The cost is actually very low,” KinKin explained. “Many game developers directly look for validated games in the WeChat Mini Program market, obtain the game code, change it to H5, wrap it in a Telegram IDK (integrated development kit), and can directly launch it. Moreover, in the later stages, the price of these mini-games' code becomes increasingly cheaper."

Low cost, short cycle, quick deployment make these game projects highly speculative. More importantly, once a game model is market-proven, it is quickly replicated and magnified, where being at the top often means having “pricing power.” KinKin mentioned, “When Catizen discussed listing on exchange platforms, they were very aggressive, even leaning towards OKX, asking for $500,000.”

In response to this, Catizen Foundation Chairman Tim Wong stated, “This information is not quite accurate; we have never asked OKX for any fees. The cooperation between Catizen and each exchange is based on mutual benefit. We are more focused on how to bring long-term value to the community and ecosystem, rather than who is dominant or submissive. When $CATI was listed on major exchanges, we actually allocated CATI tokens to conduct activities for the users of the exchanges, promoting ecosystem growth. Collaboration is mutual, and we have always hoped to find the most advantageous way for the development of the Web 3 industry and the community.”

Once a project takes off, its bargaining power will increase significantly. Catizen is able to negotiate from a strong position because it has accumulated enough market experience from the failures of multiple gaming projects, and has precisely identified a user base willing to make purchases. "A small game like Catizen, which has been validated through more than a dozen projects, is indeed a product that is mature enough, and has attracted a wave of users who are truly willing to spend money," KinKin said.

In response, Catizen Foundation Chairman Tim Wong replied to Rhythm, "We never thought of it as milking paying users, and Catizen is not a game where players simply spend money, but rather an ecosystem that truly adds value to players. In fact, many users have received airdrops in Catizen that have already yielded a return of 3-4 times. We have always focused on building a valuable and sustainable Web3 ecosystem that organically integrates Web 2 and Web 3, aiming to bring players truly fun and highly playable games, while also allowing $CATI holders and the community to share in the growth dividend. This year, we plan to launch over 200 small games on the app center to make players happy and enjoy more rewards. Recently, we have seen renewed interest in the TON ecosystem, which makes us happy as well. As a long-term builder of the TON ecosystem, Catizen has been deeply rooted here and witnessed its development and changes. Now with Durov's return and Telegram as one of the world's largest communication apps, it will undoubtedly bring more opportunities to the TON ecosystem. We also hope to seize this opportunity and work hard with excellent projects in the ecosystem to embrace the true explosion of the TON ecosystem."

The success of the leading projects has also brought another issue—highly concentrated resources. "The traffic of a project like Hamster Kombat is almost enough to support a medium-sized trading platform."

However, the Telegram gaming ecosystem has never brought in a "live stream" of fresh users, lacking the entry of external incremental markets. The high-density "bombardment" from project factories has left almost no room for survival for other small games, let alone Web2 game manufacturers—they hold a large number of abandoned and unlisted games with extremely low trial-and-error costs. In this competitive environment, the Telegram gaming track is accelerating its decline.

Another driving factor is the game of trading platforms. The traffic brought by TON small games has shown trading platforms new growth points, leading to frequent listings in the short term, resulting in the premature exhaustion of the market. Looking back at Binance's listing timeline, it can be observed that the interval between listings for new projects is becoming shorter and shorter:

May 16: Notcoin listing;

84 days later: Listing of TON;

13 days later: Listing of DOGS;

23 days later: Listing of Catizen;

13 days later: Listing of Hamster Kombat

“When DOGS was listed, all trading platforms were fighting for this data, even giving rewards for engaging in activities. ‘If you withdraw DOGS from my platform, I'll give you back how many DOGS.’ Why did they know DOGS had traffic? Because NotCoin had already proven it once. NotCoin and DOGS are developed by the same team, following the same path as NotCoin.” KinKin told BlockBeats.

A deeper issue is that the user growth rate in this cycle has lagged far behind the previous cycle. At least before Trump's listing, the market was very concerned about the user growth of Web3. This anxiety naturally transmitted to the trading platforms. Although the user quality of Telegram's mini-games varies, at least in the early stages, the conversion of TON traffic could still bring some data growth to the trading platforms. However, this data growth is fundamentally unsustainable.

Ultimately, the more projects in the project factory, the faster the listing frequency on trading platforms, and the quicker the cooling of the race.

After several rounds of listings, the incremental user growth of trading platforms gradually dried up, losing the motivation to continue listing new projects. For latecomers, the first-mover advantage has been maximized, and the space for latecomer projects and tokens is shrinking. All of this makes the collapse of the Telegram mini-game ecosystem inevitable.

TG+ Web3, Is It Really a False Proposition?

“Have you ever envied those projects that can be listed on Binance?” Facing BlockBeats' question, Sleepy responded quickly, obviously having thought about this question long ago.

“It depends on how success is defined. Many people think being listed on a trading platform is a kind of industry recognition, but I don't feel that way. For me, issuing a token is not the end of the project. If you treat it as the end, it would be very harmful, hurting oneself, the community, and investors. Because everyone can see that after these tokens are listed, their performance is very poor, and the effect of attracting new users is far from the trading platform's expectations.” Sleepy said.

The “quick money logic” of the TON ecosystem makes everything simple and crude—changing to a new project every three weeks. The operators who chase quick money dominate the market's rhythm, and teams that truly want to create games end up being eliminated as “aliens.” In this ecosystem, idealists ultimately have only two choices: either abandon their beliefs and go with the flow or be eliminated.

Sleepy and his team ultimately chose the latter. He trimmed 80% of the team, had several core members defer their salaries, and allocated some resources to a Web2 design outsourcing business to sustain the team's existence.

"Furthermore, we are also in talks with some public chains for grants. We have already received the first Launch Grant and will continue to do some development work to complete the remaining KPIs. We have also applied to participate in hackathons like Monad Madness to see if we can achieve some results. Currently, the income for the past few months has exceeded what we earned from games on TON," he said self-deprecatingly.

After the collapse of the TON ecosystem, the various individuals who were once active in it have found their own new paths.

KinKin has now shifted to the AI Agent track and is very optimistic about the future of the BASE chain. Meanwhile, Xiaoguang, who excelled at plate spinning, is researching memes. He realized early on that the Telegram mini-game business is a structural one, never a sustainable model, with a window of only a few months." A former member who had worked diligently to promote the ecosystem at the TON Foundation has since left and started researching Kaia, a public chain merging Korean and Japanese WeChat mergers.

In an ecosystem that prioritizes traffic above all else, only the traffic itself remains. The TON ecosystem did not become the "future of encrypted social networking"; it was merely another cyclical Web3 narrative, a market game more short-lived, faster, and more extreme in returns than public chains and ZK tracks.

Looking back on this carnival today, for developers, the TON ecosystem once disguised itself as the hope of "social + Web3," luring them into this market, only to turn them into producers of black-box data; for players, airdrops created the illusion of "overnight wealth," when in reality, a $0.99 game package became the new era's "cyber bonfire money."

Taking a broader view of the entire industry, the rise and fall of Telegram mini-games is not an isolated phenomenon but rather an extreme "microcosm" of the entire Web3 industry. In fact, whether it's public chains, ZK Rollups, or Layer 2, the essence of many tracks is the same; they are all essentially playing a large-scale Telegram mini-game, some with longer lifecycles, some shorter.

"Is 'Telegram + Web3' truly a fallacy?"

Each interviewee gave their own answer, but I have decided not to write it down because, dear reader, this time, I want to hear your thoughts.

This article acknowledges all the interviewees who provided information. To protect privacy, some interviewee information has been subject to anonymization.

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