1. Now is the Time to Prioritize Mass Adoption

Mass Adoption has consistently been the central challenge for Web3. Yet, the market tends to concentrate on short-term wealth effects, often neglecting the sustainability of projects and the crucial factors necessary for achieving Mass Adoption. Since the launch of Bitcoin in 2009, among various sectors, centralized exchanges like Binance have emerged as the first to achieve Mass Adoption in Web3, with its user base surpassing 200 million.

With the approval of the Bitcoin ETF, the market has entered a bull cycle unique to Bitcoin OGs and believers. In contrast, due to insufficient liquidity, new coins have performed poorly, and altcoins have not exhibited the diverse growth seen in the previous bull market. Consequently, most Web3 users have not enjoyed the prosperity of this bull market. During the last bull cycle, the number of crypto users surged from under 50 million in 2019 to 420 million in 2022, marking a tenfold increase. However, from early 2024 to the present, the global number of crypto users has only grown by 30 million, with growth rates significantly lagging behind the previous bull market.

Global Web3 User Growth Chart （Source: Triple-A, https://www.triple-a.io/cryptocurrency-ownership-data）

From a first principles perspective, the fundamental reason for this gap is evident. Thus, now is a crucial moment to focus on Mass Adoption.

2. Obstacles to Mass Adoption for Web3

A16Z emphasizes in its “Big Ideas in Tech 2024” report that simplifying the user experience is fundamental for Web3 to achieve Mass Adoption. Binance’s “Road to One Billion On-chain Users” report highlights two core conditions for achieving Mass Adoption: first, having on-chain applications that users want to use; and second, these applications must be easy to understand and access. Numerous products that have achieved Product-Market Fit (PMF) and successfully navigated through cycles validate these two core conditions. Additionally, the crypto industry needs to build necessary infrastructure, tools, and public awareness to make the concept of “digital ownership” easily understandable and accessible globally.

Mark Suster, Managing Partner at Upfront Ventures, notes that to build a Mass Adoption product, it must not only achieve PMF but also be capable of generating ongoing revenue and targeting a sufficiently large market.

Mass Adoption involves not just acquiring users but also capturing the liquidity they hold. IOBC Capital argues that addressing compliance channels for traditional institutions entering Web3 is also key to achieving Mass Adoption. Compliance issues are seen as a form of soft infrastructure. With the approval of BTC/ETH ETFs, the establishment of BlackRock’s RWA fund, and candidates in the US presidential election incorporating Web3 development into their campaign promises, related policies and compliance channels are showing a steady and irreversible trend of progress.

In summary, for Web3 to achieve Mass Adoption, the following conditions must be met:

1. Effectively meet a real need (i.e., PMF);
2. Target a market of at least billions of people or tens of billions in scale;
3. Ensure low user adoption barriers and high product usability;
4. Have mature upstream and downstream supply chains and infrastructure supporting the core value and experience of the product;
5. Achieve large-scale and precise user acquisition;
6. Possess a sustainable long-term business model.

We see that conditions 1 through 4 have seen significant focus and continuous improvement from various projects within the Web3 space. Telegram and TON have brought benefits to condition 5. However, progress on condition 6 is limited. The core logic here is:

PMF ≠ Business Model; a good product does not necessarily mean it will be profitable. Without sustainable profitability, it is challenging to acquire users at scale and with precision over the long term. After all, airdrops can only bring a low-cost burst to a project initially. Without continuous profitability, who will continue to support the airdropped tokens in the long run?

Reflecting on the previous cycle, DeFi, GameFi, NFTs, and the Metaverse all provided ample momentum for Mass Adoption. They each met several of the above requirements: Axie Infinity and YGG addressed income issues for the unemployed in the Philippines during the pandemic, and STEPN matched users’ fitness needs while reducing barriers to entry through its built-in wallet. Despite these successes, the lack of sustainable business models and the inability of non-financial products to incentivize user payments have prevented them from continuing the mission of Mass Adoption. This offers valuable lessons and insights.

3. Advantages and Challenges of the TON Ecosystem in Achieving Mass Adoption

3.1 Advantages

A Social Network with a User Base of 1 Billion: Enabling Large-Scale User Acquisition

As of now, Telegram boasts 950 million monthly active users, providing a vast platform for social viral marketing. Social viral marketing, also known as Word-of-Mouth marketing, is one of the most efficient methods for large-scale user acquisition. Efficiently acquiring users on a large scale is a crucial prerequisite for achieving Mass Adoption.

Comparison of Marketing Methods and Channel Effectiveness in the Web2 Era (Source: Miniton)

Leveraging this advantage of the TON ecosystem, several projects within the ecosystem have successfully achieved user bases in the tens of millions, with 60% of active projects being in the gaming sector. Notably, Notcoin was one of the first to reach this milestone, attracting over 35 million crypto users since its launch. Its token, $NOT, went from listing to exchange release in less than a month and saw a 400% increase within two weeks of its launch, making it one of the standout altcoins in the current bull market.

Attracting Developers through Mini-Program Frameworks: Maximizing Coverage of End-User Needs (PMF)

For ecosystems and infrastructure, achieving Product-Market Fit (PMF) is a matter of probability. By increasing the number of products, an ecosystem can eventually find one that meets user needs. Clearly, the combination of Telegram mini-programs and the TON ecosystem has attracted numerous developers to create a wide range of mini-programs, thus closely aligning with various user needs.

Developers are drawn to Telegram and TON for clear reasons: the substantial user base and the high conversion rate from exposure to app usage. Mini-programs offer the shortest access path for users—no need for URL entry or downloads; they are available instantly. This approach not only lowers the barriers to user adoption but also enhances the conversion rate for acquiring users.

Banana Gun is a Telegram bot that launched on Binance on July 18, 2024. It facilitates both automated and manual trading on the Ethereum network and supports manual token trading on the Solana network. The success of Banana Gun is undoubtedly attributed to the support provided by Telegram’s bots and mini-programs and the advantages of reaching users through Telegram.

Highly Integrated MPC Wallet: Low Barrier and High Usability

TON currently offers two wallet tools: Telegram Wallet and TON Space. With the exception of users in the United States, other users can activate Telegram Wallet by adding the wallet bot and then launch TON Space through the Telegram Wallet mini-program. Transactions within the Telegram app—from account registration to transfers and payments—provide a user experience akin to that of WeChat Pay, featuring one of the most convenient interfaces available.

With the low-barrier wallet provided by the TON ecosystem, Catizen within the ecosystem has achieved a 10% on-chain user conversion rate, with 25 million players, approximately 1.5 million on-chain gamers, and over 500,000 paying users globally, generating more than $16 million in game revenue.

On July 23, Binance Incubator announced its investment in Catizen’s issuance platform Pluto Studio. Binance co-founder and Binance Labs Head He Yi stated, “Binance Labs is always enthusiastic about supporting projects like Pluto Studio that have the potential to bring billions of users into Web3. We look forward to supporting more visionary builders dedicated to creating products designed for Mass Adoption.”

3.2 Challenges

Dependence on Telegram

The primary advantage of the TON ecosystem is its exclusive support from Telegram: it is the only Web3 infrastructure integrated with and promoted within Telegram. However, this also represents a significant risk, as any changes in Telegram could have systemic effects on TON. For instance, on the day Telegram founder Pavel Durov was arrested, the TVL (Total Value Locked) in the TON ecosystem dropped by over 60% in a single day, highlighting the systemic risks associated with sole reliance on a centralized organization.

Underdeveloped DeFi Sector

Although users are the foundation of capital, not all products and teams possess the capability to monetize traffic effectively. The current widespread issue of insufficient user payment capacity on Telegram is considered to be more of a problem with product form and team capability rather than the ecosystem itself. For example, Catizen and a considerable number of trading bots/mini-programs have effectively captured the liquidity behind Telegram traffic. Similarly, about 60% of the traffic in high-revenue Web2 WeChat mini-games comes from decentralized product viral growth. Nonetheless, the TVL of the TON ecosystem remains disproportionate, primarily due to a lack of DeFi projects. Currently, STON.fi and DeDust account for 80% of the total TVL in the TON ecosystem.

Inadequate Commercialization Services

Developers’ concerns about ecosystems typically include four aspects:

1. Platform Scale
2. Infrastructure Completeness
3. Efficiency in User Reach
4. Support for Traffic Monetization

Among these four aspects, points 3 and 4 pertain to commercialization services and infrastructure. In these areas, TON has only achieved 50% effectiveness in each.

Regarding user reach, TON has implemented large-scale and efficient user acquisition methods: aside from viral sharing, the main acquisition methods are non-performance-based CPM through Telegram Ads and traffic direction through mini-programs’ point walls. However, due to data privacy protections, precise targeting and performance marketing are not achievable unless Telegram breaches its product principles by collecting extensive user privacy data.

In terms of traffic monetization, TON provides excellent payment tools such as the Web3 payment tools Telegram Wallet and TON Space, and the Web2 payment tool Telegram Star. Nevertheless, most products that best meet user needs are not suited for paid monetization methods, such as free tools and casual games. These free products that do not apply paid monetization often struggle to establish a stable and reliable business model, which is essential for achieving Mass Adoption. The shortcomings in commercialization services and infrastructure within the TON ecosystem appear to be the final, unclear barrier to building Mass Adoption products.

On the issue of sustainable business models, there are active participants. MiniTon, a commercialization service provider funded by the TON Foundation, offers a TaaS (Tournaments as a Service) monetization solution for casual and competitive game developers, helping them move beyond reliance on ad-based monetization. MiniTon has also restructured the social operation model of games based on the Friend Tech protocol, aiming to establish a sustainable Web3 business model.

The monetization model of competitive games (EF & RK) is on par with the three main game monetization models: ad-based (IAA) and in-app purchases (IAP). This model is widely applied in PvP games like card games, with an annual market size exceeding $30 billion in the Web2 market. It has been a major driver of Mass Adoption in Web2 social platforms. MiniTon leverages encryption technology to seamlessly integrate the competitive game monetization model with Telegram and optimize the operational model of PvP games in the $30 billion market using encryption social protocols.

In its early development, MiniTon received significant investment and incubation from Waterdrip Capital. MiniTon has provided players with a social competitive platform, allowing them to experience esports in casual single-player games and establish new social connections through game battle contracts. Developers can integrate MiniTon’s monetization solutions with just 1.5 days of development time via SDK.

To date, MiniTon has completed Alpha I closed testing, with 30,000 users participating in the beta and achieving a 1% paid conversion rate. The Alpha II test version is expected to launch by the end of September, expanding the test scale to several hundred thousand users.

Notably, MiniTon’s game contracts are based on a multi-chain protocol, which does not rely solely on a single ecosystem, thus providing strong resilience against systemic risks.

4. How Much Can the TON Ecosystem Learn from WeChat’s Successes and Failures

4.1 Is it worth referencing WeChat?

Both WeChat and Telegram are social products with a core focus on communication and social relationships. However, there are significant differences between the user bases of Telegram and WeChat. The following data, sourced from third-party monitoring, provides insights into Telegram’s user statistics for the past week:

Telegram User Data Overview (Source: Waterdrip Capital)

4.2 Differences Between Telegram and WeChat User Profiles:

Apart from geographic distribution differences, the most notable distinction between Telegram and WeChat lies in their user behavior:

WeChat is a quintessential relationship-based social platform, emphasizing close-knit social connections. In contrast, Telegram functions more as a broad social network, akin to QQ.

The average daily usage time per user for WeChat is 1.5 hours, while for Telegram, it is 0.5 hours.

As of the end of June 2024, WeChat Mini Programs have achieved an astonishing 930 million monthly active users, with a penetration rate exceeding 90%. The core factors behind developers’ success in the WeChat Mini Programs ecosystem are the user acquisition benefits and WeChat’s well-established commercialization infrastructure:

1. Ultra-Lightweight User Access Path: Users can access Mini Programs instantly without the need for downloads or URL input.
2. Effective Social-Based User Acquisition: Approximately 60% of traffic originates from user sharing.
3. New Incremental Market: In February 2024, WeChat Mini Games reached 755 million monthly active users, surpassing the 650 million users of mobile game apps.
4. Efficient Commercialization Service System: Through WeChat Ads and WeChat Pay, Mini Games revenue reached $3 billion in 2023.

Telegram Mini Programs already exhibit the first three advantages mentioned above, but there are notable shortcomings compared to WeChat:

1. Weak User Payment Capability: The majority of users come from regions with low payment capacity.
2. Lack of Precise Targeting: Due to privacy protection principles, Telegram cannot provide the same level of precise marketing services as WeChat Ads, making it difficult to target high-net-worth or specific user segments.
3. Low Payment Penetration Rate: Telegram Wallet’s penetration rate is only 5%, compared to WeChat Pay’s 92.4%.

Nevertheless, Telegram remains the most penetrative product in the crypto sector. Targeting the existing high-net-worth users in the crypto field can offset some of the current shortcomings of Telegram Mini Programs. Therefore, the successful model of WeChat Mini Programs is indeed worthy of consideration.

4.3 Project Development Pathways for TON Ecosystem Based on WeChat Mini Programs and Mini Games

By examining the development trajectory of WeChat Mini Games, it becomes evident that the survival and success of WeChat Mini Game developers heavily rely on the level of developer support provided by WeChat itself.

Timeline of WeChat Mini Program Development and Project Examples (Source: Waterdrip Capital)

Booming Growth Timeline of WeChat Mini Programs

During this phase, WeChat’s operations lagged behind, and the ecosystem experienced rampant growth. The ease of acquiring users through viral sharing led to numerous “reskin” games, where development took only five days and cost recovery was achieved within three days, resulting in relatively low-quality games. The distribution of mini-games during this period was decentralized, primarily relying on other mini-programs and WeChat advertising for user acquisition. Revenue for mini-games and free mini-programs came mainly from monetization from in-app advertising (IAA), such as importing users from other mini-games or mini-programs and integrating WeChat’s advertising monetization plugins.

Key Insight for Web3 Developers: At this stage, Telegram is in a comparable situation. Excluding the exceptional game “Pirates Are Here,” 98% of the Top 50 games during this period were casual and casual competitive games. Examples include “Happy Landlord,” “Number Match,” “Brainstorming Battle,” “Geometry Escape,” and “I Want to Be the Emperor,” with “I Want to Be the Emperor” having gameplay similar to the current Catizen.

2020 - 2022: Ecosystem Adjustment

During this period, macro factors, such as the health code mini-program having 800 million users in 2020, provided a unique context. By October 2022, WeChat Mini Programs reached 1 billion monthly active users. WeChat focused on expanding traditional industries, such as education, healthcare, and dining, while simultaneously guiding the gaming industry to improve product quality. Developers were provided with over 100 features and interfaces, enhancing their commercialization (IAA and IAP) services. During this time, the only phenomenon-level product in WeChat Mini Games was “Sheep’s Big Adventure《养了个羊》,” but due to WeChat’s increased quality requirements and restrictions on viral sharing, WeChat Mini Games experienced a “smile curve.” Nevertheless, WeChat’s operational strategy proved successful, with 50 selected games generating over $50 million in revenue and 7 games surpassing $100 million.

The “Smile Curve” of WeChat Mini Games users (Source: Waterdrip Capital)

Key Insight for Web3 Developers

The best-selling games during this period remained casual competitive products, such as card games. From a gameplay perspective, card games, MMORPGs, management games, and idle games generated the highest revenue.

2023 to Present: Stability and Breakthrough

Thanks to WeChat Mini Games’ ongoing efforts to guide developers in creating high-quality content and optimizing technical support, a surge of mid-to-heavy games with high revenue has emerged. According to Tencent’s Q1 2024 financial report, the total user time on WeChat Mini Programs increased by over 20% year-over-year. The revenue of WeChat Mini Games in 2023 grew threefold compared to 2022, with over 240 games achieving quarterly revenues exceeding $10 million within a year.

Reasons for the Surge in WeChat Mini Programs/Mini Games During This Period:

• Allowing WeChat Mini Games and Mini Programs to advertise on external platforms (e.g., Douyin) further improved advertising efficiency.
• Introduction of live-streaming as a user acquisition channel.
• The top-selling game categories shifted from card games to MMORPGs, idle games, card games, and management games.
• Monetization evolved from a single model (IAA or IAP) to a mixed model (both IAA and IAP).

4.4 Lessons for TON from the Growth of WeChat Mini Programs

• Continuously address developers’ concerns related to Product-Market Fit (PMF), such as improving game engine compatibility, enhancing user acquisition efficiency, opening external effect marketing channels beyond Telegram, increasing wallet penetration, and strengthening support for commercialization solutions.
• Develop a rapid response capability similar to WeChat’s, which frequently adjusted ecosystem operations policies in its early stages.
• Provide support for each startup product, including offering dedicated, free traffic support for every mini-program (similar to WeChat Mini Programs’ preferred policies).
• Encourage the creation of high-quality content within the ecosystem.

Disclaimer：

1. This article is reprinted from [techflow]. All copyrights belong to the original author [Evan, Joy, Aaron J, Waterdrip Capital]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
2. Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
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