For domestic game manufacturers, going overseas is a choice that most game merchants have to make. In terms of commercialization models, Web3 blockchain games are one of the types that overseas game merchants will consider.
Recently, blockchain game GameFi has seen explosive growth on the TON platform. Taking Notcoin (tap to earn, tap mining game) as an example, it is reported that the project quickly attracted 35 million users after its launch, with daily active users exceeding 6 million at its peak, and a pre-market valuation of up to 850 million US dollars. In just two weeks after its token $NOT was listed on Binance, its market value soared to 2.5 billion US dollars, creating a boom in the TON ecosystem's mini-games. This has also excited many domestic game manufacturers.
So, do domestic game merchants face any legal risks when developing TON ecosystem mini-games?
01, What are Telegram and TON ecosystem mini-games
Telegram (also known as TG, telegraph, paper airplane) is a free instant messaging software founded by brothers Pavel and Nikolai Durov in 2013. As of now, it has more than 1.3 billion registered users and nearly 900 million monthly active users, and has become an important tool in the Web3 community.
The TON project (Telegram Open Network) was initially developed by Telegram, but due to compliance issues, Telegram withdrew. In May 2021, the TON Foundation restarted the project, and TON was renamed from the original Telegram Open Network to The Open Network and continued to develop.
The TON ecosystem covers a wide range of application scenarios, including but not limited to the following 19 main areas: centralized exchanges, decentralized exchanges, Staking, wallets, browsers, bridges, utilities, channels, NFT collectibles, chat, social, gambling, games, Jettons, NFT services, VPN, development tools, shopping, launchpads.
Thanks to the huge user base on the Telegram platform and its low entry threshold and simple operation, mini-games in the TON ecosystem have quickly gained widespread attention and user growth.
02, Examples of popular mini-games in the TON ecosystem
1, Ton horse gamefi
Token acquisition methods include clicking, completing corresponding tasks (such as joining Telegram groups, following Twitter, inviting friends), and purchasing platform NFTs can also produce platform tokens.
The games on the platform include Battle Royale and Rocket Game. A brief introduction to the gameplay:
Battle Royale:
Comparing the interfaces of the two images above, does it look familiar? The top image is from Ton horse gamefi, and the bottom image is the interface of the Battle Royale game from the trendy universe.
Players randomly enter a room and bet coins. Once the players are assembled, the game starts. After the game starts, if the killer enters the room where the player bet, the player will lose the bet tokens.
Rocket Game (Crash Game):
After betting tokens, the game starts. As long as the player chooses to jump off the plane before the plane crashes, the player wins. The later the jump, the higher the reward.
The way players monetize is by exchanging the diamonds obtained in the game for Horse tokens, and then trading the Horse tokens in the form of orders, thus converting the platform tokens into USDT for monetization.
2, Notcoin
Similar to the once-popular WeChat mini-game "Sheep Got Sheep," Notcoin leverages Telegram's huge user base and social dissemination capabilities, with simple gameplay that has attracted widespread attention and participation of over 30 million people since its launch on January 1, 2024.
Notcoin gameplay introduction: In the game, players need to periodically click a代 icon while capturing rockets to accelerate upgrades. The game is not limited to single clicks but also includes team cooperation score leagues, energy management, and referral rewards. Additionally, Notcoin has an "earn" system, where players can earn Notcoin by completing advertising tasks. Players can accelerate their collection through different boosts, such as full energy boost and multi-point boost. For users, this game is a no-threshold side job.
In May 2024, Notcoin issued its own NOT token on the TON (The Open Network) blockchain. Du Rove, the founder of Telegram, once stated that after Notcoin was minted on the TON blockchain and listed on all major cryptocurrency exchanges, it attracted over 35 million active users.
03, What are the legal risks for Chinese developers of TON ecosystem mini-games?
1, Legal risks related to gambling
In the previously introduced Ton horse gamefi, both types of mini-games on the platform are probability-based gameplay, which, to put it bluntly, are gambling games.
If a game involves gambling, it will have the following three characteristics:
Paying to purchase in-platform props/game coins. Most blockchain game platforms require users to purchase in-platform props or tokens through payment. The specific method is: first, buy virtual currency through an exchange using fiat currency;
Then download a cryptocurrency wallet to transfer the purchased virtual currency to the wallet; after connecting the wallet in the blockchain game, you can purchase props or tokens in the platform through the wallet. Even if a small part of blockchain games claim to be free at the beginning, users still need to spend money for a better gaming experience.
Direct/indirect cash withdrawal, obtaining fiat currency. Users can trade NFTs or game tokens within the platform, withdraw them as virtual currency, and then convert them into fiat currency.
Gameplay: random, high-risk, high-reward, loss possibility. If the outcome of the game is highly random and involves a high risk of loss, the game poses gambling risks.
In short, gambling gameplay will simultaneously involve payment input, random gameplay, and cash output.
Therefore, if domestic game merchants want to develop mini-games in the TON ecosystem, unless they allow players to play for free, once there is payment input from Chinese players in the game, the game merchants will inevitably face legal risks related to operating a gambling establishment.
2, Legal risks of issuing tokens
In the TON ecosystem mini-games, the main sources of income for game project parties include player recharges within the game, advertising revenue, etc., but most project parties still hope to issue tokens.
In September 2024, Binance announced that Launchpool would launch its 58th project, Hamster Kombat (HMSTR). From Notcoin (NOT) to HMSTR, Binance has continuously supported TON ecosystem mini-games.
(A P2E game CEO simulator based on the Telegram mini-program platform)
As is well known, issuing tokens is prohibited in China. As early as 2017, the "Announcement on Preventing the Risks of Token Issuance Financing" characterized token issuance as illegal financing activities. The 2018 "Risk Reminder on Preventing Illegal Fundraising in the Name of 'Virtual Currency' 'Blockchain'" also mentioned that "some criminals also issue tokens under the guise of ICO, IFO, IEO, etc., which are highly concealed and misleading."
If the ultimate goal of domestic game merchants developing TON ecosystem mini-games is to issue tokens, due to domestic policies characterizing virtual currency-related businesses as illegal financial activities, they may face related criminal legal risks for violating domestic policies.
3, Other legal risks
In the article "Top 10 Legal Issues Web3 Game Entrepreneurs Should Pay Attention To," Lawyer Shao mentioned that in addition to gambling-related and policy-related legal risks, attention should also be paid to marketing and the game model's potential risks of pyramid schemes, setting up consignment markets for players, illegal fundraising, money laundering, and intellectual property infringement.
04, Compliance suggestions
Telegram and WeChat both have billions of monthly active users, which is also the main reason why project parties and investors develop mini-games. Moreover, developing TON ecosystem mini-games seems to have a low threshold for overseas game merchants.
The model is also similar to WeChat mini-program games, which are easy to learn and have strong dissemination power, just like reviving once-popular WeChat mini-program games or other traditional Web2 games.
Against the backdrop of the domestic gaming industry's downturn, this is also a viable business choice for game merchants.
Therefore, if domestic game manufacturers develop TON ecosystem mini-games, they also need to fully understand the domestic regulatory provisions on Web3 games, ensuring that all activities in project financing, business cooperation, labor employment, game marketing, and content are conducted within the legal framework to avoid being identified as illegal financial activities.
