Dialogue with Catizen CFO: From Financial Investment to Virtual Cats, Unveiling the Path to Success in Web3 Games

Host: Blair Zhu, Brand Director at Mint Ventures

Guest: Ricky, CEO of Catizen

The Origin of Catizen

Blair: Hello everyone, welcome back to Web3 Founders Real Talk. Here, we engage in honest conversations with leaders in the Web3 industry. Today, we are very pleased to invite Ricky, the CFO of Catizen, one of the most popular games on TON, to the show. Welcome! Could you introduce yourself? How did you get into the crypto industry?

Ricky: Sure, thank you, Blair. I’m Ricky. Actually, I have over 15 years of experience in finance, mostly in investment. I invested in traditional industries, and I also started investing in Web3 since 2018. I’ve seen many projects but didn’t deeply engage with any of them. About three or four years ago, before COVID, I met the other co-founders of Catizen, and we started discussing how to do something in the Web3 world. We really liked the idea of collaborating together. That’s how I got involved in the Catizen ecosystem.

Blair: That’s quite interesting. As I mentioned earlier, Catizen is very popular right now. I see everyone is playing it. And your team told me you actually have 25 million users. We’re curious if there are any interesting behind-the-scenes stories behind these adorable cat characters. What inspired your team to create this mini-game on the TON platform in the first place?

Ricky: Actually, there’s another co-founder named Tim. I’ve known Tim for over 10 years, probably around 15 years. We are both cat lovers and have adopted many stray cats over these 15 years. When we met the other founders of the Catizen team and brainstormed via video conference about what to do, we found that everyone was using cat avatars. So we decided that if we were going to do something, we had to bring cats into this dog-filled Web3 world, like Dogecoin and Shiba Inu. So if we were to create a game, it had to be related to cats. That’s why we started Catizen.

Reasons for Choosing TON

Blair: It sounds like your team has a lot of cat enthusiasts, especially since everyone had cat avatars in the virtual meeting. So what prompted you to build this mini-game on TON instead of choosing another L1?

Ricky: Ten years ago, when I was investing in traditional markets, I looked at many games and teams. We found it increasingly difficult to make significant profits by investing in WeChat mini-games or even Facebook mini-games because all the competitors in the market were fully utilizing big data, including companies like WeChat and Facebook themselves. Therefore, when they push ads to users, the costs are very high. They know that when users receive ads, he/she will spend a lot of money in the game. If they expect a user to spend $10,000 in the game, they might charge 70% to 80% in channel fees. So it became increasingly difficult.

With all the experience and big data we learned from the traditional gaming market, which is also an area where another co-founder, Silver, excels, we did very well in user experience, interface design, and user game logic. Coupled with our team of engineers, it was actually quite easy for us to create or find a game that could become very popular outside the WeChat and Facebook ecosystems. That’s how we started, and then we continuously expanded and analyzed different channels.

We also studied different chains, such as Solana, TON, and many other communities. We have been observing the TON ecosystem for a long time. We believe that Telegram has tremendous growth potential and already has a very large user base, with about 900 million users, and it’s still growing rapidly. So we decided to leverage the growth of the Telegram system. When Telegram decided to make mini-games and small applications a core part of its offering, we thought they were a perfect fit for our business model. So we chose TON and Telegram as our partners and created a brand new embedded ecosystem.

Catizen is just the beginning. This year, we have 18 games to release, and we will also build other applications for this ecosystem, such as e-commerce and short drama apps. That’s what we are doing with TON. We are leveraging its vast user base and high growth rate, bringing our experience and expertise from the traditional Web2 world.

Dissecting Phenomenal Success

Blair: This is really exciting. There’s a lot to look forward to, and it seems this is your expertise since you are very familiar with all the mini-apps in the WeChat ecosystem. Now you are bringing that experience from Web2 to Web3 to attract 25 million users. That’s impressive. I feel like this popularity seems to stem from an increasing interest in Web3 games and various engaging mechanisms. What are your thoughts on this massive success? Did you foresee such popularity? What strategic measures did your team take to achieve this milestone?

Ricky: As you mentioned, we actually have over 25 million users to date. But if you only look at the on-chain player data, Catizen doesn’t stand out particularly compared to other click-based games like Notcoin. What truly sets us apart is our ability to continuously convert high-quality users. Yesterday, we had 1.8 million Telegram paying users. Telegram paying users pay for Telegram, and they are likely to pay in our game as well. We also have over 1.4 million blockchain users. This conversion rate has remained around 6% to 7% since our inception. I believe the conversion rate from off-chain to blockchain in the Telegram and TON ecosystem is about 0.66%. Our data is actually quite astonishing. Our conversion rate is nearly 10 times that.

So it can be said that almost all blockchain users in the Telegram ecosystem are quite stable. And if they continue to stay in Catizen and become active players, we are quite certain they will also direct their attention to our other games and the ecosystem. Because according to our plan, when users receive Catizen coins after the airdrop, they can use these coins to play Catizen games. They can also use these Catizen coins to continue playing our upcoming games or games released by other partners. In this way, we can continuously maintain and expand our Catizen ecosystem. So I always emphasize that this is not just a game, but an ecosystem. And based on the in-app purchase and advertising model we set from the beginning, if we can have more paying users stick around to play our games, after all, our games are fun and addictive, users can actually expect to gain some returns from playing games, which is the essence of GameFi, right? That’s how we choose or design games for ourselves or other partners to release.

Challenges in Web3 GameFi

Blair: It seems you have a very comprehensive plan for what’s coming next. A game is just a starting point, and you will build a very rich ecosystem on top of that. My next question might be a bit tricky. Many Web3 GameFi projects, and I won’t name them, but you can see that the developers of these projects are actually facing some issues, such as unsustainable models. Do you resonate with this issue in your experience? What is the biggest challenge for Catizen? How do you make the entire lifecycle of the game more sustainable?

Ricky: I believe there are several reasons for our achievements. First, it’s mainly our experience and the team’s expertise in designing and executing game plans. But I think there are also some more specific aspects worth sharing, which are our launchpad and mini-app center. These two features are actually the main parts of our ecosystem’s growth. In the later stages, Catizen will add us as the attention economy center. So our real value lies not only in the tokens but also in the shared value of the entire community. This community includes our Catizen gamers, players of other games, or our original Catizen gamers who have earned a lot of Catizen tokens. They can use these tokens in other games or purchase items on our e-commerce platform, or play games from our partners, or use them to watch the series we release on the platform. That’s what I mean by community.

Through this mini-app center, they can find many games or applications that we have carefully selected for users and partners. We will continuously attract high-quality users. By high-quality, I mean they are very engaged with our games, spending their daily gaming time in our ecosystem. Their purchasing habits are also within our ecosystem. If they decide to watch a show, instead of Netflix or other media platforms, they might want to check out the new shows we release on our platform. By attracting these users and their attention, we can continue to issue tokens or assets that we have already signed agreements with partners or our own studios. Therefore, Catizen token holders can continue to stay on our platform, whether through payments or playing games. Even if they only contribute their attention, I believe that is very valuable for us and our partners. This avoids the death spiral that many other market participants face because they lack the foresight to build an ecosystem. They might decide to rely on a single game.

However, even the best games in the world have a lifecycle, right? Even if players can play for two years, five years, or ten years, games will eventually have a lifecycle. But because we are building an attention economy and are ecosystem builders, this is not something we need to worry about. We can continue to release excellent applications and games and keep attention within our ecosystem. In addition to partnerships, launch pools, and mini-app centers, which are means for us to convert current attention into revenue for our other applications and games, a major feature of our ecosystem is the SDK and game engine. Because there may be many excellent game studios in the Web3 world that want to try to profit or establish a presence in the Web3 economy. But I think for traditional Web2 market participants, this is not simple because it requires some technology, especially on TON and Telegram, as TON is a brand new programming language. If they want to connect games to TON and link to other payment gateways and token systems, it’s not that easy.

Based on our experience and that of our development team, we have an SDK that can quickly connect those Web2 games and convert them into Web3 games and publish them on Telegram. So instead of spending three to nine months learning and experimenting, we can actually publish traditional mobile games in less than two weeks, roughly around ten days. So this part of the SDK gives us and our partners an advantage because they can quickly release their games. Especially in this Web3 world, timing is actually very important because if you release a game six to nine months later, your market may be divided by others who replicate your game.

Additionally, we have our self-developed game engine. In the past, before we had this game engine, we tried to test and release some games on Telegram, and the loading success rate was about 80% to 85%. We believed this significantly affected user experience. So afterward, we developed the game engine, which improved our loading success rate to 99.5%, even during peak times, the success rate is around 95%. When users try to launch our games, if the loading fails, they may not come back again. So we believe that the loading success rate is very important for user experience. Therefore, I think the SDK and game engine are also our core assets that set us apart from other Web3 projects.

Co-prosperity and Competition

Blair: It seems you are very clear on how to avoid the death spiral, and the SDK will be a game-changing tool because you have everything planned out. We have seen the rise of other Telegram games like NotCoin, which seems to have increased interest in Catizen. And from your Twitter account, I see you have significant collaborations with several other games. What are your thoughts on these symbiotic relationships and potential competition? I believe there will definitely be some competition; how do you view this situation?

Ricky: Yes, we have actually established good relationships with most of the popular projects in the TON ecosystem, especially with NotCoin, because the market is just too large. Competitors can also become our partners. If we collaborate, we can benefit from their traffic, and they can benefit from ours. So this kind of competition actually helps improve the entire TON ecosystem. We are very much looking forward to seeing more competition enter the market because more competition means they will bring many new users from the Web2 space, increasing the market size. I believe that ultimately, or even in the medium term, only the best operators or companies with the best ecosystem experience will stand out. So if we are the ones that stand out, then we might benefit the most from the increased market size. Therefore, we actually welcome competition because we believe in ourselves and our core tools and assets.

Back to the point, as I mentioned earlier, we have signed agreements for 18 blockbuster games, each of which is very popular in the Web2 world. Based on our experience, we can smoothly convert them to the Telegram platform, and we may achieve success similar to Catizen. This is the strength of our own releases; our experience and network in the Web2 world have helped us achieve this. Then we also opened our SDK, allowing other projects to integrate into our platform. We can even allow our competitors in the Web2 world to join our Telegram platform because, as I mentioned, the market is just too large. If we can work together to increase the number of Web2 users, it benefits all market participants, especially the leading market players and the TON ecosystem. If the TON ecosystem has more users, then the value of TON coins will also increase, and our players and users will become wealthier, leading to more consumption on our platform, whether in games or purchases. So, to answer your question briefly, we definitely welcome this competition.

Blair: It sounds like competition actually makes you stronger. As a player of Catizen, I really enjoy the low entry barrier of the game because, strictly speaking, I’m not a seasoned gamer. But from upgrading cats to increase productivity, to inviting friends for extra rewards and upgrades, it’s all very fun. However, do you think this game mechanism could be easily replicated? What measures or unique strategies does Catizen have to guard against this? This is an extension of the question you just shared.

Ricky: This goes back to the competition issue. I think it’s primarily due to our experience and team. Of course, there will always be better teams and more talented individuals because young programmers learn very quickly, and they can also learn rapidly from the successes of existing projects. We must continuously improve ourselves to remain competitive. But I believe a significant part of our competitiveness also includes the technological barriers like the SDK and game engine mentioned earlier. I think if someone tries to spend money and effort to build the same SDK and game engine and release their games, it will take a lot of time, possibly over a year. If they choose to collaborate with us, they can quickly release their games and enjoy a good user experience with our game engine because we are constantly upgrading and refining our game engine and SDK. They can develop the market faster and upgrade their games more easily while benefiting from our ecosystem because if they join our ecosystem, they can profit from the traffic of Catizen and our other games.

We will provide all traffic transfers for our partners’ games and applications in the mini-app center. So these technological barriers and our first-mover advantage in the Telegram and TON systems are significant obstacles for them to overcome. Another is the business model. Copying a mini-game is easy, but they find it challenging to replicate our business model because our goal is to become a mini-game publishing platform, essentially open to the entire mini-app ecosystem. So even Catizen has many internal features specifically designed for the purpose of this mini-app ecosystem. They can easily click some buttons to transfer directly to other applications or games, allowing us to smoothly alternate traffic. There’s also the IAB and IAP in-app purchase model; creating some in-app purchase items is not difficult, but the challenge lies in getting players to buy and continue buying. Through all their returns or assets in that game, users can profit again by playing our other games.

So our ecosystem actually sets a high barrier that makes it difficult for other single-game replicators to cross. No matter how good the game is, if they don’t have a complete ecosystem to support players, players will leave when they reach the end of the lifecycle. And we maintain players’ attention in the ecosystem by releasing different features. Finally, equally important are resource barriers. We already have exclusive rights to a large number of the best Web2 mini-games. We gained a first-mover advantage by releasing Catizen and collaborating with many partners, key players in the TON ecosystem, and of course, the TON Foundation. Many mini-games will continue to join our ecosystem. So we can say we are the largest or one of the largest gaming communities on Telegram and TON in the market. If they try to build a similarly scaled ecosystem or community, I think it’s very difficult because we won these resources early on in the Telegram and TON systems. If they try to negotiate with Telegram and TON for similar resources and support, I think it’s almost impossible.

The TON and Telegram ecosystems have already been very successful, and I think it’s hard for any single project operator to gain a large amount of marketing resources; many market players will share these resources. But for us, we are the first to seize these resources and monetize them. That’s how we grew to this scale. These resource barriers will help our ecosystem become stronger and stronger.

Token Distribution and Airdrop

Blair: I agree with your thoughts; the business model is not so easily replicable. Perhaps they can replicate a single game, but replicating an entire game ecosystem is actually an impossible task. The next question is one that all players are asking because I know you recently announced an increase in the token distribution ratio from the initially planned 35% to 45%, right? Can you provide more details about the upcoming airdrop in July? I think the entire community is eagerly awaiting this news.

Ricky: Sure. First of all, because most of our existing 25 million users are actually very active users, we have implemented penalties for bots or users suspected of cheating, and they will not be eligible for the airdrop. However, as I mentioned, our high-quality user conversion rate is quite stable. As the user base grows, the profit share each user gets from the airdrop will decrease. Therefore, our team continuously allocates the remaining tokens in our token or token economic model to the Catizen airdrop pool. So, the previous decision was about 20%, but to reward our community, we increased it to about 45% today. Even compared to the recent announcement, it has increased by 10%. We hope this provides enough room for the community, allowing users and players to maintain their expectations so they can continue to believe in our ecosystem and community in the future. As for the timing of the airdrop, I would say it’s coming soon. Let’s stay tuned.

Vision for Building the Ecosystem

Blair: Wow, this is really exciting. Besides the airdrop, are there any other upcoming features or expansions? I heard you are about to launch a gaming platform, which you mentioned several times today, that will include over 200 mini-games. Can you elaborate on this? Because you mentioned the entire ecosystem. I want to know, what is your vision for this ecosystem?

Ricky: We will launch the SDK this week, and the upcoming mini-games will also be revealed. As I mentioned, we have signed contracts for 18 mini-games to be released on our platform, and over 200 mini-games will gradually join our gaming platform. We hope the community can closely follow us, and we will actively collect feedback to understand what mini-games they want to introduce and what other applications they hope to see in our ecosystem. Our team will definitely be committed to achieving this because if users want these applications or games to join, we would prefer to bring them into our ecosystem rather than let them join other ecosystems or become standalone systems. I think our players can use the tokens from the airdrop to pay for and play these other games or applications we introduce. At the same time, this also helps these applications grow faster because they don’t have to start from scratch but can start from our existing 25 million user base. So we will pay attention to feedback from the community. As I mentioned earlier, the airdrop is coming soon because it’s an important component that connects all these mini-games. If we can do the airdrop early, then our users can enjoy the benefits of using airdrop tokens in other games within the ecosystem sooner. This feature will be coming soon.

Blair: It sounds like this podcast is coming at just the right time, with a lot of good news and exciting features about to be launched. Thank you for sharing these behind-the-scenes stories. My next question is about the TON ecosystem. You may have partially answered my question, but we know that the number of developer applications within the TON ecosystem is continuously increasing and performing well. What are your thoughts on the overall state of the current TON ecosystem? Additionally, what advice would you give to developers looking to build games or projects on a blockchain, like L1 or L2? Are there specific challenges or obstacles to avoid, or aspects to consider when choosing infrastructure?

Ricky: We can actually see that click-based mini-games in the TON ecosystem seem to have entered a bottleneck period. In fact, large-scale imitation is not as meaningful as it used to be. This has led to too many memes in the ecosystem, lacking healthy infrastructure and healthy assets. So for developers who want to build game projects on the blockchain or in the TON ecosystem, I think they need to delve deeper into user behavior. In this ecosystem, a successful market participant, like us, has been struggling and working in the traditional Web2 space for many years. We may intuitively know that having the best user experience and game logic is very important.

Technical issues are also a challenge because TON is a new ecosystem, and although its infrastructure is continuously evolving, many parts have yet to be touched. I think developers can focus on different parts of the infrastructure. For example, there is still a lot of room for development in DeFi projects on the TON ecosystem because they are just beginning to learn and dig deeper. TON’s programming language can be seen as a good starting point; if a programmer thinks it’s a different language and is unwilling to enter this field, I think that’s a mistake because they chose a different programming language because they believe it’s a better version of blockchain language. In fact, for us, I think it’s more efficient in terms of transactions. So, as a starting point, programmers should incorporate it into their skill set while exploring various parts of the infrastructure because this is just the beginning. If they think they can build something in other ecosystems and fields, why not try doing it on TON? There’s still a lot of untapped potential here.

The Application and Impact of AI Technology

Blair: Thank you very much for sharing your insights in such detail. My last question today is, we just had a very enriching conversation about Catizen, the future roadmap, the airdrop, and other good news, as well as the entire ecosystem. Considering the current buzz around AI, how do you view the impact of AI technology on the overall game development industry? We see many intersections between AI and blockchain and cryptocurrency, and we’ve seen many applications emerge in this cycle. What are your thoughts on this?

Ricky: There are certainly many opportunities, such as AI pets. We are one of the largest cat-loving communities in the Web3 space. We have actually used AI extensively in game design and many operations. But if AI can further help our community, whether it’s Web2 or Web3 players, by launching cloud cats or creating electronic pets, or using AI to create some shared fun patterns, the potential is huge. We are currently collaborating with Google Web3 to apply multiple AI functions for some initial community operation activities. For example, creating videos that interact with cats. If you check our channel on Telegram, you will find many videos about cats and Web3. This helps with user education and allows users to find their social value in the community in a relaxed and enjoyable environment.

I believe that thanks to AI, we can quickly produce many viral videos. These videos not only have marketing value but also deeper significance. Because there is an international conflict between Russia and Ukraine, and a considerable portion of our user base consists of players from Russia and Ukraine. When we look at the comments in these communities, we find that they see Catizen not just as a game, but as a tool for healing the trauma of war. Because some of these people might be soldiers, or some might be refugees fleeing from war zones. They had to leave their hometowns and seek safety in other countries. Some might not be able to bring their cats, or they might worry about the stray cats in their neighborhoods. While this game cannot help them actually rescue those cats, at least by letting them see many interesting cat videos and interact with cats in Catizen, it can provide psychological healing. This is also the motto of Catizen—healing the world.

So for us, this is not just a game. We have also announced that we will donate 1% of our revenue to stray cat charities to help rescue those cats. What we truly hope for is not just to create a good game, but also to help people’s mental health. At the same time, by donating to these NGOs to help rescue stray cats in war zones, we provide more resources. This is our mission in this game.

Blair: You are truly saving those stray cats and making a real impact on the world, which is very touching and impressive. I completely agree with your view on educating through entertainment. I’ve spoken with many entrepreneurs, and everyone is discussing how to attract the next billion users and achieve broader mainstream acceptance. We always talk about how to make the entire experience more entertaining, more seamless, and how to lower the entry barrier for users and newcomers. I feel everything is heading in the right direction. Thank you very much for all the insights and information you shared today; they are very inspiring. I wish you all the best in your development work, and may those good news come true soon. Thank you very much, Ricky.

Ricky: Thank you, Blair.