Host: Blair Zhu, Brand Director of Mint Ventures

Guest: Ricky, CEO of Catizen

The Origin of Catizen

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

Ricky: Sure, thank you Blair. I'm Ricky. In fact, I have over 15 years of experience in the financial industry, more on the investment side. I have been investing in traditional industries, and since 2018, I have also been investing in Web3. I have seen many projects, but have not deeply involved in any of them. When I met the other co-founders of the Catizen team about three or four years ago, before COVID, we started discussing how to do something in the Web3 world. We really liked the idea of working together. That's how I got involved in the Catizen ecosystem.

Blair: That's interesting. As I mentioned earlier, Catizen is very popular now. I see everyone playing it. And your team told me that you actually already have 25 million users. We want to know if there are any interesting stories behind these lovely cat characters. What inspired your team to initially choose to create this mini-game on the TON platform?

Ricky: There is another co-founder named Tim. I have known Tim for over 10 years, probably 15 years. We are both cat lovers, and over these 15 years, we have adopted many stray cats. When we met with the other co-founders of the Catizen team and brainstormed what to do through video conferences, 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 Web3 world full of dogs, like Dogecoin, Shiba Inu coin, and so on. So if we were going to make 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 lovers, as everyone had cat avatars in the virtual meetings. So what prompted your team to build this mini-game on TON instead of choosing another L1?

Ricky: Ten years ago, when I was investing in the traditional market, I saw many games and teams. We found that it was becoming increasingly difficult to make huge profits by investing in WeChat mini-games or even Facebook mini-games, because all the competitors in the market were fully utilizing big data. Even companies like WeChat and Facebook were very good at using big data. So when they pushed ads to users, the fees were very high, as they knew that when users received ads, they would spend a lot of money in the game. If they expected users 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 game market, WeChat, and Facebook, which is also an area where another co-founder, Silver, excels, we did very well in user experience, interface design, and game logic. Plus, with our team of engineers, we could easily create or find a game that could become very popular outside the WeChat and Facebook ecosystems. That's how we started, and then we continued to expand and analyze different channels. We also studied different chains, such as Solana, TON, Telegram, and many other communities. We have been observing the TON ecosystem for a long time. We believe that Telegram has a very large growth potential and already has a very large user base, with about 900 million users and still growing rapidly. So we decided to leverage the growth of the Telegram system. When Telegram decided to make mini-games and mini-apps a major part of its platform, we thought they were very suitable for our business model. So we decided to choose TON and Telegram as our partners and create a brand new embedded ecosystem. Catizen is just the beginning. This year, we have 18 more games to release, and we will also build other applications for this ecosystem, such as e-commerce and short-form video apps. That's what we are doing with TON. We are bringing our experience and expertise from the traditional Web2 world into it, leveraging its large user base and high growth rate.

Deconstructing the Phenomenal Success

Blair: This is really exciting. There is a lot to look forward to, and it seems like this is your expertise, as you have attracted 25 million users by bringing your experience from the WeChat ecosystem to Web3. It's impressive. I think the popularity seems to be increasing due to people's growing interest in Web 3 games and various engaging mechanisms. What are your thoughts on this huge success? Did you foresee this kind of popularity? What strategic measures did your team take to achieve this milestone?

Ricky: As you said, so far, we actually have over 25 million users. But if you only look at the on-chain game player data, Catizen and other click-type games like Notcoin are not particularly outstanding. What really 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 Telegram, and they are very likely to pay in our game as well. We also have over 1.4 million blockchain users. This conversion rate has remained at around 6% to 7% since our establishment. I think the conversion rate from Telegram and TON ecosystem from off-chain to on-chain is about 0.66%. Our data is actually very impressive. Our conversion rate is almost 10 times that. So it can be said that almost all the blockchain users in the Telegram ecosystem are quite stable. And if they continue to stay on Catizen and become active players, we are quite certain that they will also pay attention to our other games and ecosystem. Because according to our plan, when users receive Catizen coins after airdrops, they can use these coins to play Catizen games. They can also use these Catizen coins to continue playing the games we are about to release or games released by other partners. In this way, we can continue to maintain and expand our Catizen ecosystem. So I have always emphasized 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 persist in playing our games, after all, our games are fun and addictive, users can actually expect to get some returns from playing games, which is the essence of GameFi, isn't it? This is the way we choose or design games for ourselves or other partners to release.

Challenges in Web3 GameFi

Blair: It looks like you have a very comprehensive plan for what you are going to do next. A game is just a starting point, and you will build a very rich ecosystem on top of it. Next, my question may be a bit tricky. Many Web3 GameFi projects, of course, I won't mention their names, but you can see that the developers of the projects are actually facing some issues, such as unsustainable models. In your experience, do you resonate with this issue? For Catizen, what is the biggest challenge? How do you make the entire lifecycle of the game more sustainable?

Ricky: I think there are several main reasons for our achievements. First and foremost, it is the expertise and professionalism of our team in designing and executing game plans. But I think there are some more specific aspects worth sharing, namely 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 be adding 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 game players, players of other games, or our original Catizen game players who have earned a large amount of Catizen tokens. They can use these tokens in other games or to purchase items on our e-commerce platform, or to play games from our partners, or to watch series released on our platform. This is what I mean by community. Through this Mini App Center, they can find many games or applications selected for users and partners. We will continue to attract high-quality users. By high-quality, I mean those who are very focused on our games, spending their daily gaming time in our ecosystem. Their purchasing habits are also within our ecosystem. If they decide to watch a series, it's not on Netflix or other media platforms, they might want to see the new series released 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 payment or playing games. Even if they only contribute their attention, I think this 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 may decide to rely on a single game. However, even the best game in the world has a lifecycle, right? Even if players can play for two, five, or ten years, games ultimately have a lifecycle. But because we are building an attention economy and are ecosystem builders, this is not a concern for us. We can continue to release excellent applications and games and keep the attention within our ecosystem. In addition to partnerships, launch pools, and the Mini App Center as means to convert current attention into income for our other applications and games, our ecosystem also has a major feature, which is the SDK and game engine. Because in the Web3 world, there may be many excellent game studios wanting to try to profit or establish a presence in the Web3 economy. But I think for traditional Web2 market participants, this is not simple, as it requires some technical knowledge, especially on TON and Telegram, because TON is a new programming language. If they want to connect the game to TON and connect to other payment gateways and token systems, it's not that easy. Based on our experience and the experience of our development team, we have an SDK that can quickly connect those Web2 games and convert them into Web3 games, and release them on Telegram. So instead of spending three to nine months learning and experimenting, we can actually release traditional mobile games in less than two weeks, probably in about ten days. So this SDK part gives us and our partners an advantage, as 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 have copied your game. Furthermore, we also have our self-developed game engine. In the past, before we had this game engine, we tried to test release some games on Telegram, and the loading success rate at that time was about 80% to 85%. We believe this did affect the user experience a lot. So later on, we developed the game engine, which increased our loading success rate to 99.5%, even during peak hours, the success rate is around 95%. When users try to launch our game, if the loading fails, they may not come back again. So we believe the loading success rate is very important for user experience. So I think the SDK and game engine are also our core assets, which set us apart from other Web3 projects.

Mutualism and Competition

Blair: It seems that you are very clear on how to avoid the death spiral, and the SDK will be a game-changing tool, as you really have everything planned out. We have seen the rise of other Telegram games like NotCoin, which seems to have increased people's interest in Catizen. And from your Twitter account, I see that you have significant partnerships with several other games. How do you view these mutually beneficial 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 big. Competitors can also become our partners. If we collaborate, we can profit from their traffic, and they can profit 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 domain, increasing the market size. I think ultimately or even in the mid-term, only the best operators or companies with the best ecosystem experience will stand out. So if we are the ones who stand out, then we may benefit the most from the increase in market size. So we actually welcome this competition, because we believe in ourselves, and we believe in our core tools and assets. Getting back to the point, as I mentioned earlier, we have signed agreements with 18 sensational 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 the same success as Catizen. This is the strength of our self-released games, and our experience and network in the Web2 world have helped us achieve this. Then we also open 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 big. If we can work together to increase the number of Web2 users, this is beneficial for all market participants, especially for leading market participants and the TON ecosystem. If the TON ecosystem has more users, the value of TON coins will also increase, and our players and users will become wealthy, and they will spend more 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 barrier to entry of this game, as strictly speaking, I am not a seasoned gamer. But everything from upgrading cats to increase productivity, to inviting friends for extra rewards and leveling up, is a lot of fun. However, do you think these game mechanics will be easily replicated? Does Catizen have any measures or unique means to prevent this? This is an additional question beyond what you just shared.

Ricky: This brings us back to the question of competition. I think first and foremost, credit goes to our experience and team. Of course, there will always be better teams and more talented individuals, as young programmers learn very quickly and can also learn quickly from the success of existing projects. We must constantly improve ourselves to stay competitive. But I think a major part of our competitiveness also includes the technological barriers such as 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 game, it would take a lot of time, possibly over a year. If they choose to collaborate with us, they can quickly release their game and enjoy a good user experience with our game engine, as we have been continuously upgrading and improving our game engine and SDK. They can develop the market faster, then upgrade their game, and also benefit more easily 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 games and apps' traffic transfer to our partners in the Mini App Center. So these technological barriers and our first-mover advantage in the Telegram and TON systems are huge obstacles for them to overcome. Another aspect is the business model. It's easy to replicate a mini-game, but they will find it difficult to replicate our business model, as our goal is to become a mini-game publishing platform, essentially open to the entire mini-app ecosystem. Even Catizen, many internal features are designed specifically for the purpose of this mini-app ecosystem. They can directly transfer to other apps or games by simply clicking some buttons, 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 make purchases and continue making purchases. Through all the returns or assets they have in that game, users can profit again by playing our other games. So our ecosystem actually sets a high barrier for other single-game replicators to overcome. No matter how good a game is, if they don't have a complete ecosystem to support players, they will leave when players reach the end of their lifecycle. But we continue to maintain player attention in the ecosystem by releasing different features. Lastly, the resource barrier is equally important. We already have exclusive rights to a large number of the best Web2 mini-games. We have gained a first-mover advantage through partnerships with Catizen and many collaborators in the TON ecosystem, major players, and of course, the TON Foundation. There will be many mini-games continuously joining our ecosystem. So we can say we are the largest or one of the largest game communities in the market for Telegram and TON. I think it's difficult for them to try to build a similar-scale ecosystem or community, because we won these resources in the earliest days of Telegram and TON systems. It's almost impossible for them to negotiate with Telegram and TON for similar resources and support. The TON and Telegram ecosystems have been very successful, and I think it's difficult for individual project operators to obtain a large amount of marketing resources, as there will be many market players sharing these resources. But for us, we are the first to seize these resources and monetize them. This is why we have grown to this scale. These resource barriers will help our ecosystem become stronger and stronger.

Token Distribution and Airdrops

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

Ricky: Sure. First, because most of our existing 25 million users are actually very active users, we have implemented penalties for bots or suspected cheating users, and they will not be eligible for the airdrop. But as I mentioned, the commercial rate of our high-quality users is quite stable. With the growth of the user base, the profit space shared by each user from the airdrop will decrease. Therefore, our team continues to allocate the remaining tokens in our token or token economic model to the Catizen airdrop pool. So actually, the previous decision was about 20%, but to reward our community, we increased it to about 45% today. This is an increase of 10% compared to the recent announcement. We hope this will provide enough space for the community, so that users and players can maintain their expectations, and they can continue to trust 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.

Ecosystem Development Vision

Blair: Wow, this is exciting. Are there any other upcoming features or expansions besides the airdrop? I heard you are about to launch a game platform, which you mentioned several times today, and it will include over 200 mini-games. Can you provide more details? Because you mentioned the entire ecosystem. I'm curious about your vision for this ecosystem.

Ricky: We will launch the SDK this week, and the upcoming mini-games will be announced at the same time. As I mentioned, we have already signed 18 mini-games to be released on our platform, and there are over 200 mini-games that will be joining our game platform. We hope the community can pay close attention to us, and we will actively collect feedback to understand which mini-games they would like to introduce and which other apps they would like to join our ecosystem. Our team will definitely work towards this, because if users want these apps or games to join, rather than having them join other ecosystems or become independent systems, we would prefer to bring them into our ecosystem. I think our players can use the airdrop tokens to pay for and play these other games or apps that we introduce. At the same time, this also helps these apps to grow faster, as they don't need to start from scratch, but rather 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, as it is an important part of connecting all these mini-games. If we can conduct the airdrop early, our users can enjoy the benefits of using airdrop tokens in other games in the ecosystem sooner. This feature is coming soon.

Blair: It sounds like this podcast is coming at 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 the number of developer applications in the TON ecosystem is constantly increasing, with very impressive performances. What are your thoughts on the overall state of the current TON ecosystem? Additionally, what advice would you give to developers who want to build games or projects on the blockchain, such as L1 or L2? Are there specific challenges or obstacles to avoid, or factors to consider when choosing to build infrastructure?

Ricky: We can actually see that the click mini-games in the TON ecosystem seem to have reached a bottleneck. In fact, large-scale imitation is not as meaningful as it used to be. This has led to too many memes in the ecosystem, and a lack of healthy infrastructure and assets. So, for developers who want to build game projects on the blockchain or the TON ecosystem, I think they must delve deeper into user behavior. In this ecosystem, a successful market participant, like us, has been struggling and working in the traditional Web2 field for many years. We may already intuitively know that having the best user experience and game logic is very important. Technical issues are also a challenge, as TON is a new ecosystem, and while its infrastructure is constantly evolving, there are still many parts that have not been touched by people. 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 in the TON ecosystem, as they are just beginning to learn and explore. TON's programming language can be a good starting point, and if a programmer thinks it's a different language and is reluctant 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 for blockchain. In fact, for us, I think it's more efficient in terms of transactions. So, as a start, programmers should include it in their skill set, while delving into various parts of the infrastructure, because it's all just beginning. If they think they can build something in other ecosystems and fields, why not try it on TON? There is still a lot of untapped potential here.

Application and Impact of AI Technology

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

Ricky: There are indeed 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, 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 features for some initial community operations. For example, creating videos interacting with cats. If you go to 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 think, thanks to AI, we can quickly produce many viral videos. These videos not only have marketing value, but actually have deeper meaning. 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 to heal the wounds of war. Because some of them may be soldiers, or some may be refugees fleeing from the war zone. They have had to leave their homeland and seek safety in other countries. Some may not be able to bring their cats with them, or they may worry about stray cats in the neighborhood. While this game cannot actually help them rescue those cats, at least by letting them see many interesting cat videos and interact with cats in Catizen, it can help them heal psychologically. This is also the slogan of Catizen—Heal the World. So for us, this is not just a game. We also announced that we will donate 1% of our revenue to stray cat charities to actually help those cats. What we really hope for is not just to create a good game, but actually help people's mental health. At the same time, by donating to these NGOs to help actually rescue those stray cats in the war zone, we provide more resources. This is our mission in this game.

Blair: You are really saving those stray cats, making a real impact on the world, which is very touching and impressive. I fully agree with your point about educating through entertainment. I have had discussions with many entrepreneurs, and everyone is discussing how to attract the next billion users, how to achieve broader mass acceptance. We are always discussing how to make the entire experience more entertaining, more seamless, and how to lower the entry barriers for users and newcomers. I feel everything is moving in the right direction. Thank you very much for all the insightful views and information you shared today. They are very inspiring. I wish all your development work goes smoothly, and those good news will soon come true. Thank you very much, Ricky.

Ricky: Thank you, Blair.

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