Did Hamster Kombat’s viral rise lead to its own downfall? How did 260 million players vanish in months, leaving the game a shadow of its former self?

From boom to dust

Hamster Kombat (HMSTR), a once-celebrated tap-to-earn game on Telegram, seemed destined for blockchain gaming fame, amassing a jaw-dropping 300 million users within months of its launch in March 2024. 

But in a surprising twist, this viral sensation has seen an 86% nosedive in active users, dropping to just 41 million by November 2024 and facing one of the most dramatic declines in crypto gaming history. 

The game’s token, HMSTR, has also plummeted in value by over 76%, sliding from its September high of $0.01004 to just $0.0024 as of Nov. 5, casting doubts over the project’s stability. 

Behind this exodus lie a series of interconnected setbacks: delayed airdrops, poor user experience, government criticisms, and controversial player bans. 

Could the game’s ambitious goals have been the very seeds of its undoing? Let’s delve into the numbers, the strategies, and the backlash to find out what led to Hamster Kombat’s colossal fall from grace.

The rise and promise of Hamster Kombat

Hamster Kombat launched with an ambitious promise: to make blockchain gaming accessible to everyone. A big part of the game’s appeal lies in its simplicity. No need for gaming consoles, advanced computers, or complex controls — players simply tapped, and in return, they earned. 

Even Telegram’s CEO, Pavel Durov, hailed it as “the fastest-growing digital service in the world,” citing its potential to redefine how people interacted with blockchain technology. 

People from all over the world were suddenly part of this booming virtual ecosystem, where tapping became the new mining, and the tokens they collected had real value attached.

But the game itself couldn’t keep players engaged. The initial excitement over the tap-to-earn model quickly faded as players found the gameplay repetitive and shallow. 

With no fresh challenges, Hamster Kombat began to lose its appeal, leaving users with little reason to return, especially as the HMSTR token kept losing value. 

The AI-generated graphics, which initially seemed quirky, were also criticized for feeling cheap and uninspired, adding to the perception that Hamster Kombat was more of a cash grab than a well-crafted gaming experience.

The simplicity that first drew users in became a source of frustration, and the game’s high hopes for sustainability faced challenges that even a massive user base couldn’t fix.

The airdrop disappointment and the backlash of bans

One of Hamster Kombat’s most eagerly awaited events was its token airdrop in late September, intended as a reward for player loyalty and engagement. 

With nearly 129 million players eligible to claim HMSTR tokens, expectations ran high. But what was meant to be a celebratory event ended up driving players away in droves. 

The airdrop left many users frustrated, not just because of delays but due to the surprisingly low value of their rewards. 

Some players who had spent hours grinding the game found their earnings amounted to just $1 to $10 — a fraction of what they’d hoped for, leading some to label the airdrop as “dust.”

To make matters worse, the rollout of the airdrop was marred by delays and technical glitches. Originally promised as a straightforward distribution, the airdrop faced several postponements, testing players’ patience. 

By the time it finally happened, the discontent among the user base was palpable. Many players took to social media to vent their frustrations, some claiming they felt deceived by what they saw as broken promises. 

This backlash severely damaged the game’s reputation, transforming the airdrop from an incentive to a point of contention.

The controversy didn’t end there. Hamster Kombat introduced a new anti-cheat system alongside the airdrop, aiming to curb fraudulent activities. 

While intended to protect genuine players, this system ended up banning around 2.3 million accounts and confiscating approximately 6.8 billion HMSTR tokens. Many players felt blindsided by these sudden restrictions, as even legitimate users were caught in the dragnet. 

Some felt that the sweeping bans were too harsh, and the confiscations only added to the resentment, leaving a large chunk of the player base feeling alienated and mistreated.

The fallout was swift. The airdrop disappointment, combined with the massive bans, fueled a wave of user departures. By early November, Hamster Kombat’s once-formidable user base had dwindled to just 41 million monthly active players, a fraction of its 300 million peak.

Government scrutiny and the ripple effect of public doubt

Hamster Kombat’s rapid rise wasn’t just on players’ radar — it also attracted the attention of governments, and not always in a positive way. 

In some regions, officials expressed concern over the game’s influence, viewing it as more than just a harmless pastime. As its user base swelled, so did the scrutiny, with some authorities labeling the game as a “disruptive force” in their societies.

In Iran, the backlash was particularly strong. The game caught the attention of the country’s military officials, who were concerned that Hamster Kombat was drawing attention away from political matters. 

One Iranian military deputy chief went so far as to call it a “soft tool” being used by the West to distract citizens from national priorities and weaken the country’s religious governance, positioning it as a digital disruptor with intentions beyond simple entertainment.

The situation was similar in Russia, where the chairman of the State Duma Committee took an even harsher stance, branding Hamster Kombat as a “scam”, and called for an outright ban.

The developers of Hamster Kombat have also had to address their connection with Gotbit, a crypto market maker now under investigation for fraud in the U.S. 

As the authorities filed charges against Gotbit for market manipulation, Hamster Kombat publicly distanced itself from the company.

Despite these efforts, users have continued to question the stability of the HMSTR token, which has already experienced a stark drop in value.

What’s next for HMSTR?

The sharp downturn in Hamster Kombat’s player base and token price has left many in the crypto community asking: is this just a stumble, or has the game reached a point of no return?

One of the most pressing concerns is a breakdown in trust, with disappointed users feeling that Hamster Kombat has “betrayed the trust of its community.” 

The backlash stems from a perception that the game prioritized influencer partnerships and flashy marketing over a genuinely user-focused experience.

Many early adopters, who initially hoped for long-term rewards, are now disillusioned by broken promises, delayed airdrops, and the steady devaluation of the token. 

One disappointed player noted they left after the first season, saying they had “so much hope” for the game but ultimately felt let down by the experience.

Another major worry has been the ongoing decline in the value of the HMSTR token. As one observer put it, the token’s price chart is “in freefall,” with many users predicting that exchange delistings are “probably around the corner.” 

Two crypto companies, dYdX and ConsenSys, have announced a new round of layoffs. What’s happening, and why are American regulators being blamed for this?

Antonio Juliano, the CEO of the decentralized derivatives exchange dYdX, announced a 35% layoff. He thanked the former employees for their work and explained the layoffs as the need to “revitalize” the exchange since, in its current form, it is “different from the company dYdX must be.”

“I have seen this over and again, and it will continue. What we are building is much larger than just a company, and this you will always be a part of.”

Notably, the layoffs at dYdX came shortly after ConsenSys cut its staff by 20%. ConsenSys CEO Joseph Lubin cited unfavorable macroeconomic conditions, uncertainty over crypto regulation in the U.S., and the cost of a legal battle with the Securities and Exchange Commission (SEC).

At the same time, Lubin called the company’s financial position stable.

According to him, ConsenSys will focus on its core revenue drivers, which aligns with its previously adopted strategy. The company’s flagship products, MetaMask and Linea, the second-layer Ethereum network, will serve as the basis for further development.

In addition, ConsenSys CEO said that the laid-off employees will receive support after leaving the company, namely, severance pay depending on the length of service, assistance with future employment, and expanded health benefits.

Lubin also told Fortune that the layoffs will affect about 162 of the 828 employees working from all divisions at Consensys. Now, ConsenSys has now become the leader in layoffs in 2024, according to layoffs.fyi.

Why the SEC is again the culprit of all the worst?

In the layoff statement, Lubin cited the SEC as one of the reasons why he will cut staff. In June, the regulator sued the developer of the MetaMask wallet, noting that the company violated the law through the MetaMask Staking service.

The lawsuit comes shortly after ConsenSys filed a lawsuit against the SEC and five of its unnamed employees over its “oversight of ETH,” asking the court to formally approve language that would not classify the asset as a security.

As a result, the SEC’s Division of Enforcement closed its investigation into Ethereum 2.0. The agency took this step after the organization sent a letter asking for clarification on the asset class when approving the spot Ethereum ETF. However, the lawsuit over the SEC’s allegations is ongoing, leaving ConsenSys facing legal costs.

The layoffs come at a time when the market is bucking trends

Notably, the crypto market was booming at the time of the layoff announcement, which is generally considered a good time for crypto companies. Thus, on Oct. 29, the Bitcoin (BTC) rate grew from $70,000 to just over $73,600, approaching the historical maximum of $73,777. Since the beginning of the month, the cryptocurrency’s value has grown by 12%. Analysts associate this trend with forecasts for the U.S. presidential election.

Interestingly, the growth of Bitcoin is also explained by the situation in the U.S., which the CEO of ConsenSys previously complained about, explaining the layoffs.

The growth in the price of Bitcoin is due to several factors. In particular, interest in Bitcoin ETFs from large companies such as BlackRock is increasing, which attracts significant investments. Recently, the U.S. saw an influx of $2.7 billion into Bitcoin ETFs, which helped attract new investors and raise the price.

In addition, the desire to protect against inflation significantly impacts the market. Against a weakening dollar and rising inflation, many investors are turning to limited assets such as Bitcoin to preserve their savings.

dYdX cuts staff while competitors gain momentum

Since the beginning of the year, the crypto market has been recovering from a long crypto winter, with many exchanges ramping up their growth. According to Bloomberg, Crypto.com, Binance, Coinbase, Gemini, and Kraken are hiring as cryptocurrencies like Bitcoin rise—not dYdX, though.

When announcing the staff reduction, Juliano mentioned that in its current form, the exchange is different from what it should be, without specifying what exactly he meant. However, further development will require human capital capable of reviving the platform. Therefore, announcing a 35% staff reduction against the backdrop of crypto exchanges trying to get the most out of the current rally looks illogical, to say the least, but Juliano is hardly worried about FOMO.

How the dynamics of layoffs in the crypto industry have changed?

According to layoffs.fyi, Q1 2023 was the peak in layoffs since 2020, when more than 167,000 employees lost their jobs. However, in 2024, the situation looks much better: the peak of layoffs occurred in Q1, with 57,000 employees who lost their jobs. There were even fewer layoffs in the second and third quarters – 43,000 and 38,000, respectively.

Thus, the story of dYdX and ConsenSys has become more of an exception to the rule than a typical trend for 2024. After massive layoffs in 2022 and 2023, the blockchain job market seems to be recovering.

Many experts believe that Donald Trump will positively impact the crypto market more than Kamala Harris. However, the impact on the meme coin segment remains a matter of debate.

According to Columbia Business School professor Omid Malekan, Trump’s success in the election could negatively impact the meme coin sector.

The expert noted that investor interest in meme coins has increased due to disappointment in the tokenomics of venture-backed projects. If Trump becomes president, the Republican Party may change some rules allowing token holders to benefit from dividends and fees, which could reduce interest in meme coins.

Meme coins as a response to SEC policies

Meme coins have become a kind of response to the tough policy of the U.S. Securities and Exchange Commission (SEC), so their softening in the event of a victory of the Republicans with Donald Trump at the helm will lead to a drawdown, stated the co-founder and general partner of the firm Castle Island Ventures, Nic Carter.

This is how he commented on the publication of the professor of the Columbia Business School, Omid Malekan. In it, he called on the community of the Solana project to support the Democrats, who are represented in the presidential elections by Kamala Harris.

The expert argued his opinion as follows:

• Meme coins represent economic populism and a protest against traditional crypto assets and the participation of venture investors.
• Institutionally funded projects are becoming a response to SEC Chairman Gary Gensler’s and Senator Elizabeth Warren’s “repressive policies.”
• A Republican victory could strengthen the position of significant traditional crypto assets. This will introduce economic mechanisms to token holders who are absent from meme coins.

Malekan insisted that better regulation of the crypto sphere in the U.S. will act as a “bearish” factor for meme coins. Carter supported him, saying that if the SEC’s position changes, demand for meme coins will decrease, but it will not disappear completely due to existing speculative interests.

Opinions from the crypto community

People react to these statements differently. Blogger and influencer Murad believes that the growth of meme coins is not due to political factors but economic ones, and the election results are unlikely to significantly affect this sector.

Another popular blogger, Jordan Fish, known as Cobie, also disagrees with Malekan and Carter, emphasizing that the interest of ordinary traders in meme coins remains high since they cannot participate in large projects in the early stages.

Meme coins and the U.S. Election

The meme coin sector has become the fastest-growing sector in the crypto industry in 2024, rising by more than 1800% since the beginning of the year. Ahead of the U.S. election, meme coins associated with Donald Trump have seen a sharp increase in volume and price.

This category holds a small capitalization relative to the entire meme coin market. Coingecko estimated its size at $1.2 billion, which is 2.4% of the entire market, with only four of them having a capitalization above $100 million. However, this did not prevent them from attracting the attention of the crypto community.

Forrest Przybysz, a trader and CEO of Sistine Research, noted that meme coins’ popularity is based on attention cycles, and the more attention they receive, the higher their value will be.

“Trump is an attention magnet. Therefore he is the ideal subject for a meme token.”

Forrest Przybysz, a cryptocurrency trader and CEO of Sistine Research

Yan Liberman, co-founder at crypto research firm Delphi Digital, emphasized that meme coins act as collectibles, allowing for the monetization of public attention.

“Meme coins are similar to nonfungible tokens in terms of being a bit of collectors’ item. The idea is that you monetize public attention,”

Yan Liberman, co-founder at crypto research firm Delphi Digital

Thus, if Trump’s election promises come true, America will see a new boom in the cryptocurrency segment. However, the question of meme coins remains open — the coins are unlikely to have any practical utility and strategic importance for the development of the decentralized finance market.

One way or another, the crypto market is likely to face volatility as the U.S. presidential elections approach. But it’s not entirely clear what kind of volatility it will be.