Hamster Combat Critiques VC Funding Practices in Web3

Hamster Combat Criticizes VC Funding Practices in Web3

In a recent broadcast to its community, the popular play-to-earn crypto game, Hamster Combat, expressed strong criticism towards the trend of venture capital (VC) funding in the crypto space, labeling it as an “exit liquidity” activity. The game’s administrators shared their stance on this issue in a message posted on their official Telegram group, stating that they have consistently turned down every investment offer they have received.

“Since our explosive growth began, we’ve received numerous investment offers from some of the biggest venture capital firms in the Web3 space,” the admins noted. “We’ve turned down every single one.” They further elaborated, “Too many Web3 projects have built audiences only to use them as exit liquidity for their venture capital backers. This has, unfortunately, become the norm in the industry.”

Hamster Combat’s team emphasized their commitment to the fundamental principles of the Web3 ecosystem. “We stand against this practice,” they stated. “We want the web3 space to return to its fundamentals.” They criticized the current trend where companies prioritize creating compelling pitches to secure funding, only to spend it on marketing, conduct airdrops, or even launch public ICOs, ultimately abandoning users who are left holding devalued tokens.

About Hamster Combat

Hamster Combat allows players to step into the role of a virtual hamster CEO, managing a crypto exchange of their choice, such as Binance or OKX, within the game’s platform. Players earn points by tapping on their hamster, which can then be used to acquire upgrades for their in-game exchange.

The game operates on the TON blockchain and has reported an impressive user base of 200 million as of July. Players can convert their in-game coins into HMSTR tokens, which are tradable on various cryptocurrency exchanges. Since its launch in April, the game has seen a remarkable rise in popularity, boasting 53 million subscribers on its Telegram channel.

Importantly, the only way to acquire the forthcoming HMSTR token is by actively participating in the game. A significant 60% of the total token supply is allocated for players, while the remaining tokens are designated for market liquidity, future ecosystem partnerships, grants, rewarding squads, and other initiatives.

Why is VC Funding Facing Scrutiny?

In recent months, parts of the crypto industry have directed criticism towards venture capital firms, particularly regarding their investment strategies in projects whose tokens often end up with higher valuations than the initial investments made by these firms. This practice tends to exert downward pressure on token prices following their exchange listings, resulting in significant losses for public investors.

As previously reported by CoinDesk, newer tokens such as Aptos’ APT and Sui Network’s SUI have experienced declines of up to 70% since reaching their peak values in 2023, while Bitcoin (BTC) has continued to rise, achieving new highs in 2024.

Markus Thielen, founder of 10x Research, highlighted the situation in a June report, stating, “Venture capital funds invested $13 billion in Q1 2022, while the market turned into a steep bear market. Those funds are now under pressure from their investors to return capital as artificial intelligence (AI) has become a hotter theme.”

Despite the challenges faced by the crypto funding landscape in 2023, there has been a resurgence in activity, with growth recorded over the past three quarters, according to a PitchBook report from August 9. The report noted that deal value reached $2.7 billion in Q2, reflecting a 2.5% increase in total invested capital, although the number of deals declined by 12.5% compared to Q1.

Regarding Hamster Combat’s anticipated HMSTR token, developers have assured that venture funds will gain access to the token in the same manner as regular users: by purchasing it on exchanges once it is eventually issued and listed.