Table of Contents
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What is TON
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What are TON’s Core Businesses
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Historical Milestones of TON
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Investment Risks
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Technical Roadmap
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Future Prospects of TON
Main Text:
- What is TON
Let’s start with a brief overview of the TON chain.
The “TON ecosystem” refers to “The Open Network” (TON), a decentralized blockchain platform originally developed by Telegram Group Inc. However, due to legal disputes with the U.S. Securities and Exchange Commission (SEC), Telegram announced its withdrawal from direct involvement, handing the project over to an independent developer community.
The TON ecosystem aims to provide a highly scalable and secure blockchain infrastructure supporting various decentralized applications (dApps), smart contracts, and cryptocurrency transactions. Key components of this ecosystem include:
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TON Blockchain: A high-speed, secure, and scalable blockchain network designed for processing transactions and running smart contracts.
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TON OS: An operating system for managing nodes and applications on the TON blockchain.
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TON Crystal: The native cryptocurrency of TON, also known as Gram, used for paying network fees, staking, and incentivizing node operators.
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TON Services: A range of decentralized services, such as decentralized storage, domain name services (TON DNS), anonymous browsing, and more.
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Developer Tools: A suite of tools and resources to help developers build and deploy dApps and smart contracts.
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Community and Governance: A community of contributors and stakeholders that maintain and govern the network.
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Decentralized Applications (dApps): Various applications running on the TON blockchain, covering fields like finance, social media, and gaming.
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Decentralized Finance (DeFi): Financial services based on TON, such as lending, trading, and insurance.
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Research and Development: Research focused on improving TON’s technology, including consensus mechanisms, privacy enhancements, and performance optimization.
Since Telegram’s direct involvement ended, the TON community and related organizations, such as Free TON or TON Labs, have continued to develop and promote the TON ecosystem. These entities drive growth and innovation through hackathons, developer tools, and funding support.
- What are TON’s Core Businesses
- Payment and Wallet Services: TON has built a decentralized payment system akin to WeChat Pay in the Web3 space. It focuses on securing fund custody and providing a simple and fast on-chain payment experience, eliminating the need for complex banking systems or traditional payment methods.
The On Foundation understands that some aspects of the blockchain world are better handled in a decentralized manner while others benefit from centralization. For payments and wallets, they chose decentralization, a strategy that was key to WeChat’s success. TON aims to ensure fund security and simplicity in transactions, providing a seamless payment experience on-chain without the complexity of traditional banking.
They aim for a natural payment experience, minimizing the need for cumbersome processes previously required with tools like MetaMask or OKX Wallet. For non-core ecosystem building, TON adopts a crypto-native approach, outsourcing these tasks to the community and encouraging active participation through incentives, thus promoting a vibrant, community-driven ecosystem.
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Ecosystem Building and Community Involvement: The TON Foundation wisely separates centralized and decentralized services, decentralizing payment and wallet functions to ensure user control over funds. At the same time, it outsources ecosystem expansion to the community, encouraging and incentivizing developers and users to participate, creating a dynamic, community-driven ecosystem.
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Diversified Revenue Models: Projects within the TON ecosystem can explore various revenue streams beyond traditional Web2 models such as advertising, user referrals, value-added services, and subscription fees, including Web3-specific methods like NFT sales, token issuance, and DeFi protocol fees.
Unlike traditional Web2 or Web3 projects with singular revenue models, TON projects benefit from diverse monetization options. Web2 projects mainly relied on advertising or subscription fees, but Web3 enables revenue through DeFi service fees, NFT sales, and token issuance, which also attracts investors and enhances project value.
- Traffic and Settlement Integration: Leveraging Telegram’s vast social platform traffic, TON not only addresses payment challenges but also provides blockchain-based settlement services. Although individual user value may be low due to the large user base, the extensive potential market is advantageous for TON.
Telegram’s large user base, despite being spread out globally, offers a significant opportunity for TON. Rather than focusing on high-value users, TON may benefit more from a Web2-style approach, emphasizing user base expansion over deep monetization, utilizing the large user resource effectively.
- High-Performance Public Chain and Ecosystem Compatibility: Similar to Solana and Base, TON is a high-performance public chain capable of handling large-scale transactions. It not only provides its settlement layer but can also work with other blockchain networks like Polygon and Solana, enhancing ecosystem interoperability and flexibility.
TON’s performance is comparable to Solana and Base, both high-performance public chains with strong consumer-facing features. With Telegram’s vast user base, TON is well-positioned for growth. Its active wallet usage has surpassed Base and is approaching half of Solana’s usage. TON’s strategy mirrors WeChat’s mini-program success, blending social and blockchain to create a unique user experience.
- DeFi and Asset Innovation: Although TON’s smaller market capitalization limits its potential in the DeFi sector, its concentrated token distribution might imply specific financial needs for core stakeholders. However, TON has adopted a cautious approach towards non-BTC and ETH asset innovation.
Despite strong growth in TON’s total value locked (TVL), its smaller market cap limits its DeFi potential compared to Bitcoin and Ethereum. TON’s concentrated token distribution raises questions about whether core stakeholders have significant financial needs. Innovation outside of Bitcoin and Ethereum’s domains needs to be approached with caution given the current financial market dynamics.
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Regulatory Vacuum and Opportunities: On the Telegram platform, projects can develop freely due to the lack of regulation, but this also presents compliance risks. For projects pursuing unique business models (e.g., gambling), this is an unregulated gray area.
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Project Lifecycle and ROI: Projects on TON may face shorter lifecycles, especially those relying on short-term speculation. This encourages a focus on quick returns and “ROI recovery” business models.
Certain blockchain projects, like those similar to Catizen and Hamster, often experience brief lifecycles driven by speculative behavior. Once tokens are distributed, speculators may sell off quickly, causing sharp price drops and value erosion. This highlights the need for projects to focus on long-term value and community support rather than short-term gains.
- Crowdsourced Projects and Non-High-Value Users: Given Telegram’s user characteristics, crowdsourced projects (e.g., data labeling, autonomous driving data collection, delivery services) may find a suitable environment on TON, particularly those generating positive cash flow.
Telegram’s large user base includes many non-high-net-worth individuals who may prefer low-barrier, flexible task-oriented work. Crowdsourcing projects can leverage Telegram’s platform for outreach and task management, benefiting from the platform’s broad user engagement and community features.
- Historical Milestones of TON
Starting in 2013, the Durov brothers demonstrated their vision by creating Telegram (TG), which quickly amassed a large global user base. In 2018, Pavel Durov launched the blockchain project The Open Network (TON) and successfully raised $1.7 billion through an ICO, showcasing market confidence and anticipation.
However, in 2020, the SEC’s intervention forced TG to relinquish direct control of TON, but this did not halt TON’s progress. That year, the community-driven Ton Foundation took over the development of TON, ensuring its continued advancement. In September 2021, the TON mainnet went live, officially entering the operational phase with its cryptocurrency launch.
In the following year, Ton Foundation and miners accumulated over 80% of the TON tokens, laying a solid foundation for the project’s future. By September 2023, TG announced a deep collaboration with TON, integrating it into its platform using a WeChat mini-program-like model, initiating a new ecological layout.
Capital market recognition followed, with Pantera Capital investing $300 million in TON in February 2024, enhancing its market influence. In April, Tether, the world’s largest stablecoin issuer, announced deploying USDT on the TON network, significantly improving TON’s utility and liquidity, enabling convenient transfers via TG.
As the TON ecosystem thrives, innovative applications like Notcoin, Hamster, and Catizen have gained popularity on the TG platform, attracting a large user base and marking the success of the TON-TG collaboration, signaling the maturation of their joint ecosystem and providing users with unprecedented experiences.
Investment Risks
The risks associated with high concentration of holdings cannot be ignored, especially in the cryptocurrency sector. For example, in the case of TON, the token distribution mechanism is divided into two types of contract addresses: Small Givers and Large Givers, which are responsible for distributing tokens on a smaller and larger scale respectively. Large Givers, due to their distribution of large quantities of tokens (100,000 tokens versus 100 tokens), are more efficient but have higher demands on computational resources.
Going back to July 6, 2020, Telegram launched a mining program aimed at promoting token circulation by transferring tokens to 20 contract addresses through specific system addresses, which were then responsible for further token distribution. Although mining activities continued until June 28, 2022, the vast majority of tokens were actually distributed within the initial 51 days. Specifically:
From July 6, 2020, to August 26, 2020, Large Givers distributed 4.8 billion tokens, accounting for 96% of the total.
In the same period, Small Givers distributed only 9.9 million tokens, or 0.2%.
Over the next two years, Small Givers distributed an additional 117.3 million tokens, about 2.35% of the total.
Notably, despite 3,278 independent addresses participating in mining, only 248 addresses received large quantities of tokens from Large Givers, meaning over 96% of the TON supply was ultimately concentrated in these 248 addresses. Furthermore, these 248 addresses were found to be closely linked, exhibiting similar behavior patterns such as mining start and end times, as well as handling of acquired tokens. Although retail investors also participated during this period, the majority of TON’s supply was mined and held by a cluster of interconnected “whale” investors.
This high concentration of holdings can affect token price stability and increase the risk of market manipulation, as a few holders have the capacity to significantly influence market trends.