TON - The first blockchain to 1 billion users?
Deep Dive into TON
Welcome to the alpha please newsletter.
Gm friends,
Today we are doing a deep dive into TON.
For a coin that is now in the top 10, I still feel like most people have no idea what is going on with this blockchain.
Pantera, which is the oldest fund in the crypto space, recently announced they have made their biggest ever investment into TON.
I have spent a few weeks getting my head around the ecosystem.
This piece will take a look into the genesis story, what the metrics are saying today, and the ecosystem opportunities. There are a lot of incentives right now, so you will want to read to the end to get the alpha.
I am collaborating with TON, but this newsletter is independent of that.
The genesis story
The TON story began in 2017 when Telegram founders, the Durov brothers, began exploring blockchain solutions for their business. But as they couldn't find any Layer 1 blockchain capable of hosting Telegram's 9-figure user base, they challenged the status quo and designed their own Layer 1: Telegram Open Network, or TON (which later renamed into “The Open Network”).
On December 3rd, 2017, the team launched the TON whitepaper and a few weeks later, they embarked on the largest closed-ICO ever, raising $1.7 billion through the sale of TON tokens (called “Grams”). Now with all this money, there was one thing left to do: build. And this is what they did and in 2019, they released their first two testnets and made the code open source.
However, they ran into trouble with the SEC as they were accused of having conducted an unregistered securities offering with their ICO. This delayed the launch of the TON token until legal matters were resolved, and in 2020 Telegram was forced to return the ICO money to investors, pay a $18.5 million fine, and cease their support for TON. This is where TON rebranded to “The Open Network.”
But this didn’t stop this OG blockchain from existing, and another entity, TON Labs, decided to carry the project independently.
The rebirth of TON
While all of those regulatory problems posed a lot of roadblocks to TON, the team continued to deliver and it wasn't until very recently that TON started to make a lot of noise when Telegram officially announced again its collaboration with this blockchain in September 2023. From this moment, momentum kicked back in and TON climbed to become the 9th biggest crypto project with a current FDV of approximately $25 billion.
The full tech stack
The Open Network (TON) protocol consists of a variety of different components. The main ones are: TON Blockchain, TON DNS, TON Storage, and TON Payments. Let’s quickly look at each one of them:
TON Blockchain
TON is designed as a blockchain of blockchains. It is a Layer 1 Proof-of-Stake (PoS) blockchain built for high performance and scalability that distributes workload and interaction between accounts thanks to its dynamic sharding mechanism. This ensures that as it scales, the network will be able to handle millions of Turing-complete smart contract transactions per second to accommodate the next generation of the internet.
TON DNS
TON DNS (Domain Name System) is a service for assigning human readable names to account, smart contracts, services and network nodes. This is similar to websites domain names on the internet except that it is on a decentralized blockchain. This brings more privacy and security to domain owners and also facilitates the interaction between blockchain smart contracts and internet resources and vice versa. Currently, over 70,000 DNS has already been sold and the trend is still up and strong.
TON Storage
Data is the blood of the internet. Every person and services needs to store more and more data. While the first iteration of data storing was on centralized servers, there is a strong case to be made that a fully distributed storage system on a decentralized network makes a lot of sense. This is exactly why TON Storage was developed - a universal technology that stores any files in a decentralized, secured, and private way on the TON network.
TON Payments
TON Payments is the platform for micropayment channels. It allows instant payment without the need to commit all transactions to the blockchain, pay the associate fees and wait for block confirmations. This features can be used in APIs, off-chains apps, or games.
The state of the network is promising
On a high level, the value of a blockchain infrastructure is directly related to the strength of its network. Without participants, there is no network, and without a network, the blockchain is worthless. Hence, the biggest challenge of a new blockchain project is to overcome this "cold start" problem. In other words, how to attract enough contributors and users to make the network intrinsically useful and self-sufficient. In that regard, the early story of the internet demonstrates that even a small amount of friction can stymie adoption of a particular network over another.
This is exactly why TON is exciting – it avoids this "cold start" problem by leveraging its direct collaboration with Telegram. With over 900 million monthly active users, Telegram is the perfect funnel for the TON blockchain. This means that there is no need for them to chase users; users come to them in a seamless manner. This is huge.
So while everyone is focused on the Ethereum versus Solana debate regarding which chain will be the first to accommodate over 1 billion users, it seems that TON has been a quiet outlier that has climbed to become a real contender and has all it takes to become one of the largest blockchain networks: A strong Web 3 ethos, innovative tech, and massive distribution.
Active wallets
Over the past year, TON has experienced massive growth and we note that monthly active wallets have been on the rise, up 1,900% year-on-year (YoY).
Total value locked
Total value locked (TVL) has also gained a lot of momentum. While it is still relatively low compared to other major chains, it has grown over 1,200% year-to-date (YTD) to reach a TVL of approximately $180 million. With all the development happening on-chain, TVL has a lot more room for growth.
Trading volume
We also note a big shift in trading volume since the beginning of March 2024 where trading volume started to skyrocket. It is as if the chain went from dormant to super active. A true rebirth.
Native stablecoin integration
The last killer feature of TON is the recent deployment of USDT, the biggest crypto stablecoin, on its blockchain and in the Telegram wallet. This enables hundreds of millions of Telegram users to send and receive stablecoins in directly on the Telegram app, in a cheap, easy, fast, secured manner.
This is an interesting integration that has true potential for global adoption, especially in developing countries who often lack access to proper banking services. As such, this is another big step forward for crypto and peer-to-peer money.
The Wallet Earn Campaign
To kick off this new integration, the TON team launched a campaign where users can earn up to 50% APY (Annual percentage Yield) by storing USDT in Telegram Wallet. The total bonus pool size is $30 million and this is a super attractive opportunity that won’t last long.
Participation is easy. Users simply need to deposit USDT (up to $3k) into their bonus account in their Telegram Wallet to earn 50% APY for the first 2 weeks followed by 25% APY for the next 2 weeks.
You can bridge some USDT from Solana to TON using layerswap. bridging takes a couple of mins.
Layerswap has a Refuel feature where you get a tiny bit of TON to pay for your initial transactions.
Ecosystem incentive - The Open League
TON foundation recently announced a new incentive program, “The Open League” which is a competition designed to help users, teams, and traders by distributing 30 million TON tokens to its community from April to July. As of writing, this represents over $150 million in rewards. Prior to this, we had “The Open League Pilot” competition that delivered 1 million TON in rewards and delivered all-time-high (ATH) to all the key growth metrics. With 30x more prizes in this new season, this competition could be one of the biggest catalysts for TON.
How does it work
The Open League is simple: TON projects compete every month to win a massive prize, while TON-chain users earn massive rewards for their activity. It is open to everyone, from crypto newbie to the most experienced one and represents huge earning potential for users.
The competition is divided into the following 4 categories:
The league
It’s an overall KPI competition where Web3 projects compete in two different leagues: the Major League and the Minor League to try and win rewards where at the end of each season, the 2 best projects of the Minor League will be promoted to the major League while the 2 worst project from the Major League will be relegated to the the Minor League. Any projects on TON can compete to enter the Minor league by having significant traction and a cool community behind.
Token mining
Projects in “The Open League” are encouraged projects to create their own incentives mechanism and referral program to give every user the chance to get free tokens.
Quests & airdrops
Quests gives a step by step intro to on-chain usage of TON projects. There are many quests live in Community Bot, but there will also be more quest activities listed on TON Society.
By completing those quests, you can earn Soul Bound Tokens which can yield a lot of benefits in the future.
Liquidity pool & boosts
The Open League introduces a boost to liquidity pools. This means that users will earn additional TON on top of the rewards from fees collected by the pool. The boosted pools can be found through The Open League Mini App.
How to join The Open League
1) To get started, create a wallet that supports TON on Telegram (@Wallet, Tonkeeper, MyTonWallet) full list here and get involved in the ecosystem.
I think Wallet is the most simple experience as it is embedded within Telegram, but Tonkeeper seems solid, and has a good discovery page for apps if you want another option.
2) Try out some apps to get free ecosystem tokens. The two mini-apps I tried were:
• Catizen - This is a play to earn airdrop game with seemingly millions playing. The initial game is simple, but Catizen is more than just a game; it is a platform designed to evolve continuously with its player community
• Pixels - The Pixels Battle is a competition between Telegram communities, fighting for space on a giant canvas of 1 million pixels (1024 by 1024 pixels). In The Pixels, any Telegram community, be it chats or channels, can participate. Every Telegram user has the opportunity to form their own squad based on any channel or chat of their choice.
3) Next, try out projects competing in The Open League.
They are games, DEXs, NFT protocols, memecoins, liquid staking services, and a host of many other apps that are available to check out.
The two DEXs you can use to swap and find your pools are DeDust or STON.fi
4) Use the Open League bot here to provide liquidity to projects and receive boosted Toncoin rewards ($40m being distributed).
A few parting thoughts:
TON has overcome a lot of technological and regulatory hurdles to be here today.
The chain and ecosystem is starting to attract real attention from users, devs and institutional investors. They have a unique advantage in being able to convert 900M Telegram users to the ecosystem. That alone warrants taking TON seriously.
There are some promising apps, but still feels nascent and it will be interesting to see if familiar names we know in crypto start to deploy/talk about deploying on this chain.
The Tether integration is really significant though. Pinging stable coins around the world via Telegram on your mobile is probably the most seamless UX and most simple way to transfer value across the internet. Would suspect that sees tremendous adoption.
And that’s your alpha.
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Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Crypto currencies are very risky assets and you can lose all of your money. Do your own research.
Amazing blog!
Honestly TON’s growth is inevitable, but it could go two ways on the long term depending on how committed the team is. TON's collaboration with Telegram gives it a significant advantage in user acquisition, potentially bypassing the typical hurdles new blockchains face. However, its past regulatory issues and reliance on a single platform for growth could pose future risks.