TLDR:
Freedom, openness, and permissionless are the spirits of cryptocurrency and also the unparalleled highlights of the TON ecosystem. Coexisting with Telegram, it utilizes its mini app, built-in wallet, and other "small programs" to break the boundaries between web2 and web3.
Recently, with the popularity of Notcoin, the market's unprecedented anticipation for the TON ecosystem has been ignited. With the support of tens of billions of users, 900 million daily active users, and a daily growth of 2.5 million users, it obtained 36.7 million downloads in January 2024 alone. After a brief "highlight" moment of the trading bot on Telegram in July 2023, it temporarily fell into a market downturn due to technical issues. However, in the first half of this year, the MEME & game project Notcoin in the TON ecosystem attracted 35 million users in just three months, with a daily average of 5 million active users. After launching a centralized exchange on May 16, 2024, it has fully ignited the market's attention and expectations for the TON ecosystem.
Below, LBank will review the current progress of the TON ecosystem based on TON's historical process, growth factors, and data comparison with other public chains, allowing more users to have a deep understanding of the "fission" moment on TON.
TON Introduction
TON (The Open Network) is a decentralized network aimed at building an open internet environment for everyone. Initially conceived by Telegram's founders Nikolai and Pavel Durov in 2018, it aims to provide fast, secure decentralized payments, digital identity, and other services for Telegram's 500+ million users. TON hopes to achieve hundreds of millions of transactions per second through expansion and support for a decentralized ecosystem.
Although TON has encountered some difficulties in regulation and law, it has gained extensive support from the Telegram community and continued to develop, officially launching in September 2021.
TON Development History
In 2018, the Telegram Open Network released a whitepaper and its simplified version called Gram. Subsequently, it successfully raised $1.7 billion through private token sales.
In the first quarter of 2020, due to legal conflicts with the U.S. Securities and Exchange Commission (SEC), Telegram was forced to abandon the TON project and was fined $18.5 million.
In May 2021, a developer community named NEWTON took over the unfinished TON project, continued its research and development, and rebranded Telegram Open Network as The Open Network, with the native cryptocurrency renamed Toncoin, marking a transition to a more decentralized and open network.
In 2021, the TON Foundation was established, and the NEWTON developer community was officially renamed the TON Foundation, marking a new starting point for the project.
In November 2021, TON launched a centralized exchange and received public support from Telegram's founder.
TON Technical Analysis
The TON chain leverages the massive traffic of the world's largest social platform, Telegram, making high performance its primary technical element.
Sharding Technology: TON's architecture adopts sharding technology, dividing the blockchain into multiple shard chains, each capable of independently processing transactions and smart contracts, greatly enhancing the ability to handle a large number of transactions. TON claims to support millions of transactions per second.
POS Consensus Algorithm: By combining Byzantine Fault Tolerance (BFT) technology with the PoS consensus mechanism, TON's consensus mechanism enhances network security while ensuring efficient network operations and lower energy consumption. Additionally, through the introduction of BFT technology, TON can maintain normal network operation even in the face of node failures or malicious attacks, ensuring the correctness and consistency of transactions and data.
Message Routing between Shard Chains: TON uses slow hypercube routing and instant hypercube routing technology to achieve effective message delivery between shard chains, ensuring network scalability and the need for instant communication. Slow hypercube routing ensures logical growth of message distribution among multiple shard chains as the number of shard chains increases, while instant hypercube routing is used for scenarios requiring instant message delivery between shard chains, supporting almost real-time communication.
In April 2022, the TON Foundation established a $251 million ecosystem fund.
In July 2023, Telegram bots like Unibot and Bananagun became popular, rediscovering the value of TON.
In September 2023, during TOKEN2049 in Singapore, Telegram and TON launched a cryptocurrency wallet for use by Telegram's tens of billions of users.
In April 2024, during TOKEN2049 in Dubai, TON announced that Tether would issue USDT on TON and launch the Open League sponsorship program.
Compared to Ethereum and Solana chains, the TON chain has faster transaction processing performance and speed.
Based on the underlying technology mentioned above, with advantages such as high efficiency, scalability, and user-friendliness, TON can directly bridge Web2 users to web3 and enable various functions such as payment transactions and dapp launches directly within a social software.
TON Super Application Design: Embedded Wallet, Mini App, and Infinite Bot
Firstly, as the world's largest social platform, Telegram has hundreds of millions of users. Therefore, in terms of design on the TON chain, it is more in line with the current usage habits of web2 and has strong compatibility. Its main competitive edge lies in the embedded wallet, mini app, and bot.
Traffic Entry and Payment Scenarios: Wallet
First is the embedded wallet service, providing a native wallet experience and allowing traditional web2 email-style usage. In terms of understanding and user acceptance, it is smoother and easier to accept, omitting complex registration processes and creating a recoverable non-custodial wallet account with one click.
The Telegram wallet allows users to directly send or receive USDT, BTC, TON, and Notcoin within Telegram, reducing the complexity of traditional concepts such as private keys for users. It also adds a channel for credit card purchases of cryptocurrencies and avoids the forced narrative of "web3 concepts," as well as the hassle of multi-screen switching, thereby increasing user retention. Users can use TON's embedded wallet to achieve payment and transfer functions.
Most importantly, it has bridged the circulation of USDT in the TON ecosystem. As the largest stablecoin in the world in terms of circulation and market value, USDT's role in the public chain ecosystem is irreplaceable. Combining the world's largest stablecoin with a highly scalable blockchain and a massive messaging platform like Telegram will provide an inflation-resistant stable currency for emerging markets. On-chain data shows that the total supply of USDT on TON has increased to $130 million, indicating that on-chain demand and the widespread use of web3 are no longer just empty talk. Additionally, the TON official has launched a campaign where users can earn a 50% annualized return by depositing USDT.
On April 16th of this year, Telegram launched an advertising revenue return program, where ads are paid for using TON. Channel owners can receive 50% of the ad revenue displayed in their channels, making it an unprecedented "sharing" economy pioneer in social platforms.
Traffic Carrying and Prosperity: Mini App
Next, the mini app has strong flexibility and compatibility. As a program that carries 1.5 billion Telegram users, the mini app has diverse functions, low latency, strong aggregation, and mobile capabilities. The mini app can be directly "summoned" within Telegram and perform various operations following commands, without the need to download its wallet or other applications, all within Telegram.
Doesn't this sound somewhat similar to OKX's web3 wallet? In fact, it's even cooler!
Notcoin is one of the successful mini dApp cases, demonstrating its huge potential and attractiveness. Here are some other successful mini app cases:
Catizen: This is a social interactive game where players can raise and dress up cats and interact with other players. Catizen leverages the high transaction speed and low-cost operations of the TON blockchain to provide users with a smooth experience.
Paper Plane: This game allows players to control a paper plane through simple operations to collect tokens and rewards. Paper Plane's simple operation and rich social features quickly attracted a large number of users.
There are also other games like Tapswap, Hamster Kombat, and more.
Mini apps are the main products promoted by Telegram and TON, similar to WeChat mini programs. For users, they can complete Web3 application interactions without leaving Telegram, providing higher user acquisition and retention efficiency.
Bridge Tool: Telegram Bot
Another tool is the Telegram bot, which sparked a frenzy in July 2023. Although the leading bot, unibot, was heavily attacked and suffered a downturn, this model gradually equalizes the distinction between retail investors and scientists, and is highly praised by most studios in the market.
Telegram bots now mainly provide:
1) Trading: Buying and selling tokens directly through Telegram.
2) Airdrop hunting: Automatically execute a series of operations to increase the chances of receiving airdrops.
3) Trade chasing: Simulate operations based on on-chain wallet analysis or tracking.
4) Finding the best liquidity pool: Telegram bots can profit from collecting transaction fees and token buy/sell "taxes."
Although Telegram bots have various risks such as private key leaks and theft, compared to existing DeFi front-ends, Telegram bots provide a more user-friendly and convenient user experience, with real and substantial demand.
Overview of the TON Ecosystem
According to the TON official website, the entire ecosystem currently includes 600+ projects in 19 categories, including DEX, wallets, liquidity staking, social, games, launchpads, and more.
Despite TON's "hot chicken" status in the market, having received at least $2.5 billion in investment from Pantera, a review of its ecosystem reveals that as of May 23rd, TON's TVL reached 295.32 million, with TONstakers (226.33M) and STON.fi (207.05M) ranking the highest. Compared to other public chains where TVL is a major indicator of mass adoption, the attractiveness of DEX and liquidity staking on TON is low, with APY below 3%. Additionally, there are very few cross-chain bridges, and mature and large-scale financial projects cannot directly cross-chain to TON. Liquidity staking, borrowing, and other products with strong financial attributes are relatively weak.
To attract more project teams to root in the TON ecosystem, the TON official not only provides basic tools such as TON SDK, TON Connect, TACT language, and Blueprint framework but also hosts programs such as Open League, Grants, and Accelerator. Since the launch of Open League in March, the daily active wallets have increased by 725%, DeFi TVL has grown by 800%, and liquidity providers have increased by 765%. Additionally, TON has established a $250 million TONcoin.Fund to invest in TON ecosystem projects, covering Infra, DeFi, gaming, sociafi, and more.
At the same time, rooted in its massive user social base, mini apps like Notcoin are becoming hot new stars in the market, with 35 million users and 6 million daily active users (Axie Infinity's peak daily active users are around 3 million), which is unattainable in the history of GameFi in the current and past crypto markets.
In addition, the cat game Catizen, with its "Play to Airdrop" feature, has already attracted 5.66 million game players, with 422k daily active players and over 200,000 on-chain users and over 2.4 million transactions. Furthermore, the Catizen team has signed cooperation agreements with 18 popular WeChat mini games and plans to create a game launch pool to empower game players and governance token holders.
Other similar mini-games are spreading and sweeping through the TON ecosystem, with frequent imitations, and Tapswap and Hamster Kombat have made slight innovations based on Notcoin's model. Yescoin, on the other hand, has some new features, including swipe and snake designs, maintaining strong user cohesion and attention.
TON Fundamentals & Technical Analysis
According to coingecko data, the current price of TON is $6.34, with a market cap of 22.016 billion and a fully diluted valuation of 32.359 billion, ranking tenth in market cap. It has been listed on LBank, OKX, Bybit, and other exchanges.
The initial supply of TON was 5 billion, with no upper limit on supply, growing at a rate of approximately 0.6% per year (about 3 million tokens). After reaching a settlement with the SEC in 2020, nearly 98.55% of the tokens were held by miners.
In response to this situation, in February 2023, 21% of the total supply was frozen through a community proposal, and these tokens will be locked until February 2027. Additionally, the community initiated the TON Believers Fund, allowing TON holders to lock their tokens for five years—two years locked and three years vested. These measures collectively lock about 47% of the total supply.
Furthermore, with the continued growth of on-chain activities and the mechanism of burning 50% of TON transaction fees, effective circulation in the short term will be reasonably controlled within a price range. A fee burning mechanism similar to EIP-1559 has been launched.
According to DeFiLlama data, the TVL on the TON chain has reached 308.99 million, an increase of 103.97% compared to last month, with a trading volume of $472.8 million, a 30.61% increase. Additionally, according to tonstat data, the number of activated wallets on the chain has reached 5.71 million, with a daily active wallet count of 308,000.
With the drive of TON's incentive mechanism, various on-chain data indicators have shown significant growth.
- TON's price has doubled, increasing from 2.27 at the beginning of the year to the current 6.32.
- The number of active addresses on the chain has quadrupled, increasing from 1 million in January 2024 to the current 5.3 million.
Will TON Become the Next Solana in the Crypto Market?
Following LBank's comparison of on-chain data, ecosystem projects, and funding data, we can estimate the potential future value of the TON chain.
Based on the comparison of on-chain data, TON's ecosystem is still in its early stages. Compared to the mature Solana and Base chains, the infrastructure, DEX, and liquidity staking on TON are still relatively weak.
However, from a different perspective, traditional measures of public chains are not applicable to TON. In the rich social environment, rising game dapps backed by Telegram and the TON ecosystem, as well as wallets and mini apps connected through various bots, are bound to benefit from the TON ecosystem.
As anticipated by the TON Foundation, by 2028, 30% of Telegram's active users will be able to participate in the TON chain, with a plan for 5 billion Telegram users to become users of the TON chain by that time. Therefore, we believe that the primary issue TON needs to address at the moment is how to attract Telegram users into the TON ecosystem. In addition to continuously building various types of dapps to meet the traffic brought by Telegram users, integrating gaming, DeFi, creator economy, and crypto-commerce into daily life through the TON wallet can increase the frequency and stickiness of user usage of TON.
From an investment perspective, the current price of TON is $3.8 per token, with a market cap of $22.2 billion, ranking tenth. While TON's market cap is quite high, surpassing chains like Avalanche, Apt, and Sui, its 1-year ROI is 230.79%, compared to Avalanche at 160.10% and APT and SUI both below 15%.
Future Value Prediction
At the TON2049 event in Dubai at the end of April, the TON Foundation stated that it positions the value of Telegram as "freely communicating privately, expressing yourself, and building your applications." Now, based on Telegram's 800 million daily active users, the pioneering effect of notcoin, the rich TON mini ecosystem, and the stablecoin payment system, these have all become powerful tools for capturing market traffic in the TON ecosystem.
It can be predicted that the TON ecosystem is igniting attention with the momentum of a spark, attracting more ecosystem developers to join, and overall development is positive. Combined with the sharing spirit of Web3 and the integration of the potential of over a billion users on Telegram, TON is achieving a broader user coverage.
At the same time, we need to be aware that regulatory risk remains an important factor affecting TON's development. Additionally, the balance of the token system's inflation, staking, and burning mechanisms is crucial. If not calibrated correctly, it could lead to an oversupply of tokens, reducing the value of individual tokens and potentially causing a decline in investor interest.
As the TON ecosystem continues to develop, leveraging its advantages such as one-click wallet creation, mini apps, and integrated payments, TON has strong potential for development, and what we see now is just the tip of the iceberg. LBank believes that the most influential updates are the native currency, bridges, and stablecoin toolkits, which will collectively expand the application scenarios of TON in daily payments and allow more people to start building their own crypto asset portfolios.
References:
OKX Ventures Latest Research Report: TON Ecosystem and Investment Analysis https://www.techflowpost.com/article/detail_14363.html
OKX VENTURE: TON In-Depth Research Report https://www.wublock123.com/index.php?m=content&c=index&a=show&catid=47&id=19913
TON Token Holdings Data https://eagleeye.space/detail/TONcoin
TON On-Chain Ecosystem Report: Trends and Opportunities, How to Find Entry Points in the TON Ecosystem? https://foresightnews.pro/article/detail/46655
TON: Telegram Becomes the Only Link for WeChat in the Web3 Field https://www.coinlive.com/id/news/ton-telegram-becomes-the-only-link-for-wechat-in-the
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