What specific development expectations can we have for TON?

Written by: wyz

After Trump's victory, Bitcoin broke through 76,000, and the bullish trend is strong. However, compared to the price fluctuations of Bitcoin, what is most beneficial for the growth of the entire industry ecosystem is the altcoin season, and the industry expects richer growth. In the short term, we can see that tokens in various sectors are already closely following the market to reignite interest. Among these sectors, the "TON ecosystem" continues to attract close attention from investors.

Since the Durov Paris incident two months ago, the TON ecosystem has fallen into crisis, or rather, entered a new adjustment phase. Even though various meme projects and mini-games within the ecosystem are still continuously attracting new users and updating activity information, market-sensitive individuals seem to have sensed the "limited faith" in the TON ecosystem.

For example, from market feedback, SOL has quickly rebounded and surpassed 200 alongside BTC, but the increase in TON is far less than this.

So, what is most beneficial for TON in this major election event that has drawn industry attention? We can find some answers in Trump's ten commitments to cryptocurrency. Among these commitments, we see that not only are there measures for Bitcoin, but more initiatives will represent the future "unblocking" of the dollar economy towards the cryptocurrency industry. For Telegram and TON, which have long been shrouded in fog, this will be a powerful remedy.

Under the expectation of a smooth background, if the market continues to rise, what specific development expectations can we have for TON?

Favorable Development Background for TON

Before Durov's news, the growth of the TON ecosystem was strong. Led by the several-fold increase in TON tokens, most ecosystem DeFi tokens saw increases of around ten times. Beyond token price increases, the attention was even more remarkable. First, various CEXs scrambled to list Notcoin before its launch to attract new TON ecosystem users, and then DOGS once again stirred the enthusiasm of all Telegram users. These represent a huge market base; as long as the market rebounds, the tokens in the TON ecosystem will inevitably follow suit.

However, in the past two months of sluggishness, after the decline of TON tokens, metrics such as TVL and DEX trading volume within the ecosystem have also decreased with the waning interest, which is currently the most thought-provoking data.

But when we understand TON from the perspective of long-term growth of public chains, we may find that the current data performance is a natural occurrence in the growth process of public chains. This first allows us not to worry about the future competition of public chains losing TON's position, but rather to continue viewing TON with a long-term perspective.

Just like the trend of DEX development, the entire industry's user education is laying the groundwork for high-speed public chains like TON.

On October 28, according to SolanaFloor, the DEX trading volume on Solana reached 15.78 billion dollars within the week, surpassing Ethereum's 8.87 billion dollars by 77.91%, marking the largest lead over Ethereum. Consequently, Solana's share of total DEX trading volume reached 35%, setting a historical high.

At the same time, according to data from The Block and DefiLlama, the spot trading volume of DEX relative to CEX reached 14.12% in October, a new high since May 2023.

This trend continuously confirms one trend: as high-speed chains become popular, the boundary between user trading behavior on DEX and CEX is becoming increasingly blurred.

Under the multiple trends of mature on-chain liquidity supply, on-chain token market cap management, and the prevalence of small to medium-sized projects, combined with the increasingly blurred trading scenarios for user transactions, we will ultimately see user behavior shift towards: more trading and interaction returning to on-chain native trading exchanges, or trading behavior primarily based on DEX and Web3-style interactions.

Compared to the current background facilities hotspots across various chains, TON itself is an ecosystem where the boundaries between DEX and CEX are even more blurred. Its Web2 interaction methods first obscure the categories of trading, while the TON wallet on Telegram further lowers the threshold for crossing from Web3 native trading to Web2, meaning simpler and more convenient on-chain native trading, or potentially surpassing the current level of trading convenience achieved on Solana.

We can imagine that in the Solana environment, excellent DEXs can achieve a surge in trading volume in a short time. For example, Dune data shows that the total trading volume of the Solana ecosystem DEX aggregator Jupiter is close to 334 billion dollars, while Uniswap took several times longer to reach the 10 billion dollar mark.

Additionally, the token price of Raydium, the most active DEX on Solana recently, has performed exceptionally well, maintaining an upward trend even as BTC, ETH, and most altcoins have retraced, fully demonstrating the stable advantages that DEX and DeFi can possess amid price fluctuations.

Such a development path has already been established for TON in terms of infrastructure and development thinking; it just needs a spark to ignite.

History of Growth in Public Chains

At the beginning of this cycle, TON has already been very impressive. However, in today's unclear cycle rotation, it is difficult for TON to have the previous time advantage and external momentum like Ethereum and Solana. Seeking stability, maintaining the improvement of infrastructure, and waiting for opportunities to explode still seem to be TON's main theme, as if TON has quietly prepared for the 2024 cycle for a year. By tracing the growth of Ethereum and Solana, we can find a clear development path for TON.

First, for the economic model of public chains to enter a positive cycle, the core lies in the continuous occurrence of transactions, representing all possible on-chain interaction behaviors.

On Ethereum and Solana, DEX and DeFi behaviors dominate, driven by users utilizing DApps. Therefore, bringing a rich and diversified application type development approach to the ecosystem is suitable for TON.

In summary, both Ethereum and Solana have gone through several steps:

1. Rapid Increase in the Number of TGE Tokens for Ecosystem Projects

Simply put, during a favorable cycle, a large number of ecosystem projects issue tokens and go live on DEX, or DeFi can start operations.

Ethereum entered this phase in 2018, and by the time of DeFi Summer, it had completely formed a wave, which included the emergence of Uniswap, various wallet applications, and major EVM projects, DEX, and DeFi successively issuing tokens to stimulate business growth.

Solana emerged as a challenger to Ethereum during DeFi Summer, with the foundation driving a large number of project TGEs early on. Even though the chain was not yet perfect and on-chain interactions were limited, Solana's stimulation of the ecosystem has been ongoing, and even the impact of the SBF incident did not completely halt it.

At the start of this cycle, TON saw a surge in the number of tokens within the ecosystem, and the heat and increase in tokens were also impressive, resembling the corresponding stages of Ethereum and Solana.

2. Growth of DeFi TVL

After a large number of ecosystem project tokens' TGEs, the most direct impact is TVL. The native applications of public chains are all related to token trading, and DeFi categories account for 90%. The launch of tokens on DEX and the initiation of DeFi operations will lead to locked funds, so TVL data is the second inevitable metric for public chain growth.

Every token launched on a DEX must add trading pools, which is often the first locked fund. If engaging in DeFi business interactions, such as lending or depositing, token staking will also inevitably occur, which is the second foundational action for TVL growth. Stimuli for this action will include token airdrops, mining, and interest from deposits and loans.

During DeFi Summer, Ethereum received a dual stimulus from TGE and the explosive growth of DeFi tokens, resulting in a TVL increase of about 100 times. Later, as prices rose, TVL soared again. The growth of Solana in this regard came from the ecosystem's heat in 2023 and the airdrops and TGEs of ecosystem projects in 2024.

In the past six months, TON's TVL rose to 700 million dollars but began to retrace before breaking through 800 million dollars, which is a result of the ecosystem's waning heat. Like Ethereum and Solana, after the initial growth, it needs to return to the richness of growth ecosystem application projects. Ethereum and Solana took another two years; how long will it take TON?

3. Accumulation of Richness in DEX and DeFi

Ethereum and Solana completed their accumulation of richness over two years, one during the 2018 bear market and the other after the heat retraction following DeFi Summer.

During this phase, Uniswap V1 matured on Ethereum, MakerDAO and AAVE emerged, Curve and Compound began, and Sushiswap quickly followed suit, with farm-type mining projects appearing one after another. These projects contributed to the maturity of DEX and DeFi, and by the second round of application development, DEXs like Uniswap had iterated at least two versions, while DeFi projects like AAVE expanded from single-chain to almost all EVM chains.

During Solana's accumulation process, DEXs like Raydium and Jupiter emerged, along with a large number of DeFi projects staking SOL tokens. Therefore, the maturity of these applications is necessary, representing more convenient and faster user business usage, which will lock users' real money on the public chain.

TON's maturity is still early; currently, its DEX functions are relatively singular, and the number of DeFi projects is limited. Before waiting for an explosive opportunity, the first step is to increase the diversity and maturity of DeFi.

The First Step of TON's Growth

In the past year, TON has experienced the first increase in the number of ecosystem project tokens, with a large number of tokens and small to medium-sized projects starting to list, airdrop, and conduct IEOs, leading to a rapid increase in TVL. However, after this TVL and price decline, interest has waned, and ecosystem projects will be affected as a result, necessitating a rebuilding of trust in the future. The more this is the case, the more it requires practical help for ecosystem diversification in this round, specifically calling for the maturity of DEX and DeFi.

In reality, TON is currently at this stage, which is also the first step of TON's growth.

We can see that the DEXs of Ethereum and Solana have matured significantly through cycles. So, what is the current situation of TON? How far is it from them, and where does it fall short?

TON's performance and pressure-bearing capacity are currently the only ones that can stand shoulder to shoulder with Solana among all public chains, but the DEX of the TON ecosystem does not match its potential.

Telegram has integrated a centralized trading pool to complete the recharge of stablecoins and TON, followed by the exchange of TON for other tokens, with an operational experience consistent with CEX's instant exchange. This function is the primary feature of Telegram's Wallet, while the second function is to interact with the on-chain wallet TONSpace, providing an experience similar to using MetaMask on PC and mobile. If token exchange is needed, STON and Dedust are commonly used within the ecosystem, but their functions are basically similar to Uniswap V1.

This highlights TON's shortcomings in DEX. If Telegram Wallet has taken on the CEX experience, TONSpace and DEX can interact on PC and mobile, while Telegram's MiniApp and Bot will serve as the trading front end for DEX or CEX functions. These designs meet the optimization of trading experience, but the back-end on-chain native interaction part is clearly lagging behind.

If the DEXs on Solana and Ethereum can only provide simple AMM pools and exchange capabilities similar to Uniswap V1, then the richness of DeFi on Ethereum and the business diversity on Solana would decrease by at least 50%.

On Ethereum, most DeFi is an extension of financial scenarios beyond DEX functionality. After Uniswap iterated on the design of LPs in AMM, DeFi on Ethereum saw the emergence of more new businesses or directly copied business models (based on liquidity mining and interest-bearing deposits, upgraded to multi-liquidity pool interactions, etc.). The same is true for Solana, where LPs and specialized liquidity platforms serve as one of the best options for asset holders.

Therefore, from the perspective of project development, it is crucial for DEXs on high-speed blockchains to provide trading liquidity or modularize trading functions, allowing the advantages of liquidity to become a reason for user choice.

In TON, the entry points for transactions must exist in large numbers within Telegram. DEXs need to increase the level of business refinement like Jupiter and Balancer, achieving balance for all users, whether they are users, token providers, liquidity providers, or platform developers. Each role requires a certain level of refined functionality to cooperate.

Compared to DEXs like Uniswap, Balancer, and Jupiter, the DEXs on TON have become a necessary development direction to enhance DEX functionality or supplement DeFi functionality.

Currently, the known project LayerPixel has launched the first step of DEX functionality repair called PixelSwap based on Balancer's features. For DEXs, airdrops are the fastest way to attract users. In the new round of actions, LayerPixel has announced that PixelSwap has already started its airdrop plan, with the TGE date for the PIX token set for Q4. In light of the current changes in the TON ecosystem, PixelSwap may still be able to advance steadily in the short term, similar to Raydium.

LayerPixel is a DeFi solution designed for Telegram Mini Apps, enabling seamless integration of DeFi with Telegram Mini Apps. It is officially referred to as TON's Layer 1.5. It can provide a modular combination of features, including wallet services, DEX (with various trading algorithms), oracles, and more. PixelWallet focuses on account abstraction, while Pixacle can provide fast and accurate price data for DApps and smart contracts within the ecosystem.

Pixelswap is a DEX based on weighted pools, consistent with Balancer's functionality, supporting the asset issuance method of LBP. This Dutch auction-style issuance method is suitable for small to medium-sized projects with low FDV, and the Telegram ecosystem is filled with such GameFi projects. This is why it is said that it can meet the DeFi needs of the TON ecosystem. The LBP asset issuance method facilitates the completion of token issuance for small to medium-sized projects in the early stages while maintaining a relatively reasonable trading price.

During periods of rapid development and growth, ordinary DEXs are mainstream, but once a downtrend begins, the prices of tokens in DEXs become harder to market compared to CEXs. At this point, the more refined the design, the more likely it is to achieve a win-win situation. For the B-end, it is more suitable for control, and for the C-end, it allows unofficial LPs in DEXs to resemble mature LPs in centralized exchanges, actively ensuring the yield of funds while isolating risks and stabilizing prices.

At this time, during a phase of growth retracement, the emergence of such DEXs is quite timely.

In addition to PixelSwap, the liquidity sharing between DEXs on TON and the potential to form liquidity hedging structures among various DeFi projects also need to be stabilized. Currently, after projects issue tokens, they cannot establish staking mining or various types of deposit financial products in most DeFi platforms.

One reason for the rapid increase in token lock-up on Solana is that lending projects, staking, and restaking projects are following popular projects to increase their offerings, such as Marginfi and Meteora on Solana, which have actively increased token pools for almost all newly emerged tokens on Solana. Although most tokens do not yield financial returns, platforms provide incentives in the form of points or airdrop expectations, encouraging investors to deposit large amounts of assets in hopes of receiving airdrops. If TON follows suit, it will achieve the same effect.

In Conclusion

Before the Durov incident, our expectations for TON were very high, but the decline in ecosystem heat has caused both ecosystem projects and investors to suffer. This is already a familiar rhythm in the industry; there are always investors whose persistence in projects is surprisingly long. Regardless of when the next opportunity to ignite arises, whether in a week or several months, it provides builders with ample time to enrich the ecosystem.

At this stage of TON, users and projects will gradually realize the differences in new DEXs and new functionalities, or they may one day discover that new DEXs like PixelSwap have attracted a large amount of TVL and established numerous staking pools. This will indicate that the ecosystem is ready for another round of growth, prepared to handle the continuously increasing trading volume, the constant issuance of new projects, and the rapidly increasing liquidity pools and liquidity mining.

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