The TON (The Open Network) public chain ecosystem is exploding, and this is a new world where you can go to dig for gold.

In order to better understand the TON public chain and Telegram, we can compare and analyze it with WeChat, the largest social application in China.

WeChat uses social networking as its basic disk, and combines WeChat payment and WeChat applets to build a very large application ecosystem.

But what is the biggest problem with WeChat?

Users' data and assets are actually controlled by the platform, lacking privacy and freedom.

And Telegram can be said to be the Web3 version of WeChat.

Telegram is an encrypted communication tool with strong privacy. Combined with its TON public chain (financial infrastructure, which can be compared to WeChat Pay) and Bot capabilities (robots, which can be compared to WeChat applets), it is building a more open, free and autonomous Web3 application ecosystem.

Therefore, the TON public chain is a very special existence. Backed by Telegram, an encrypted social application with more than 900 million monthly active users worldwide, TON has a clear landing scenario and a large number of seed users among all public chains.

This article will conduct an in-depth analysis of the TON public chain, and have a deep understanding of the current status of the TON public chain ecology and future development trends, which can help us seize new opportunities in the new ecology.

01 Basic Introduction

1.1 Let’s start with Telegram

If we want to analyze the TON public chain, we must start with Telegram.

Telegram is an encrypted communication application that supports end-to-end encryption and does not censor content. In order to avoid the influence of a single government, its servers are distributed in many countries around the world, so it has a strong "freedom" label.

Telegram was founded in 2013 by a Russian founder, and the origin of the project was to serve the cryptocurrency industry.

Therefore, Telegram has carried the genes of the encryption industry since its appearance, and it can be said that it was born for encryption.

Telegram currently has more than 900 million monthly active users worldwide, and advertising revenue is about 4.56 billion US dollars. Telegram is another social application giant besides WeChat, Facebook, and Whatsapp.

More importantly, Telegram is very different from other social applications. Other social applications will conduct strong censorship of content, while Telegram attaches great importance to user privacy, focuses on encrypted social networking, and basically does not conduct content censorship. Therefore, it can be said to be a "non-mainstream" social application, which is a supplement to other social applications.

Take Facebook as an example. As of 2023, the number of Facebook reviewers will exceed 7,500, while Telegram has only about 50 core employees in total.

At present, many projects in the Web3 industry will use Telegram for community operations.

Another community tool commonly used in the Web3 industry is Discord, which originated from the gaming community and later expanded to the Web3 industry community.

Discord has more functions, which also makes it very complicated to use, while Telegram is very simple and light, with a smoother user experience overall. It has built a more free and powerful application ecosystem through robot functions (benchmarking WeChat applet).

Telegram is further integrating with the encryption industry and truly transforming into a Web3 application. Building a blockchain that can be closely integrated with its own applications is an important ecological puzzle for Telegram.

1.2 The development history of TON

The development history of the TON public chain is actually very tortuous.

In 2019, Telegram tried to launch the TON (Telegram Open Network) public chain.

However, during the ICO (Initial Coin Offering) phase of the project, the U.S. Securities and Exchange Commission (SEC) intervened, and after a series of legal disputes, the project was canceled in 2020.

The TON project was originally planned to be promoted by Telegram. After reaching a settlement with the SEC, Telegram announced that it would no longer participate in the TON project.

However, the community and other developer teams decided to continue the project and launched several branch projects based on TON. The TON public chain that we are familiar with is actually called: The Open Network. It is the most mature public chain project that has grown after the abortion of Telegram's official encryption plan.

Although TON has no direct relationship with Telegram, Telegram officials and founder Pavel Durov have repeatedly supported the project in recent years and emphasized the business relevance between Telegram and TON.

Therefore, it can also be said that TON is the only public chain officially recognized by Telegram and has orthodoxy.

1.3 TON's goals and vision

TON's recent goal is to attract 30% of Telegram's users to join TON by 2028.

That is to say, TON needs to be able to take on 300 million new users into the Web3 world.

TON's vision is to build a Web3 mini-program ecosystem based on TON within Telegram.

Through Telegram's Bot technology (robot, benchmarking WeChat mini-programs), decentralized applications built on the TON public chain can be implemented in the form of Bot and organically integrated with the Telegram ecosystem.

Most decentralized applications now exist in the form of web-based web pages. The biggest problem with this form is that the user experience is poor and it is not smooth enough to use.

Telegram's Bot is an application form with a very good user experience. It can be used directly in Telegram, and the experience is consistent with the APP, allowing Telegram users to easily transition to the world of Web3.

Different from the WeChat applet ecosystem, WeChat applet is suitable for applications that combine online and offline, such as food ordering, e-commerce, food delivery, taxi-hailing, etc.; while Telegram's robot ecosystem is more suitable for pure online scenarios, such as games, finance, etc., and therefore naturally fits in with the pure online attributes of Web3 applications.

The Web3 industry is currently full of various speculations, and there are very few projects with fundamentals.

What are fundamentals?

User usage scenarios are fundamentals. Only high-frequency scenarios with actual needs can bring the user volume of the entire Web3 industry to the billion level.

Whether Web1, Web2, or Web3, they are all Internet businesses in the final analysis. The basic foundation of Internet businesses should always be "starting with traffic and ending with transactions".

Telegram has traffic, and now needs TON public chain to bring transactions. This is also something that other social application giants cannot do, such as WeChat and Facebook, which cannot enter the Web3 industry due to policy compliance constraints.

Telegram was born for encryption and is naturally compatible with the encryption industry. Now it needs a key to open this treasure chest with a large number of native encryption users. TON public chain is the key to this treasure chest.

02 Technical Analysis

2.1 Overall Architecture

TON currently consists of four main components: TON Blockchain, TON Payment, TON Proxy and TON Storage (decentralized storage).

(1) TON Blockchain is a general blockchain that contains a standard execution layer that allows permissionless transactions;

(2) TON Payment is a low-fee micropayment platform that allows instant and fast payments between users. It is currently accessible through the Wallet bot on Telegram, thus benefiting from in-app convenience;

(3) TON Storage allows files to be stored and distributed on TON, similar to a decentralized Dropbox;

(4) TON Proxy ensures censorship resistance by allowing users to run .ton websites independent of fixed IP/centralized domains;

Here we mainly analyze the TON blockchain itself.

The architecture of the TON public chain is divided into three layers: the main chain (Masterchain), working chains (Workingchains) and shardchains (Shardchains).

Among them, the master chain is responsible for overall coordination and plays the role of the central brain, while the working chain and shard chain are responsible for specific transaction processing, with high performance and high scalability.

The most distinctive and competitive technology of TON public chain is sharding technology.

Ethereum, the king of all chains, has also been mentioned for a long time, but the progress has been very slow. At present, layering and modularization have been realized in disguise through Layer2, but it is still far from the sharding of a layer of network.

The TON public chain goes further:

The TON blockchain consists of a main chain and up to 2^32 working chains. Each working chain is an independent chain with its own rules. Each working chain can be further divided into 2^60 shard chains or sub-shards, which contain the status of a part of the working chain. At present, there is only one working chain running on TON—basechain.

2.2 Fee Mechanism

The transaction fees paid by users are mainly to obtain block space storage transactions. In essence, they are competing for block space. Therefore, it can be said that the business model of blockchain is a business about block space leasing.

For most public chains, including Ethereum, they are permanent leasing models. Users pay a transaction fee, and the transaction is permanently stored on the blockchain.

But the TON public chain is completely different.

First of all, the block fee is not paid by the user, but by each smart contract, that is, each smart contract needs to pay the cost of its own consumed resources.

Each smart contract holds a TON token balance and uses this balance to pay the rent. If the smart contract runs out of money, it will eventually be deleted (can be restored).

Therefore, in the TON public chain, paying for on-chain storage is not a one-time payment, and the rent of block space is continuous.

If you only store data for a period of time, you will pay significantly less. This fee economic model is actually more in line with the cost of nodes, so it is easier to expand.

2.3 Address mechanism

Most public chains have implicit wallets, that is, you can use a private key to generate a public key, and then generate an address from the public key. The private key, public key, and address are corresponding. As long as you save the private key, you can use this wallet.

But on TON, the wallet is not implicit. If you want to get a wallet, you must deploy an independent smart contract like any other smart contract.

This address is composed of the wallet contract code and various initialization parameters (such as the user's public key), which means that users can deploy multiple wallets, each with its own address.

This also means that in TON, even if users know their private keys, they must remember their wallet addresses.

The wallet usage mechanism is also different:

Like Ethereum, when you use an application (i.e., a smart contract), you actually sign a message with your own private key and then send the message to the application;

But on TON, the transaction is not sent to the application's smart contract first, but to the user's wallet contract, which in turn forwards the message to the application's smart contract.

2.4 Development Language

TON has three smart contract programming languages: Fift, FunC and Tact. Tact is a new statically typed high-level programming language launched by TON, which aims to reduce the difficulty of developing smart contracts and improve security.

Tact has two important features:

(1) Asynchronous calls: Tact supports asynchronous calls, so that smart contracts can run in parallel without waiting for other contracts to complete, which enhances the performance and responsiveness of the TON blockchain.

(2) Message-oriented programming: This design can eliminate the coupling between callers and receivers, and objects can subscribe to and unsubscribe from messages at any time, which makes it easier to establish dependencies and updates between objects.

Although new programming languages ​​can bring many features and give full play to technical advantages, they will hinder the entry of developers and ultimately affect the development speed and prosperity of the ecosystem.

They have developed an independent development language, which is more sound and advanced than the Solidity language of the Ethereum ecosystem. However, the Ethereum ecosystem already has a relatively mature developer ecosystem, so it is difficult for these developers and mature applications to be directly and quickly migrated to their own public chains.

A typical example is Ethereum's ZK-based second-layer network Starknet, which has a very luxurious financing background and a very strong technical team, but after a few years, the ecosystem is still very poor.

The most important thing about a public chain is the ecosystem, and it is best to directly migrate applications and developers from the existing ecosystem. A new development language is actually an invisible barrier in the process of starting a new ecosystem.

03 Token Economics

3.1 Basic Data

The following are some of the core data of TON tokens:

(1) Initial supply: 5 billion

This initial supply is relatively large, which is why the price of TON tokens did not go up for a long time at the beginning.

(2) Supply: There is no upper limit, and it will increase by about 0.6% each year

The inflation rate of TON tokens is relatively low, in fact, lower than the inflation rates of Bitcoin and gold, which are 0.85% for Bitcoin and 1.64% for gold.

（3）Current supply: 5.1 billion

Relative to the initial supply, only 100 million have been added in the past four years.

（4）Current circulation: 2.4 billion

The circulation rate is 47.61%. Among the top ten tokens by market value, the circulation rate is relatively low, indicating that there are more short-term and medium-term lock-ups, which is conducive to the increase of the coin price. However, in the long run, the selling pressure is relatively large.

（5）Current price: 7 USD/coin (2024.06.09)

In June 2022, the lowest price of TON was 0.73 USD. After a round of bear market, in the current bull market cycle, the coin price has increased by 7 times.

(6) Market capitalization: $17 billion

For the Solana public chain, which is also driven by strong capital, the current market capitalization of SOL tokens is $70 billion, so the market capitalization of TON is not large.

(7) Total market capitalization: $35.8 billion

At the peak of the last bull market, SOL's total market capitalization was $150 billion, and it is currently $90 billion, so the ceiling of TON's total market capitalization is still very high.

3.2 Token distribution

TON's token distribution has also been full of twists and turns. At first, some tokens were sold through ICO (Initial Coin Offering), but later, after regulatory intervention, the team adopted a more traditional PoW model for initial token distribution, that is, fair distribution of tokens through hardware mining.

Since the TON public chain was designed with PoS as the underlying consensus from the beginning, the core team embedded the "Giver Contract" on TON to implement the PoW token distribution model.

The total amount of tokens distributed by PoW will account for 98.55% of the total supply, and the remaining 1.45% will be held by the core development team.

In June 2022, the last TON token in the contract with a total amount of 5 billion was successfully mined, which also means that TON's initial token distribution task has been successfully completed.

Although the PoW token distribution model was adopted, the TON project team was mainly mining in the early stage. Therefore, TON tokens are basically concentrated in the hands of the project team.

The excessive issuance of TON public chain tokens and the concentrated distribution of tokens are one of the core problems facing TON at present. This is also one of the historical burdens left over from the Telegram Open Network era, but the TON Foundation and the community are trying their best to solve this problem.

On July 28, 2023, TON communities from different language backgrounds jointly established TBF (TON Beliver Fund).

The organization launched a special smart contract, and the interactive funds are divided into two parts: donations and deposits. All donations will be directly issued as additional rewards for deposits, while deposits will experience a 24-month full lock-up period, after which they will enter a 36-month linear unlocking.

The fund received strong support from the TON Foundation on August 18. The foundation highly recognized this spontaneous token economic optimization behavior and publicly pledged to donate 1 million TON as support in the subsequent community vote.

Thanks to such support, TBF has developed rapidly. Recent blockchain data shows that TBF's contract address has locked up 970 million TONs, and the annualized deposit rate is even more than 10%, which is almost twice the return of other staking methods on the main network.

3.3 Token Application Scenarios

The application scenarios of TON tokens are mainly divided into two types: public chain fees and Telegram service fees.

Telegram has built a platform called Fragment, where users can purchase various Telegram services through TON, which mainly include four service scenarios:

(1) Purchase a username: Each username is an NFT that can be traded freely. The username is mainly for social display;

(2) Purchase a mobile phone number: A mobile phone number is required to register a Telegram account, but users can further enhance their privacy by purchasing an anonymous number on the Fragment blockchain using Toncoin;

(3) Purchase a membership: Includes multiple advanced features within the Telegram application, such as more cloud space, voice-to-text, real-time translation, etc.;

(4) Purchase advertising services: Advertisers use TON to purchase advertising services and can launch their marketing campaigns. The funds are divided equally between Telegram and content creators;

04 Ecological Analysis

Wallet is the entrance, DeFi is the infrastructure, and games are the biggest advantage of TON public chain.

4.1 Wallet

Wallet is the entrance for users to enter the public chain ecosystem and the first application to use the public chain.

Therefore, the user experience of the wallet determines the threshold for users to enter the public chain ecosystem.

Currently, Telegram has deeply integrated a wallet robot called Wallet.

Wallet Bot is very simple and smooth. The emergence of Wallet Bot is a milestone in Telegram's transformation to Web3. Since then, a large number of Telegram Bots have also been launched. The current popular track is various cryptocurrency trading robots to help users improve transaction efficiency.

Wallet is a custodial wallet, and TON Space is a non-custodial wallet expanded within Wallet.

When users use Wallet, it is actually an address assigned by the application to the user's Telegram account. This address is still controlled by the Wallet application project, so it belongs to a custodial wallet.

The advantage of a custodial wallet is that users do not need to understand the underlying logic of the blockchain, and can directly use the wallet address to receive and pay; at the same time, when transferring money to other contacts in Telegram, no handling fee is charged and the money can be received in real time, because this kind of transaction is not on the chain, and the essence is a data flow. Wallet records accounts in the accounts of different users.

The disadvantages are also very obvious. Once the user's Telegram account is stolen or the Wallet project runs away with the money, the user's assets will be completely lost. In addition, the custodial wallet cannot interact with various applications on the TON public chain on the chain.

Therefore, a non-custodial wallet, TON Space, has been expanded in the Wallet application.

Users need to keep their own private keys, and the assets are completely controlled by the users.

Therefore, even if the user's Telegram account is stolen or the Wallet project runs away, the user's assets will not be lost. At the same time, with a non-custodial wallet, users can interact with various applications on the TON public chain on the chain.

Of course, the biggest disadvantage of non-custodial wallets is that users need to be able to keep their private keys safely, that is, the risk of asset management is transferred to the users themselves.

In addition to Wallet Bot, TON ecosystem has several popular wallets, including Tonkeeper, MyTonWallet, etc., but none of these wallets are as deeply integrated into Telegram as Wallet.

Wallet has obvious entrances in Telegram's personal information page, conversation chat box, and wallet connection components.

The maturity of wallet applications has laid the foundation for the development of various decentralized applications in the subsequent TON ecosystem. On the other hand, wallet applications meet Telegram's payment needs and complement Telegram's payment section.

Payment is the most basic, clear and high-frequency financial scenario.

4.2 DeFi

From the TVL (Total value locked) trend chart of the TON public chain, we can see that the TON public chain has risen rapidly since March this year.

The TVL here only counts DeFi applications, but DeFi is the infrastructure of the public chain, and it represents the activity and amount of funds of the public chain, so we can see that the TON ecosystem is rising rapidly and has experienced explosive growth.

What happened at this point in March?

The main reason is that the TON Foundation has begun to vigorously promote the development of the TON public chain, such as announcing that the Telegram advertising platform will use Toncoin for payment, distributing 30 million TON tokens for liquidity incentives, and cooperating with Tether to launch the USDT stablecoin on the TON public chain, etc.

These major actions are very beneficial to the TON public chain ecosystem.

On the other hand, now is the early stage of the bull market, but the industry still lacks sexy narratives, and the story of the integration of the TON public chain and the social giant Telegram is very attractive, so it has attracted the attention of the market.

It can be said that the concentrated outbreak of the TON ecosystem in these few months is the result of a combination of factors such as time, place, and people.

DeFi (decentralized finance) is a must-have application for public chains.

After you have assets, you need all kinds of financial tools.

The three axes of public chains are exchanges, lending platforms and stablecoins.

We can see from the list of the top ten DeFi applications by TVL in the TON ecosystem that they basically cover applications such as exchanges, derivatives, and lending.

More importantly, the top DeFi application is liquidity pledge, which is a typical financial application of the PoS public chain, and the top financial application of the Ethereum ecosystem is also liquidity pledge Lido.

4.3 Games

Games are the development direction that TON can truly combine with Telegram's features.

Currently, the TON Foundation is pushing a game project, Notcoin, to make it a benchmark.

Notcoin is a Click-to-Earn project on the TON ecosystem. It uses Telegram robots to mine tokens by clicking on the mobile phone screen. Doing tasks (signing in, following Twitter, inviting friends, etc.) can increase the number of clicks.

It is precisely because of its simple and crude model that it has attracted a large number of users. This game has more than 35 million users and more than 5 million daily active users.

Of course, it is still unknown how many users can stay, but this is an impressive experimental attempt.

Compared with other GameFi projects, this volume of users is definitely at the top. For example, the leading blockchain game Axie Infinity had 2.7 million daily active users at its peak, which is far lower than Notcoin's 5 million.

NOT tokens were listed on the world's top two exchanges, Binance and OE. After listing on top exchanges, Notcoin's market value continued to rise, and its wealth boom attracted more users to enter the TON ecosystem.

In addition to Notcoin, there are many games with similar modes, such as the popular cat-raising game Citizen and the hamster-raising game Hamster Kombat. These games are basically the same as Notcoin, all of which earn coins by clicking and get more clicks by completing tasks.

The game track of the TON ecosystem is still in its early stages. The game mode is too simple, and subsequent user retention is bound to be poor.

Only by deeply integrating with Telegram and utilizing the social relationship chain accumulated in Telegram can we create more interesting games, such as the vegetable planting, parking space grabbing and long-lasting card games that were once popular in China.

05 Future Development

Compared with other public chain ecosystems, TON public chain has three core advantages:

(1) Active promoter

TON Foundation and its related organizations have been actively promoting the development of TON public chain ecosystem.

There are two schools of thought in the development of public chain ecology:

One ​​is to rule by inaction, that is, the public chain project party will not intervene too much in the development of the public chain, and mainly build a fully free market, which is independently developed by the public chain ecology and community. A typical example is Arbitrum, which has now become the top Layer2 of Ethereum with a TVL of more than 18 billion US dollars.

The other is strong guidance, where the public chain project party will lead the development direction of the public chain ecology. The advantage of this is that resources can be concentrated on the development of the ecology, and the development speed will be faster. The disadvantage is that spontaneous innovation in the ecology will be suppressed, such as Solana, which is currently one of the top five public chains in terms of market value.

TON adopts the second development model.

(2) Improved infrastructure

The project team of TON public chain is very active and strong. Some infrastructure applications of the public chain ecosystem have been embedded in the TON blockchain from the beginning, rather than being separate applications built on the blockchain, including decentralized storage, proxy layer, DNS domain name, payment, site, etc.

(3) User traffic

Currently, Ethereum has less than 1 million daily active users, but Telegram has 400 million daily active users and more than 900 million monthly active users. Therefore, TON public chain has huge user traffic. What TON public chain needs to do is to build various application scenarios and successfully introduce these users into the Web3 world.

What is the biggest problem in the development of TON ecology?

Many people think that encrypted social networking such as Telegram will amplify the risk of fraud, and that an overly free ecology will aggravate various illegal crimes.

But the truth is that the use of blockchain technology can actually improve the ability to track and deal with criminal activities. Blockchain is a completely transparent and public database. Every transaction of the user is permanently public on the chain, so it is easier to track various illegal transactions.

Compared to the problem of fraud, the complexity of cryptocurrency is the main obstacle to its large-scale popularization for new users.

Therefore, for TON, the strong guidance of the project party, coupled with capital promotion, has been deeply integrated with Telegram, basically completing the cold start of the project. How to successfully transition hundreds of millions of users to the Web3 world is TON’s biggest challenge, and it is also TON’s most imaginative narrative.