Rising High: Toncoin’s Journey to Becoming a Top 10 Cryptocurrency

10 min readApr 15, 2024

Opening Remarks

Telegram was launched in Russia in 2013 by Nikolai and Pavel Durov. Today, it’s the third most downloaded messaging app worldwide, the eighth most popular social network, and one of the top five instant messengers with 800 million active users a month. Its CEO, Pavel Durov, is among the wealthiest social media billionaires, with a net worth surpassing 15 billion U.S. dollars.

TON, short for The Open Network, is a L1 blockchain developed by the team at Telegram. They started working on it between 2017 and 2018 out of a need for a blockchain capable of serving Telegram’s extensive user base, which numbers in the hundreds of millions.

Although they faced some legal challenges from the SEC in 2020, the TON Foundation took over in 2022, giving the project a fresh start. It quickly made its mark by breaking into the top 10 cryptocurrencies, thanks to financial investment from entities like DWF Labs and the project’s strategic vision.

If you keep an eye on the crypto world, you’ve probably noticed how much time crypto people spend on Telegram. With the market cap of $TON growing quickly, it seems likely that more users will start moving to the TON network, much like Coinbase users have begun shifting to Base, sparking a “Base season.”

The Telegram team seems to be gearing up to get more people on board with TON, potentially kicking off a “TON season.” A glimpse of this strategy was seen last January when Telegram integrated TON into its app and introduced crypto payouts for content creators. This move makes it possible to develop and use apps directly within Telegram, creating a smooth experience for its users.

In this article, we’ll delve deeply into the TON ecosystem, seeking to understand its core functions and identify potential asymmetric opportunities.

The TON Network

TON functions through a distinctive mix of architectural elements and consensus mechanisms, ensuring rapid, scalable, and secure transaction processing.

At present, the services provided by TON include:

TON Wallets: Secure digital wallets like Tonkeeper (non-custodial) and @wallet (custodial), for managing Toncoin with features such as DApp use and staking.
TON Storage: Offers private, encrypted blockchain storage, akin to Dropbox but more secure.
TON Sites: Facilitates creating decentralised websites on the TON network creating a web ecosystem accessible via TON wallets and browsers.
TON Proxy: Provides access to the TON network, ensuring freedom from censorship and smooth use of decentralised apps.
Smart Contracts: Fast transaction processing on TON, powered by the TON Virtual Machine.
TON DNS: Simplifies TON network navigation by converting complex addresses into user-friendly names.
Ton Bridge: Enables easy Toncoin transfers between major blockchains like Ethereum and Binance Smart Chain.

Future Outlook

On October 31, TON achieved a new world record for the fastest blockchain, showcased during a live stream. The video of this event is available on YouTube. This milestone allows the team to explore new opportunities given the chain’s potential.

TON’s team has frequently discussed the concept of a SuperApp, aiming to consolidate various services, including instant messaging, social networking, DeFi, and e-commerce, all underpinned by TON’s blockchain technology. The vision is to transform it into a gateway to Web3, potentially attracting hundreds of millions of users and facilitating billions of transactions within a user-friendly and seamless Telegram framework, leveraging its established user base.

Furthermore, TON recently secured an $8 million investment from web3-focused Mirana Ventures to develop this ambitious vision.

The team also emphasised GameFi as a potential use case, noting how the gaming industry could benefit from TON’s speed to develop in-game economies. Last year, the TON Foundation announced that Animoca Brands, a company at the forefront of digital property rights in gaming and the open metaverse, became one of the largest validators of The Open Network Blockchain.

TON seems also suitable for a robust payment system, offering individuals and businesses the ability to carry out global financial transactions quickly and at a lower cost.

In January 2022, TON had 200,000 active monthly wallets. A year on, this number soared to over 700,000. Currently, it’s nearing $1.7 million, showing an increase in the use of Toncoin wallets and hinting that widespread adoption could potentially become a reality.

Market Opportunity

With a market capitalization of $23 billion, TON distinguishes itself as a significant Layer 1 blockchain with a strong user base. This potential is due to the unique position of Telegram, a messaging app with millions of users worldwide, many of whom are already engaged in the cryptocurrency space.

DeFiLlama reports that the chain has a total value locked of $140 million. When compared to other Layer 1 or Layer 2 blockchains such as Sui with $658 million, Avalanche with $1.14 billion, or Base with $1.4 billion, it’s clear that there’s significant potential for growth.

If the TON season materialises, early adopters and attentive observers of the ecosystem stand to gain considerably from its expansion. Engaging with and keeping an eye on the TON ecosystem could be a strategic move, given the likely shift towards this ecosystem in the foreseeable future.

Exploring the TON ecosystem reveals a diverse range of projects and tokens with room for growth and development. In the realm of memecoins, which are often indicators of community interest and social momentum, the landscape appears to be in the early stages. There hasn’t been a standout namecoin with a robust community or notable social growth. However, certain tokens like $TEPE have shown some activity, with a 100% increase in value last week.Other memecoins such as TON FISH, TON INU, and DogWifHood, while lacking in distinctiveness, indicate the budding nature of TON’s memecoin sector.

The DeFi space within TON features two main decentralised exchanges that could be pivotal for the ecosystem’s liquidity and growth. $STON, the leading DEX with a total value locked of $80 million, alongside DeDust, the second-largest DEX with a $49 million TVL, represent the foundational infrastructure for DeFi activities on TON. The success of these platforms could be critical if Telegram aims to nurture a thriving DeFi ecosystem, as they would directly benefit from any liquidity enhancement initiatives.

In the GameFi domain, TON hosts projects such as PunkCity and Petcoin. PunkCity stands out with its GameFi ecosystem powered by Telegram chatbots and integrated NFTs, while Petcoin introduces a Tamagotchi-inspired GameFi project named Tongochi.

Some the most popular tokens on the TON Chain right now include:

The overarching narrative for TON’s market opportunity lies in its potential for ecosystem growth, driven by Telegram’s vast user base and strategic moves to integrate cryptocurrency more deeply into its platform. While it’s early days for DeFi and GameFi projects on TON, and the memecoin scene is yet to mature, the signs of a growing ecosystem are worth following.

Competitors

Right now, there’s a lot of competition among the Layer 1 blockchains in the cryptocurrency world. While some early competitors of TON like Polkadot, Tezos, NXT, and EOS seem to be losing momentum, new players like Aptos, Sui, Solana, Avalanche, and Cosmos have emerged over the last few years. Despite TON making it to the top 10 in the cryptocurrency rankings, holding onto a large market share won’t be easy.

TON has several key strengths:

Fifth-Generation Blockchain: TON is working towards becoming a Proof-of-Stake multi-chain system. It supports custom workchains that can be sharded, offers almost instant message forwarding between shards, and keeps everything in sync across its network.
Native Sharding Support: Built for real scalability, TON can support a broad array of applications, aiming to handle any project that can be run on a blockchain.
Comprehensive Ecosystem: TON provides a range of services including a P2P Network, Storage, and other Services to build a complete infrastructure that boosts its utility and scalability.
Versatility for Different Applications: TON’s design is versatile enough to support both wide-ranging and specific needs, from big private blockchain projects to general decentralised apps.

Tokenomics

Toncoin ($TON), the TON blockchain’s native cryptocurrency, supports transactions and applications like games and collectibles. Its tokenomics began in November 2019 with 5 billion coins minted. Regulatory issues in May 2020 paused development, shifting focus to Proof-of-Work. By May 2021, TON transitioned to mainnet, continuing coin distribution via PoW. In June 2022, TON upgraded to a Proof-of-Stake network, improving security and stability, highlighted by over 12 million accounts, 0.6% annual inflation, and significant validator engagement.

Mining started in June 2020 and ended in June 2022, allowing public participation and marking the end of initial distribution. Post-mining, TON launched the Infinity TON Mining Pool for continued engagement. As a PoS system, TON’s operation now involves validators and nominators, with rewards in Toncoin fostering network growth.

Market Cap: $22.73 billion.
Fully Diluted Valuation (FDV): $34.13 billion.
Circulating Supply: 3.47 billion (67.98% of total)
Total Supply: 5.11 billion
Max Supply: Infinite.

Bullish Fundamental Factors

TON’s integration with Telegram, a platform with 800 million active users, offers a massive potential user base for adoption, fostering an environment ripe for growth in both the number of users and the development of dApps.
TON’s architecture, including its advanced consensus mechanism and scalability solutions such as sharding, positions it as a leading-edge technology in the blockchain space, capable of processing transactions rapidly and efficiently.
TON’s ecosystem is rapidly expanding, with a variety of services such as TON Storage, TON Sites, and DeFi applications.
The project has received significant financial backing from major entities like DWF Labs, indicating strong investor confidence. These investments support the development of TON’s infrastructure and applications, propelling its growth and innovation.

Bearish Fundamental Factors.

TON’s history with regulatory challenges, notably with the SEC, could pose ongoing risks, potentially affecting its operations and future development. Additionally, TON’s close ties with Telegram mean that any legal, public relations, or economic issues faced by Telegram could have ripple effects on TON. This connection could influence investor confidence, user adoption rates, and overall market perception of TON.
TON operates in a crowded market with heavyweights like Ethereum and rising projects such as Solana, necessitating constant innovation to stay relevant and attract users. Also, The TON Virtual Machine is incompatible with the Ethereum Virtual Machine due to TON’s distinct architectural framework. This means that TON cannot directly utilise Ethereum’s extensive ecosystem of developer tools and decentralised applications.
Despite its integration with Telegram, converting messaging app users to active blockchain participants, while promising, remains uncertain. A slow ecosystem development could dampen its potential.
Inflationary mechanisms, if not properly calibrated, could lead to excess token supply, reducing individual token value and potentially leading to decreased investor interest.

Closing Remarks

Rooted in the popular messaging app Telegram, TON has quickly made a name for itself among the top Layer 1 blockchains. Despite its fast rise to become one of the top 10 cryptocurrencies, TON faces a tough journey ahead. The blockchain world is highly competitive, with newcomers like Aptos, Sui, Solana, Avalanche, and Cosmos shaking things up. These new and old players alike mean TON has to work hard to keep a strong market presence.

Looking forward, TON’s connection with Telegram offers a great opportunity for growth. Thanks to Telegram’s huge number of users, TON is in a good spot to speed up its adoption and encourage the creation of new decentralised apps.

As TON moves through the world of blockchain, its future success will depend on keeping up with innovation, getting developers on board, and making the most of its special link to Telegram. There’s a lot of possibilities ahead, and TON’s goal to change how blockchain is used could see it becoming a key player in getting more people to use blockchain technology.

Disclaimer

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