TON crypto review

Ton Crypto Analysis: Explore Ton Coin Network

22.09.2022 10:58
by Aleksandar Đurić
10 min read
TON crypto analysis

Every blockchain project wants to introduce real-world applications of decentralized technologies to the masses and achieve mainstream adoption. But, only a very few develop products and services fit for the daily lives of ordinary people. 

The challenge arises when blockchains can’t scale and lack the necessary speed to appeal to the mass market. While Bitcoin and Ethereum networks are efficient on a decentralized scale, their transaction fees are unpredictable, making them non-ideal for everyday value exchange. 

Further, the user experience in many dApps is broken. People new to the crypto ecosystem find it difficult to buy, sell, and manage their crypto assets. And what makes it worse is that users need to use multiple wallets to tap into specific applications built on different blockchains. 

While the user experience is getting better with every iteration, the consumer market for blockchain solutions is not growing at the pace we expected. The majority of interest is coming from investors who are looking to catch the next big trend. As a result, mainstream users are not exposed to crypto assets and their benefits. 

This is where TON blockchain comes in. Designed by the founders of Telegram, the TON blockchain has all the technical capabilities necessary to scale to million transactions per second, at minimal fees.

TON aims to accompany all blockchains under one network, in order to create a self-sustaining and environmentally friendly decentralized ecosystem. Having a ready user base of 700 million to plug into, TON is also primed to be amongst the leading blockchains to drive mass adoption. 

In this analysis of the TON crypto project, we will uncover the story of Telegram Open Network, the technology supporting its vision, the use cases driving adoption, and the future of the Toncoin cryptocurrency. 

Origins of Telegram Open Network  

The Durov brothers, Pavel and Nikolai, are the ones who initially, in 2017, came up with the idea to build a blockchain system that allows Telegram users worldwide to exchange value in a peer-to-peer manner. 

When Telegram announced its blockchain plans, the entire industry took notice. It was the first time that a successful company of that magnitude proposed blockchain solutions for the masses. And there was no resistance from the pioneers of crypto, as everyone chose Telegram as the go-to platform for messaging and managing community activities.  

Telegram origins  

To aid TON blockchain development, Durov planned an Initial Coin Offering (ICO) with a hard cap of $1.2 billion. In the beginning, he was looking at raising capital from accredited investors. Seeing the user base of 200 million, investors from top VCs were eager to participate in the pre-ICO fundraiser. Sequoia Capital, Lightspeed Ventures, Ribbit Capital, and Benchmark were among the leading investors. 

After quickly raising $850 million, Durov wanted to conduct a second pre-sale, raising the hard cap to $1.7 billion. As tokens were offered at a 30-80% discount, the shares sold out like hot cupcakes, with investors flipping for double-digit returns in the secondary market.

SEC Legal Battles Begin 

While the entire crypto community was excited to buy GRAM tokens in public sale, the SEC came out of nowhere in 2019 to hand Telegram a complaint for violating federal securities laws. After a long legal standoff, Telegram decided to settle. Telegram agreed to pay back more than $1.2 billion to investors and an additional $18.5 million for a civil penalty. 

The SEC also took a harsh stance on not allowing Telegram to engage in the unregistered distribution of GRAM tokens outside of the US. They wanted to completely shut off access to the TON platform and eliminate every way possible for a US citizen to buy a GRAM token. 

This obviously didn’t sit right with Durov. He understood that US decision-makers had too much power and were not going to allow a digital token to undermine the US Dollar. In his last post regarding TON, Durov announced that Telegram would no longer be actively engaged on any level with the development of TON. 

But what happened to the money? Telegram closed the refund chapter in 2021 after paying back non-American investors $1 billion in capital raised from Telegram’s bond sale. American investors were only offered 72% of their investment, which accounted for $425 million. 

Community Takes Over 

Durov was shown the door by the US regulators. But his vision of decentralization lived on. Many developers in Russia formed an alliance to revive the TON project by continuing to build the blockchain using the available open-source code. They soon renamed the project FreeTON Network. 

Seeing TON blockchain make its comeback, many institutional investors and developers across the crypto space showed interest. The TON foundation behind FreeTON is TON Labs, backed by Runa Capital, BR Capital, and Bitscale Capital. TON Labs has delivered operating systems for developers to access the TON blockchain and create new decentralized applications. 

The co-founders of TON Labs are Alexander Filatov, Mitja Goroshevsky, Dmitry Malyugin, and Pavel Prigolovko. In 2021, Cyril Paglino joined the team as CEO and later took on the role of a partner heading business development. 

What is TON Blockchain Anyway 

Telegram Open Network, now rebranded as simply The Open Network, is a collection of proof-of-stake blockchains, namely, masterchain, workchain, shardchain, and vertical blockchain. Each of them plays a crucial role in enhancing the scalability and functionality of the TON ecosystem. Let’s see how. 

What is TON Blockchain

Master Chain

The master blockchain is one of the most important components of the TON network. It is responsible for designing rules and parameters for validators to participate in the PoS consensus and generate new blocks. It is also a storage unit for hashes belonging to workchains and shardchains. 

Work Chain 

TON can accompany close to 4.3 million workchains. These are unique blockchains that contain information regarding transaction data transmitted through smart contracts. Each work chain can have its basic cryptocurrency and virtual machine, allowing for heterogeneity among blockchains. 

Shard Chain 

Shardchains are basically sub-blockchains of workchains, meaning a shardchain is formed when a workchain is divided. With these shardchains, TON aims to achieve scalability at low transaction costs. According to the whitepaper, the method used is described as Infinity Sharding Paradigm. 

Vertical Chain 

Vertical blockchains work alongside shardchains. When a block generated on shardchain is incorrect, TON uses a verticalchain to insert a new block or its difference. This mechanism stands out from other blockchains as TON doesn’t allow forks to happen when invalid blocks are detected. 

So, we know what TON is and how it works — now it’s time to dive into some of the use cases it has developed over the years.

Use-Cases of TON Blockchain 

TON blockchain and its networking technologies have come up with many decentralized services that could significantly impact the internet as we know it. Let’s dive into some of them in detail.

TON blockchain use cases

TON Storage 

TON storage technology can facilitate the storage of files off-chain and enforce their availability with the help of smart contracts. So, you can securely store your files while ensuring they don’t get into the wrong hands. 

TON Proxy 

The applications of the TON blockchain are not truly decentralized in nature because of their reliance on off-chain infrastructure. TON proxy came into the picture to offset this added degree of centralization. It adds a privacy layer for TON nodes to fight against censorship. 

TON DNS 

TON DNS is an on-chain hierarchical naming service that allows users to register a username in order to surf the web in the simplest manner. It is also beneficial for transferring cryptocurrencies, as you cannot go wrong with a name as you can with a 256-bit address identifier. 

TO Payments 

When using TON payments, you are creating trustless payment channels for instant microtransactions. You can make P2P transfers in less than five seconds, at extremely low fees and without depending on an intermediary. 

TON NFTs 

TON Diamonds is an NFT marketplace built on the TON blockchain. It features high-quality NFT collections from renowned artists like Ellen Sheidlin. To buy an NFT, you must use the native token TON. The blockchain also supports another marketplace, called Disintar

These use cases leverage the TON token as a medium of exchange. But do you know the details of its economic model? Let’s find out. 

Toncoin Tokenomics 

Toncoin latest stats

When the SEC stopped the Telegram messaging app from issuing unregistered securities, five billion tokens were already mined and placed in the testnet smart contract. In 2021, based on the TON community consensus, the testnet was promoted to mainnet. 

To distribute the mined tokens, TON follows a meritocratic model. It allows community members to make proposals for grants. So, it essentially rewards those who add the most value and help grow the TON blockchain ecosystem. You should participate in the network as a validator for mining new tokens. These new tokens account for 0.6% inflation. 

Toncoin is also well integrated into all verticals of the TON blockchain. It is primarily used for transaction fees and on-chain governance programs. Beyond that, Toncoin is the centerpiece of TON proxy and storage payments. 

Crypto Influencers Who Joined TON Blockchain Bandwagon

TON community

TON has amassed a massive following online across social media. The TON community channel on Telegram has 640k+ members.

This continuous rise in public interest comes from the content created by some of the biggest crypto influencers and thought leaders. Through videos, tweets, and blogs, influencers promoted the TON network as the next big layer-1 blockchain primed to achieve scalability.

Many YouTubers did project reviews of TON blockchain. A Russian YouTuber, Kharchevnikov, published a video comparing TON with Bitcoin. He has a massive subscriber base of 1.18 million.

Another YouTuber in America called Michael Wrubel also did a video about TON, saying it could be the next Cardano layer-1 blockchain. Michael has a following of over 310,000 on YouTube.

Along with influencers covering TON, we also saw the leadership team of TON Labs conduct several interviews with leading crypto shows. One of them is Crypto Coin Show. In one of the interviews, the co-founder and CEO of TON Labs, Alexander Filatov, sat down with Ashton Addison to talk about the recent developments of TON and its roadmap.

Is Toncoin available on Telegram?

Is Toncoin available on Telegram

Although Telegram could not continue its involvement due to the court case, it started supporting Toncoin in 2021 under its verified payment service, Donate. 

With this partnership, TON blockchain can tap into hundreds of millions of users who can seamlessly transact using Toncoin. Further, you also don’t have to worry about fiat on-ramps. The Telegram crypto bot will allow you to buy Toncoin using a credit or debit card. 

The Road Ahead 

The Open Network and native token TON have successfully created a go-to-market strategy that is more compelling to the masses. Compared to other layer-1 blockchains like Ethereum, it is evident that TON is technically superior in transaction speed and fees. It is also not compromising on decentralization, as every token distributed is earned through contests. 

Without the SEC court case, the developments on TON would have been much faster. But the community is still strong and thinking long-term about driving real adoption. We will soon see complete tooling and easy-to-use apps built using the TON blockchain, which will aid existing solutions and grow the Web3 crypto world.

Disclaimer: All information contained here should not, under any circumstances, be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.

Author

  • An experienced journalist working in the film and video-game industries for many years. An enthusiast busy with learning new things about the world of crypto every day. Majored in English Language and Literature. Has a shrine in his apartment dedicated to Hidetaka Miyazaki.

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