1. The Birth and Development History of TON
TON was originally developed by Telegram founders Nikolai and Pavel Durov as a blockchain platform. However, due to strong regulation by the SEC, Telegram was forced to halt the active development of TON and refund 72% of the investment after losing the legal battle with the SEC. Later, the project was taken over by the community and the TON Foundation, who continued to develop it.
TON is a decentralized blockchain network composed of a main chain (Masterchain) and multiple work chains (Workchains), with each work chain further divided into shard chains (Shardchains). In this network, validators need to use advanced hardware similar to that used on blockchains like Solana and Aptos. Theoretically, the TON network can support up to 2³² work chains, each of which can be further divided into 2⁶⁰ shard chains, enabling near-instant cross-chain and cross-shard communication and processing capacity of millions of transactions per second.
In short, TON is a high-performance public blockchain. It uses a unique TVM virtual machine that is not compatible with Ethereum's EVM. Smart contracts on TON are written in the new programming language FunC developed by the team, and it uses a Proof of Stake (BPoS) consensus mechanism, where validators who hold and stake Toncoin are responsible for block validation and consensus. Similar to Ethereum, TON's consensus mechanism has transitioned from Proof of Work (PoW) to Proof of Stake (PoS). Currently, over 98% of the circulating Toncoin tokens were generated through PoW mining, which is closely related to TON's origin story.
The development of TON began in 2018, when Telegram founders Pavel and Nikolai Durov started exploring a blockchain solution capable of supporting Telegram's user base of hundreds of millions. However, the existing Layer 1 blockchains were unable to meet this demand, so they decided to design their own Layer 1 blockchain, called the Telegram Open Network (TON). To drive this project, Telegram launched a $1.8 billion ICO, but was forced to terminate the project in 2019 due to intervention by the U.S. Securities and Exchange Commission (SEC). Nevertheless, the TON project was open-sourced in 2020, and the community took over and renamed it "The Open Network" (TON). Since then, the TON ecosystem has experienced rapid development.
By 2022, the TON ecosystem has expanded rapidly, with the launch of several important projects such as TON Nominator Pools, TON DeFi, and TON DNS. Particularly in 2023, the total value locked (TVL) in the TON ecosystem grew 20-fold in just three months, and the number of daily active addresses even surpassed Ethereum at one point. The rise of TON marks its transition from the initial exploration stage to the mainstream of the blockchain industry.
Now, as the network continues to evolve, new Toncoin are being created as a reward for the validators' work. Approximately 0.6% of the total supply is created annually.
Anyone can become a validator, as long as they have a powerful server and stake a large amount of Toncoin. The TON ecosystem has nominators, which allow stakers to lend their tokens to validators for staking and share the rewards.
2. Technical Characteristics of TON
The biggest technical features of TON are high concurrency, high efficiency, and scalability. Of course, this seems to be the standard configuration for every new blockchain, so how does TON achieve this?
Taking Ethereum as an example, after the fast nodes complete the block packing and sort the transactions, the input is processed in the EVM, which is a serial process. The advantage of this approach is that the result is deterministic, and when processing a transaction, there will be no other transactions that can change the state, which can ensure consistency. However, the disadvantage is also obvious, which is that the TPS will be relatively low.
TON abandons the serial execution process and adopts a fully parallel architecture. This requires solving two key problems: how to parallelize and how to ensure state consistency.
2.1 Actor-based Parallel Environment
In the TON network, the basic unit is called an Actor, which can be analogous to a smart contract in Ethereum. Unlike traditional blockchains, TON does not distinguish between accounts and smart contracts, and all objects are Actors, including user accounts. Each Actor has the ability to execute logic and store data, and when processing transactions, it will go through steps such as triggering events, executing methods, updating states, and (optionally) sending messages.
TON's parallel processing mechanism allows each transaction to be processed independently and asynchronously send messages to interact with other Actors. Each Actor maintains its own state, so Jettons (Tokens on TON) will have independent addresses, and their quantities are managed separately from the state of Toncoin.
In summary, TON's Actors can be viewed as wallets or contracts, and the delivery of messages represents the interaction between contracts. Understanding this is the key to grasping the core operating principle of the TON system.
2.2 Sharding
The sharding mechanism is the core of TON's network scalability. It dynamically adjusts the number of nodes processing transactions to ensure the system can run efficiently even under high load. Simply put, when the transaction volume is too high, the system will divide the transactions into multiple subsets and distribute them to different nodes for parallel processing; when the transaction volume is low, the system will merge these subsets into a single shard to optimize resource utilization and processing efficiency.
2.3 Error Rollback
In a serial processing scenario, if an error occurs, the transaction state will be rolled back; in a parallel processing scenario, TON uses an internal message bouncing mechanism for rollback. TON's smart contracts interact through message passing, so internal messages must be set as bounced. When an error occurs, the original message will be bounced, carrying the remaining Toncoin and marked as "bounced". The receiving Actor will then perform the corresponding error handling.
In summary, TON uses the Actor model to allow each state to be processed independently without relying on other states, thereby achieving full parallelism. Through the sharding mechanism, TON can dynamically adjust to accommodate changes in the chain's transaction volume.
3. Differences between TON, Solana, and Ethereum
The core design features of the TON blockchain can be summarized as follows:
- Resource Self-payment Mechanism: On the TON blockchain, smart contracts need to pay for the resources they consume, and must hold Toncoin to pay for computation, storage, and network transmission costs. Unlike Ethereum, where users pay the resource fees for smart contracts, in TON the contracts pay for their own resource usage. If a smart contract's Toncoin balance is depleted, the contract will be automatically deleted to prevent data bloat.
- Asynchronous Processing: Smart contract calls in TON are processed asynchronously, rather than executed immediately. Calls will be processed in a future block. This design improves the system's scalability, but also increases the difficulty of maintaining transaction consistency and atomicity.
- Performance and Scalability: TON's architecture focuses on high performance and strong scalability, which are crucial for supporting large-scale applications.
- DeFi Development Challenges: Due to the asynchronous nature, the development of DeFi applications may be more complex and slower, which could impact the total value locked (TVL) in the TON public chain.
- Large-scale Adoption Goal: TON aims to become a decentralized application and service platform, similar to decentralized alternatives to Kakao, Google Play, App Store, Visa, and Mastercard. High performance, low-threshold user experience, and a massive traffic entry point are key factors driving its widespread adoption.
- Deep Integration with the Telegram Ecosystem: TON's deep integration with Telegram is one of its core competitive advantages. This relationship provides TON with a strong user base, helping it achieve large-scale adoption.
Overall, the TON blockchain is designed around resource self-payment and asynchronous processing, and while it has significant advantages in scalability and performance, it also faces challenges in development and maintenance. Its ultimate goal is to become a widely adopted decentralized platform through its tight integration with the Telegram ecosystem.
4. What Can Be Done on TON?
The recent popularity of TON is largely due to Telegram bots and their mini-programs, especially the recently emerging gaming mini-programs, which have brought a large amount of traffic to many Web3 projects.
The Explosion of Telegram Mini-programs
The mini-programs on the Telegram platform are reminiscent of the rapid growth period of WeChat mini-programs. Currently, the mini-programs on Telegram are mainly concentrated in the small game sector, with varying quality. Users' main motivation comes from the expectation of potential airdrops from the project parties. Project parties can leverage this expectation to attract a large number of users in a short period of time. In addition, some utility mini-programs, such as red packet applications, also achieve advertising promotion and user acquisition through the form of red packet distribution.
Website Building on TON
On TON, domain name resolution not only can replace complex addresses, but can also be used to build websites, realizing the functions of traditional Internet domain names. Similar to domain names on ETH, TON's domain names are essentially Non-Fungible Tokens (NFTs) that can be bought and sold. The price of a domain name is related to its length, with the cheapest domain name costing only 1 TON. Detailed information can be found on the official TON domain platform (https://dns.ton.org/).
Telegram Bots
Although bots are not directly related to TON, they are closely related to the Telegram platform, so they are also worth mentioning. There are a large number of bots on Telegram that provide functions such as trading monitoring and fast trading, and each interaction will incur a fee of about 1%. The huge number of transactions occurring on Telegram every day cover multiple blockchains, including SOL, ETH, and TON. However, due to the fierce competition in the bot market and the fact that some bot codes are not publicly available, users may feel uneasy when handing over their private keys to bots for management.
The combination of these functions has driven the rapid expansion of the TON ecosystem, while also bringing new user growth opportunities.
5. Representative Projects in the TON Ecosystem
5.1 Ston.fi
Ston.fi is an important project in the TON ecosystem, providing multiple key functions, including liquidity mining, decentralized exchange (DEX), lending services, staking, and rewards. Users can earn rewards by providing liquidity, as well as trade, borrow, and lend cryptocurrencies. By staking cryptocurrencies, users can further earn rewards. Ston.fi has the richest trading pairs on TON and is one of the core platforms in the TON ecosystem.
5.2 Getgems.io
Getgems.io is the most popular Non-Fungible Token (NFT) trading marketplace on TON. The platform allows users to buy, sell, mint, and transfer NFTs, supporting various types of NFTs such as Notcoin NFTs, Telegram virtual numbers, and Ton Diamonds. As the primary platform for NFT trading in the TON ecosystem, Getgems.io provides users with a diverse selection of NFT assets.
5.3 Ton Space
Ton Space is the official wallet of the TON Foundation, embedded within Telegram and accessible through Telegram's Wallet feature. Users can directly connect to decentralized applications (dApps) on TON through Ton Space. Ton Space provides an experience similar to other non-custodial EVM wallets, and users can import existing accounts from non-custodial wallets like Tonkeeper. In addition to the traditional seed phrase and private key recovery methods, Ton Space also supports recovery through email and Telegram accounts. Currently, Ton Space only supports receiving Toncoin and tokens on the TON chain.
These three major projects, covering liquidity, NFT markets, and wallet tools, respectively, constitute the key infrastructure of the TON ecosystem, driving the rapid development of the entire ecosystem. Furthermore, Tap to Earn has become a focus in this bull market, with the simple and fun Tap to Earn game mechanism where users can earn airdrops just by tapping the screen of their phones.
5.4 Notcoin
Notcoin, the first click-to-mine Memecoin on TON, has attracted widespread attention due to its unique mechanism. Within just a few months of its launch, Notcoin has already attracted millions of active users, becoming most popular in Russia, Uzbekistan, Nigeria, the United States, Germany, and Iran. Since its May TGE, NOT has been listed on almost all major exchanges, with a market capitalization of nearly $1.5 billion, ranking 56th. The founder stated that they will build more subsystems for Notcoin in the future, which may include a gaming platform, competitions, ways to incentivize contributors, and even a decentralized university open to everyone based on AI. Since its launch on January 1, 2024, its participation has exceeded 30 million, with a daily active user count of 5 million.
5.5 Hamster Kombat
Hamster Kombat is a Tap2Earn management simulation game with a simple gameplay, where players can earn coins by simply clicking on hamsters through daily tasks, and also mine through collecting cards. This game became popular due to the videos made by Russian KOLs on TikTok, attracting a large number of Web2 users. Data shows that Hamster Kombat has covered over 100 million users, and the official YouTube channel Hamster Academy reached 10 million followers in just 7 days. In September 2023, the official claimed the user count has reached 300 million, with 131 million users eligible for airdrops.
5.6 CatizenAI
CatizenAI is a chain-based cat breeding game developed by Pluto Studio based on a Telegram Bot. The team previously launched their first mini-game Tap Fantasy in 2023 and released the beta version of Catizen in March 2024. By April, Catizen had reached 260,000 users, and the user count surpassed 20 million by June, with 1.7 million Twitter followers. In the Catizen token economic model, 42% of the tokens will be used for airdrops. Currently, Catizen has over 12 million daily active users and 12 million game players.
In Catizen, players can earn game coins by raising cats and obtain token rewards through cat synthesis, roulette, and fishing. The game also provides a mining mechanism, where players can earn $wCATI tokens by completing tasks and activities.
5.7 BLUM
Blum is one of the most popular Telegram mini-games in the TON ecosystem besides TG Dogs, Catizen, and Hamster. As a game based on the TON blockchain, Blum has received investment support from Binance. Players can earn a large number of points through daily check-ins and completing social tasks, attracting a large number of users to participate.
6. TON Economic Model and Token Distribution
The initial total supply of TON tokens is 5 billion, and its token economic model has some unique designs and challenges.
Token Distribution
- Team Holding: The team holds 1.45% of the tokens.
- Mining Allocation: 98.55% of the tokens are distributed through POW mining, but the current consensus mechanism has already shifted from POW to POS.
Inflation Rate and Supply
- Inflation Rate: TON inflates at a rate of 0.6% per year, used to reward POS validators.
- Total Supply: Currently, the total supply of TON is around 5.09 billion.
- Circulating Supply: The circulating supply is around 2.5 billion.
Freezing of Inactive Wallets
In February 2023, the TON community passed a proposal to freeze 171 inactive mining wallets for 48 months. These wallets held over 1.081 billion TON, accounting for about 21% of the total supply at the time.
Staking and Token Distribution
- Staking: POS validators have staked around 480 million TON.
- Token Concentration: The top 100 largest holder addresses hold over 50% of the tokens, which is in stark contrast to the decentralized distribution of Bitcoin (the top 100 addresses hold only 13.63%). This level of concentration may pose a threat to the healthy development of the ecosystem.
Community Measures
To reduce the circulating supply, the community has voted to freeze inactive wallets and burn half of the transaction fees. Currently, 350-400 TON are burned daily, although the impact on the total supply is relatively small, it shows the community's efforts to mitigate the token concentration issue.
Long-term Challenges
While the community is taking measures to reduce the circulating supply, diluting the tokens held by early whales will be key to the healthy development of the TON ecosystem.
7. TON Market Performance
According to on-chain data, the total value locked (TVL) on TON has seen a significant increase compared to the previous month. The metric has surged from the previous low of $317.2 million to the current $407 million, a growth of around 28.31%. This indicates that more investors are becoming informed about TON, locking their TON tokens on the blockchain and interacting with DeFi protocols.
Furthermore, Telegram's continued expansion may have contributed to TON's stability in the past few trading days. The surge in stablecoin supply is attributed to Telegram's community of around 900 million users, with popular Tap-to-Earn games like BLUM driving substantial trading volume.
As of the time of writing, TON has decreased by 0.95% compared to a day ago, with the price reaching $5.18. During the T2E outbreak in July and August, TON reached $7, but the momentum of T2E has now faded, and the TON memecoin is no longer able to support the price of TON. Currently, the situation for the TON token is that its performance will tend to be stable, and there are no signs of a significant upward trend in the short term. At the same time, considering the overall market environment and the current application scenarios of TON, the downside space for the price is also limited. Therefore, the volatility of the TON token in the future may be reduced, and the price will remain in a relatively stable range, without significant upward or downward movements.
8. Summary
The success of the TON ecosystem largely depends on its close integration with Telegram, leveraging its global user base of 900 million monthly active users. Through Telegram's Mini Apps, users can easily use blockchain applications without the need to download additional apps or wallets, lowering the barrier to entry into the blockchain world. Meanwhile, the capital of the TON ecosystem is also growing, partly due to the incentive policies and fund support launched by the TON Foundation.
TON has demonstrated its potential as a rising blockchain through its rich DApps ecosystem and community governance. Although facing challenges such as token concentration, the TON community has shown strong adaptability and resilience through innovative projects. Furthermore, the rise of MEME projects and the mini-game ecosystem has brought more users and trading activities to TON.
Looking ahead, the true potential of TON lies in the integration of DeFi and social functions. It is expected that by the second half of 2024, TON will achieve significant growth in these areas, further driving the increase in TVL, transaction volume, and on-chain user numbers.
