A Deep Dive Into The Open Network (TON) and Toncoin

The Open Network (TON) is a decentralized, high-performance blockchain platform originally developed by Telegram. Explore the Open Network (TON) and its native token, Toncoin, including its tokenomics, investment potential, and its role in Telegram's ad revenue distribution model.

The Open Network (TON) is a decentralized, layer-1 blockchain initially developed by the team behind the popular messaging app Telegram, specifically by the Durov brothers. TON was designed to offer a high-performance blockchain capable of handling mass-scale applications and transactions. Unlike many blockchain projects developed by single entities or limited groups, TON stands out for its transition to a community-driven development model. After Telegram ceased its direct involvement due to regulatory challenges, the global developer community took over, continuing the project under the same name, emphasizing its decentralized nature and commitment to maintaining an open-source protocol.

An overview of the TON blockchain | Source: Tonviewer

The journey of TON began when Telegram, under the leadership of Pavel Durov, sought to create a blockchain platform that could integrate with its messaging service to enable secure, fast, and scalable applications. In 2018, Telegram released a whitepaper for the Telegram Open Network, drawing significant attention and investment through a highly successful initial coin offering (ICO) that raised $1.7 billion. This ambitious project aimed to include a variety of services, such as a decentralized domain name service (DNS), a virtual private network (VPN), and a platform for decentralized applications (dApps).

However, the project faced significant legal hurdles when the U.S. Securities and Exchange Commission (SEC) intervened, arguing that the sale of TON's native tokens, Grams, constituted an unregistered securities offering. This led to a court ruling that effectively halted the project in 2020. Following this, Pavel Durov announced that Telegram would discontinue its involvement with the project.

Despite Telegram's withdrawal, the project lived on through community efforts. Developers and blockchain enthusiasts from around the world rallied to continue the development of TON's technology under new guises, such as Free TON and later simply as The Open Network, maintaining the project's vision and expanding its capabilities without Telegram's direct involvement.

Tether has partnered with the TON Foundation and launched $60 million of USDT on The Open Network (TON) blockchain in April 2024, which positions TON as the 11th largest out of 16 blockchains supporting Tether. This collaboration also introduced the gold-pegged Tether Gold (XAUT) stablecoin on TON, with cross-border payments highlighted as free, instant, and as simple as sending a direct message on Telegram to its 900 million users.

Toncoin, the native token of The Open Network (TON), plays a multifaceted role within its ecosystem. Its primary function is to facilitate the operation of dApps, acting as the fuel for the network. Beyond application development, Toncoin is integral to transaction processing across TON's network, including cross-chain exchanges, where it is used to cover transaction fees.

In the realm of network security, Toncoin is employed in staking mechanisms that enhance blockchain security. Stakers use Toncoin to validate transactions and, in return, secure the network and its services. Toncoin also enables participation in decentralized data payments for services like TON DNS and TON Proxy, which are crucial for maintaining the network's wide array of decentralized functionalities.

Furthermore, Toncoin is utilized in governance through TON VOTE, a platform that empowers the community to participate in decision-making processes. This voting system allows token holders to influence the developmental trajectory and policy changes within the TON ecosystem.

Toncoin (TON) is also seamlessly integrated into Telegram, allowing users to make commission-free crypto transfers to any Telegram user directly through the app. This integration also supports the use of Toncoin within Telegram's various decentralized applications, enhancing the utility and accessibility of the cryptocurrency for everyday users.

In March 2024, Telegram announced that it will share 50% ad revenue with channel owners and that the payments would be settled on the TON blockchain, distributed in Toncoin. Toncoin jumped 40% upon the announcement, giving the crypto a real-world use case linked to Telegram.

TON DeFi TVL | Source: DefiLlama

The TON network is home to over 650 dApps as of April 2024 and boasts a DeFi TVL of over $160 million. The tokenomics of Toncoin are structured to support a robust and scalable network. Toncoin has a total maximum supply of 5 billion tokens, with a circulating supply of 3.47 billion at the moment. This supply model supports the network's operational needs and the rewards system for validators and stakers.

The economic model of Toncoin is designed to incentivize participation and investment in the network. Validators, crucial for the maintenance and security of the blockchain, are compensated in Toncoin for their services. This not only secures the network but also distributes the governance and control more democratically among users. Users can also engage in staking, providing their tokens to validators to secure additional rewards, thereby contributing to the network's overall robustness.

TON/USDT price performance since January 2024 | Source: KuCoin

Its native token, $TON, has offered year-to-date (YTD) gains of over 177% at the time of writing, starting the year at around $2.30 and going higher than $7 by mid-April. Toncoin’s market cap exceeds $22 billion, a 71% gain in the past month. Toncoin price predictions by leading analysts such as CoinCodex and Changelly forecast the $TON price to cross $10 and even $22 within 2024, subject to market conditions.

Telegram's potential IPO (Initial Public Offering) has created a significant buzz in the cryptocurrency market, particularly impacting Toncoin, the native token of The Open Network (TON). Toncoin's price saw a dramatic increase, rising by over 60% in the days following the announcement of the possible IPO. This surge is attributed to the renewed interest and confidence in Telegram's broader ecosystem, which includes TON.

The possibility of Telegram going public brings a substantial spotlight to all its associated projects, including TON. An IPO could not only provide Telegram with the necessary capital to expand its operations but also enhance its legitimacy and stability in the eyes of potential investors and users. For Toncoin, this translates into likely increased adoption and use, as more users within Telegram's vast network could begin to explore and utilize Toncoin for various transactions and governance functions within the TON ecosystem.

Moreover, the integration of TON into Telegram and the potential influx of funds from an IPO could lead to further development and expansion of the network's capabilities, making Toncoin an even more attractive investment. Investors and market spectators are closely watching this development, anticipating that a successful IPO could solidify Toncoin's position in the market and potentially lead to greater valuation and utility.

Check our more crypto stocks and potential IPOs to watch.

The Open Network (TON) blockchain utilizes an adaptive infinite sharded multi-chain architecture. This system employs a bottom-up approach where individual account chains are initially grouped into shard chains. These shard chains enable interactions within and across them, facilitating parallel transaction processing across multiple chains. This setup creates a "blockchain of blockchains," significantly enhancing the scalability and flexibility of the network.

Asynchronous Message Delivery and Hypercube Routing Mechanism

TON's innovative architecture includes asynchronous message delivery, which allows transactions and message exchanges across the network without requiring synchronous processing. This feature is crucial for scaling as it permits transactions to be processed independently and in parallel. Additionally, TON uses a hypercube routing mechanism to route messages between shard chains efficiently. This setup minimizes latency and maximizes throughput by ensuring messages can travel through the shortest possible path within the complex network structure.

Cross-Shard Transactions

One of TON’s standout features is its ability to handle cross-shard transactions effectively. These transactions, which involve the exchange of data or value across different shards, are crucial for maintaining the network’s high throughput and scalability. TON ensures seamless communication between shards through sophisticated routing mechanisms that use a hypercube structure to minimize latency and maximize efficiency.

Scalability through Dynamic Sharding

Dynamic sharding is another pivotal feature of TON, allowing the network to adapt dynamically to changes in load by splitting and merging shard chains as necessary. This flexibility ensures the network can scale efficiently and maintain high performance regardless of transaction volumes.

Proof of Stake (PoS) Consensus Mechanism

TON operates on a Proof of Stake consensus mechanism, which is more energy-efficient than the traditional Proof of Work model used by networks like Bitcoin. This approach not only reduces the environmental impact but also enhances transaction speeds and network scalability. Validators in the network are chosen based on their stake in the network, promoting a secure and decentralized validation process.

The PoS consensus mechanism reduces the network's energy consumption, making TON an environmentally friendly blockchain solution. Coupled with its architecture, TON maintains low transaction fees, making it economical for users to perform transactions and participate in network activities.

Ton Virtual Machine (TVM)

The TON Virtual Machine (TVM) is a pivotal component of The Open Network (TON), acting as the execution environment for smart contracts within the TON blockchain. It plays a role similar to the Ethereum Virtual Machine (EVM) in that it processes and executes smart contracts and handles the network's state transitions. TVM is specifically designed to handle a broad array of operations needed for smart contracts, including parsing incoming messages, managing persistent data, and creating new messages. It supports various cryptographic methods and arithmetic operations, enhancing its security and versatility making it capable of executing complex financial and mathematical contracts efficiently.

This architecture allows for high transaction throughput and scalability, supporting TON's goal of accommodating billions of users and transactions across its decentralized network. With recent updates, TVM has expanded its capabilities, introducing enhanced cryptography and new instructions to streamline smart contract development and improve overall network performance.

Key components of the TON ecosystem | Source: ton.org

Here are the key elements of The Open Network ecosystem:

TON DNS

The TON DNS component of The Open Network functions similarly to the traditional Domain Name System on the internet but with a decentralized twist. It enables the assignment of human-readable names to accounts, smart contracts, and dApps within the TON ecosystem. This feature simplifies user interaction, making the network more accessible by allowing users to navigate using simple names instead of complex cryptographic addresses.

TON Storage

TON Storage offers decentralized file storage solutions akin to services like Dropbox but within the blockchain context. It supports the storage of large data files off-chain, facilitating high transfer speeds and advanced data storage capabilities. This not only enhances data permanence but also optimizes data retrieval and interaction within the TON ecosystem.

TON Proxy

Acting as an anonymization layer over the TON network, TON Proxy provides privacy and security features by masking user IP addresses and enabling secure, private connectivity akin to VPN services. This component is crucial for protecting user identities and enhancing the security of network interactions, particularly in regions with strict internet censorship.

TON Payments

The internal payment system of TON, known as TON Payments, uses Toncoin as the default currency. It facilitates various transactions within the network, including transfers between TON wallets, micro-payments in dApps, and payments for services like TON DNS and TON Proxy. This system supports a seamless and flexible exchange of values within the TON ecosystem, underscoring its utility for everyday financial operations.

TON Space

This feature integrates closely with Telegram, offering a self-custody wallet solution accessible through the Telegram interface. TON Space allows users to manage their digital assets directly within Telegram, enhancing usability and ensuring that blockchain interactions are as straightforward as sending a message.

Integration with Telegram’s User Base

The integration with Telegram's vast user base worldwide of over 1.5 billion is a strategic move that leverages the messaging platform’s reach to promote the adoption of TON's services. This integration facilitates access to TON’s blockchain features directly from Telegram, potentially onboarding millions of users into the TON ecosystem and enriching their interaction with blockchain technology.

The Open Network (TON) hosts a variety of dApps that range from financial services to social media platforms. These applications leverage TON's high transaction speeds and low fees, making them attractive to developers and users alike. Among these applications are gaming platforms, marketplaces for NFTs, and DeFi products, all integrated directly within the TON ecosystem or through Telegram. This integration facilitates seamless user interaction and enhances the functionality of the apps by utilizing TON's decentralized features.

Future Development Directions

TON's roadmap for future development is expansive, focusing on increasing the platform's scalability and enhancing its user-friendliness. Plans include further integration with Telegram, potentially increasing user adoption through the messaging app's vast user base. The future direction also emphasizes improving TON's infrastructure to support more sophisticated dApps, aiming to attract a broader range of developers and foster innovation within the ecosystem. This will include enhancing features like TON DNS, TON Storage, and TON Payments, making the network more versatile and capable of supporting complex applications.

Upcoming developments in the TON Roadmap | Source: ton.org

TON is well-positioned to expand in areas such as decentralized finance (DeFi) and enterprise solutions. The network's ability to process transactions quickly and at a low cost makes it an ideal candidate for financial applications that require high throughput and scalability. Additionally, TON's flexible architecture allows it to adapt to various business needs, potentially attracting partnerships and integrations with large-scale businesses seeking blockchain solutions.

Upcoming Projects in the TON Ecosystem

TON continues to innovate with new projects that aim to extend its capabilities and reach. Upcoming projects include further developments in cross-chain functionalities, allowing TON to interact more seamlessly with other blockchain networks. This interoperability ensures that TON remains competitive and can function within the broader blockchain ecosystem. Enhancements in governance mechanisms and the introduction of more sophisticated staking options are also on the roadmap, which will further decentralize the network and enhance user participation in its development.

One such example is Notcoin (NOT), an intriguing addition to the TON ecosystem. This project has gained rapid traction as a "Tap-to-Earn" game integrated within the Telegram app. It engages users by allowing them to mine virtual coins through simple interactions, with plans to transition these coins into a tradable cryptocurrency on the TON blockchain. Notcoin featured as KuCoin Pre-market’s 13th project listed on May 10, 2024.

The TON ecosystem faces a significant challenge in boosting developer engagement due to the complexities of its programming languages, FunC and Fift. These languages, less intuitive than popular ones like Ethereum's Solidity, pose a steep learning curve that may deter developers and slow ecosystem growth.

However, TON's integration with Telegram for ad revenue sharing presents a unique growth opportunity. Telegram's vast user base provides immediate access to millions of potential users, enabling rapid adoption and scalability of services built on TON. Coupled with TON's high transaction speeds, low fees, and scalable infrastructure, it is well-positioned to meet the growing demand for blockchain solutions across various sectors,, offering a rich exploration field for developers and investors.