The Open Network: Backed by Telegram, Exploring the Path of Interconnectivity Between Web2 and Web3
August 14th marks the 10th anniversary of Telegram, with founder and CEO Pavel Durov outlining in his 10th-anniversary message that Telegram’s next step is to go beyond mere information transmission and lead the innovation in social media. Due to its information encryption and privacy features, Telegram has become one of the most popular communication applications.
This year’s Telegram Bot craze has also caught the market’s attention. However, Telegram bots merely use the Telegram application as an interface for the Ethereum protocol and do not directly interact with the TON (Telegram Open Network) blockchain. TON emerged from the Telegram Open Network blockchain platform initiated by Telegram in 2017 but had to halt its operations due to SEC charges. Subsequently, the Telegram community, through spontaneous organization, renamed the network as the Open Network (TON) and continued its network development and ecosystem expansion. Currently, TON’s governance token TON has a market value surpassing Polkadot and Polygon, ranking 12th overall and 6th among public blockchains. Despite Telegram no longer being involved in TON network development, TON could still gain significant traffic through its association with Telegram. Telegram bots have also brought about a paradigm shift in user experience from Web 2 applications to Web 3, offering low-cost, low-threshold entry into Web 3.
I. Network Framework
TON’s structure is a multi-layer, multi-chain system consisting of the master chain, workchains, and shard chains. The master chain serves as a central manager, while workchains support smart contracts and decentralized applications (DApps). Different workchains need only adhere to unified interoperability standards, similar to Polkadot. Each workchain implements shard chains to enhance scalability and parallel transaction processing, with each shard responsible for a specific subset of accounts.
TON currently adopts a PoS (Proof of Stake) consensus mechanism. Three roles exist within the network:
1) Validator Nodes: Maintain network security by staking TON tokens.
2) Fishermen: Detect whether validator nodes fulfill their validation tasks by sending invalid proof. Validator nodes face penalties if they fail this proof.
3) Collators: Check the state of the shard and adjacent shard and send it to validator nodes. Collators are typically rewarded by validator nodes.
II. Roadmap
1. Strengthen detection and penalties for non-compliant validator nodes.
2. Create cross-chain bridges with the Ethereum and Binance Smart Chain networks.
3. Allow stakers to participate in on-chain governance.
4. Introduce payment channels supporting instant micropayments between any two participants, free except for network fees incurred during channel creation and closure.
III. Token Situation
After the launch of the Telegram Open Network testnet 2, 5 billion tokens were minted, with 1.45% allocated to developers and testers. However, the SEC quickly banned Telegram from issuing tokens to investors, leading Telegram to cease its work within the TON ecosystem. Testnet 2 tokens were placed within smart contracts. All available Toncoin (TON) tokens are released through mining. These tokens are held in a special Giver smart contract, allowing anyone to participate in mining until the mining deadline on June 28, 2022.
After the initial distribution, TON entered the PoS phase. According to the whitepaper, rewards for the PoS network amount to around 20% of staked tokens, with an annual inflation rate of approximately 2%, doubling the token supply in an estimated 35 years. Currently, the total token supply is 5.093 billion, with a circulating supply of 3.441 billion.
Use Cases
1. Payments: Domain Name System (DNS), data storage, TON proxies, on-chain gas, cross-chain fees, etc.
2. Staking: Maintaining network security, with a portion of tokens confiscated from penalized validator nodes likely to be burned (specific ratio unspecified).
3. Governance
IV. Network Data
The TON network currently has 343 validator nodes in the verification phase, with a total staked TON token count of 486 million, accounting for 9.5% of the total token supply and 14.12% of the circulating token supply. Tokens destroyed amount to 41,600. Starting from January 2022, network account numbers and active addresses have steadily increased, with a total account count of 3.351 million, approximately 765,000 active addresses, a daily average of 160,000 transactions, and a daily increase in on-chain addresses ranging from 700 to 900.
Despite the total number of account addresses exceeding 3 million, the Jetto wallet has only 133,000 users deeply involved in the Ton ecosystem. (Note: Jetto represents the Ton network token standard, and the Jetto wallet includes any Jetto tokens. The number of forged NFTs stands at 1.194 million. The number of sold DNS is 32,000 (the number of forged ENS domain names on Ethereum is 2.574 million). Sales revenue amounts to 6.205 million TON, estimated at 10.67 million USD at the current price, with an average price of 333 USD per DNS, which is relatively high.
V. Ecology
The current Ton network ecosystem is led by the Ton Foundation, which is 100% community-driven. Since the beginning of 2023, the Ton Foundation’s main activities include:
1) Regular liquidity funding rewards.
2) A comprehensive accelerator program, launched in May 2023, with a funding allocation of 25 million USD. The Ton Foundation has announced the projects funded in the second and third quarters of 2022 and 2023. According to the reports, a total of 31 projects were funded in 2022, 10 projects were funded in the second quarter of 2023, and 5 projects were funded in the third quarter, with a focus on infrastructure.
3) Development plans for Telegram. In August, the Ton Foundation launched the tApps center, a platform that includes any app that supports the Telegram ecosystem. In September, they introduced the web3 Grant program for Telegram, without specifying the exact amount, but each project’s funding is expected to be between 20,000 and 50,000 USD.
According to Defillama, Ton’s current Total Value Locked (TVL) is 9.85 million USD, with the historical high point being only 21.04 million USD. Ton’s ecosystem is in a very early stage of development.
【DEX】
Megaton Finance
An AMM DEX developed by the South Korean blockchain technology company OZYS, originally built on the Klaytn platform as Klayswap. The current TVL has reached 4.89 million USD, accounting for approximately 50% of the Ton TVL, making it a dominant player in the Ton DeFi space. In March of this year, Megaton Finance secured 1.5 million USD in seed funding, led by the Toncoin fund, with participation from Cypher Capital, First Stage Labs, Orbs, MEXC Ventures, and other institutions. The project token $MEGA is listed on MEXC, with 54% of tokens allocated to liquidity providers.
DeDust
Developed by Scaleton, it now supports almost all available wallets in the Ton blockchain. They recently released DeDust 2.0. The DeDust DEX currently supports token bridging, allowing users to seamlessly transfer tokens between the Ton blockchain and Ethereum. The current TVL is 2.56 million USD.
STON.fi
An AMM DEX with a trading fee of 0.3%, where 0.2% goes to liquidity providers and 0.1% to the STON.fi protocol. The current TVL is 2.23 million USD.
【Lending】
DAOLama
As a lending platform using NFTs as collateral, the current Total Value Locked (TVL) is only $160,000.
【NFT Marketplace】
TON Diamonds
TON Diamonds serves as the primary NFT trading marketplace on the TON blockchain. Regular users are subject to a 5% market fee when trading NFTs on TON Diamonds. However, users can reduce transaction fees by purchasing official diamond NFTs of different levels.
【Other】
Fanzee
Fanzee, a platform for fan engagement, has raised a total of $2 million in pre-seed funding. This round was led by the TON Foundation and First Stage Labs, with participation from other entities including MEXC Global, Huobi Global, KuCoin Exchange, VLG Capital, Orbs, 3Commas.io, and Hexit Capital.
VI. Summary
Despite the Telegram team no longer actively participating in the development of The Open Network, both parties maintain a certain level of cooperation. The Open Network is actively embracing the Telegram ecosystem. It is positioned to leverage high performance as its cornerstone, using Telegram as a significant traffic gateway to provide low-barrier use cases to gain its most essential competitive edge. However, the current TON ecosystem is still in its very early stages, with infrastructure projects dominating, and a shortage of innovative and highly engaging projects.
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LD Capital has successively discovered and invested more than 300 companies in Infra/Protocol/Dapp/Privacy/Metaverse/Layer2/DeFi/DAO/GameFi fields since 2016.
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