Original article by: Dan Morehead, founder of Pantera Capital, and Ryan Barney, partner
Compiled by: Odaily Planet Daily Azuma
Editors note: This article is from the 100th article of Pantera Capitals market commentary column Blockchain Letter, which mainly excerpts the analysis of TON. The statement about the number one heavy position comes from Pantera Capital founder Dan Morehead. Dan mentioned that he had recently had lunch with Telegram founder Pavel Durov, and Pantera recently made the largest investment in Telegrams TON blockchain project in the funds history. Apart from this, most of the rest of the article was written by Pantera Capital partner Ryan Barney.
Why did Pantera choose TON? (Dan Morehead)
Throughout my career, I have been on the lookout for great investments.
I am passionate about Bitcoin and blockchain because I believe it has the potential to change the world and have a huge positive impact on billions of people. I have met so many amazing people in this community who share the same mission and goals. It is so inspiring.
I recently had lunch with Pavel Durov, the founder of Telegram, and the purity of his conviction was astonishing.
Telegram was founded by Pavel in 2013. The first principle of the platform is freedom . Telegram is a neutral social platform that is fair and impartial and does not favor any party.
At the age of 21, Pavel and his brother Nikolai founded VK, which is known as the Russian version of Facebook. The platform is also excellent and not controlled by the Russian media. The Russian opposition has widely used this application to organize large-scale protests in Russia. For this reason, the government has tried to force Pavel to censor and ban some opposition communities, but Pavel refused.
Pavel said at the time: Neither I nor my team will engage in political censorship. We will not block Navalnys anti-corruption community or the hundreds of other communities that have been ordered to be blocked. Freedom of information is an inalienable right in post-industrial society, without which VKs existence is meaningless.
In 2013, Pavel left Russia permanently. Together with Nikolai, he founded Telegram again, whose principles are freedom, openness and expression.
Pavel said: Every action in my life is for freedom. My life mission is to make other people free as much as possible. This is the mission of Telegram.
Pavel and his team ultimately chose to flee their home country rather than abandon their principles, and we are honored to be working with people who believe so strongly in this— Pantera recently made the largest investment in the fund’s history in TON . Below, my colleague Ryan Barney breaks down the investment in detail.
In short, when you build your portfolio, its best to look for some unique qualities.
99.999% of blockchain projects try to build communities from scratch based on technical concepts. According to CoinMarketCap, there are more than 23,000 cryptocurrencies on the market. For most projects, starting from scratch is a difficult path, while TON is integrating blockchain technology into its existing community, which is undoubtedly easier to achieve.
Today, Telegram has begun rolling out wallet services to their 930 million users.
TON Overview (The following content is written by Ryan Barney)
TON is a Layer 1 network originally designed by Telegram and continued to be developed by the open source community. Due to the widespread adoption of TON in the Telegram system, we believe it will promote the further promotion and popularization of cryptocurrency. Telegram is a future-oriented, fast, and secure messaging platform with more than 900 million active users, through which users can communicate individually and in groups, build large-scale communities, share content, and more.
Based on Telegram’s large user base and seamless user experience, coupled with the vitality of the TON ecosystem itself, we believe TON has the potential to become one of the largest crypto networks.
The reason why we believe in TON so much is not only because of its strong promotion potential, but also because of Telegram’s own values. During this year’s Token 2049, Pavel specifically discussed these values in his keynote speech.
Telegram does not sell user data, and its virality is based entirely on the promise of privacy. It is a neutral platform free from government interference and has been a hub for protests organized by communities around the world.
Telegram is also one of the fastest growing and largest social platforms in the world. They spend zero on marketing, yet are able to add almost 2.5 million users every day. They currently have a total of 930 million active users, and Pavel is still the only product manager in the company, which has only 30 people.
Telegram has almost 10 times more monthly downloads than its nearest competitor, Signal, with 36.7 million downloads in January alone.
The spiritual core of Web3
Telegram stands out not only because of the platform’s remarkable distribution capabilities, but also because it inherently embodies the spirit of cryptocurrency.
At the Token 2049 conference, Pavel introduced why TON and Telegram are a perfect match. Pavel said: The reason I like blockchain is that it is a technology with freedom - it can give power back to ordinary people. No other social application has the same positioning.
Telegram is currently the only major platform that has integrated blockchain without regulatory barriers to incorporate the Web3 vision. While Messenger has attempted to integrate crypto payments through Libra, it ultimately faced regulatory hurdles in the United States, leading to the complete shutdown of the program. WeChat has attempted to integrate CBDC payments, but the system is still limited in scope.
We believe that Telegram has great potential to promote cryptocurrency globally, combined with the sharing spirit of Web3.
Scalable network for hundreds of millions of users
The Open Network (TON) is a blockchain initiative developed by Telegram that aims to leverage its broad user base to create a decentralized network capable of supporting a variety of applications. TON has built a rich multi-component ecosystem, including the TON Blockchain, TON Storage, TON DNS, and TON Services — all of which can be integrated together and run seamlessly.
The TON blockchain is the backbone of this ecosystem. TON is positioned as a high-performance, scalable Layer 1 network that uses dynamic sharding to quickly process transactions. TONs architecture ensures that the network can process millions of transactions per second and scales efficiently as the number of users increases, making it an ideal choice for developers to launch applications for hundreds of millions of users without compromising speed or security.
Simple admission process
Getting users started with crypto apps is usually difficult. New users need to write down a bunch of keys and keep them safe, but what if you forget your private key? How can you send or receive money from other users? Copying and pasting public keys is not a good experience in itself.
Telegram has simplified many of these complexities through Top.co’s Telegram wallet, which allows users to seamlessly connect to a variety of small applications that can be accessed directly through Telegram settings and personal chats, and easily buy, sell or manage tokens and NFTs within a single interface.
Telegram wallet supports both custodial and self-custodial options. Newbies can have a simple onboarding experience, and experienced veterans can also choose to fully control their own keys. With TONs self-custodial wallet, users do not need to write down mnemonics, but can simply use Telegram and email as backup.
The magic of applet
TONs growing ecosystem benefits from Telegrams innovative design and large user base. More than 360 million users interact with so-called applets on Telegram every month, such as chatbots, mini-games, and more. For TON, we envision that its encryption functions can also be integrated into these applets, significantly improving the operating experience of hundreds of millions of users. There are currently more than 300 projects on TON, most of which have built applets on Telegram and can be directly accessed through the Telegram App Center.
Earlier this year, we saw meme token trading tools like BonkBot generate tens of millions of dollars in revenue through Telegrams user interface. TON-based applications such as StormTrade now also allow users to trade perpetual contracts, cryptocurrencies, stocks, and equities using the same interface. StormTrade can handle more than $10 million in daily trading volume, and we believe similar TON-native Telegram bots will become the first choice for many traders.
Telegram also provides a basic platform for viral social and gaming dissemination. Early experimental Telegram games such as Pixels and Fanzee Battles attracted millions of users within a few days, demonstrating the platforms huge potential for user participation; Catizen is a TON-based mini-game platform that currently has more than 4 million users and more than 700,000 daily active users; Notcoin is a TON-based social application where users can mine. The application has now attracted more than 30 million users, which is one of the fastest growths ever recorded in the cryptocurrency field.
The TON Foundation also recently announced their incentive program, which aims to incentivize successful TON applications. We believe this will lead to the creation of more new and exciting mini-programs, which in turn will attract more users to join.
New revenue model
TON has also opened up many new ways for the Telegram community to make money, share, and expand their business. As a decentralized market based on TON, Fragment provides users with a trading platform where they can trade collectibles such as virtual phone numbers and custom Telegram usernames. Fragment has now facilitated more than $350 million in total transactions, and this is just the beginning.
The Fragment platform also supports revenue sharing between content creators and channel owners, which is an important innovation that marks a shift in the traditional social media profit model, allowing creators to earn revenue directly through advertising revenue on their channels. This approach not only incentivizes content creation, but also strengthens the connection between the platform and users, and promotes a fairer distribution of economic benefits within the digital ecosystem.
Payment Revolution
On April 19, 2024, Tether announced the deployment of its stablecoin USDT on the TON blockchain and Telegram wallet. This move represents a major advancement in the crypto industry in the payment field, as it will allow hundreds of millions of users to seamlessly send and receive stablecoins through the Telegram platform, making payments as simple as using Venmo or Apple Cash.
With the strong scalability support of the TON network, users transaction fees are reduced to about $0.1, which is 66% cheaper than other mainstream cryptocurrency payment platforms. In addition, Telegram also provides built-in deposit and withdrawal channels (for banks or exchanges) to further facilitate user use.
We believe that stablecoin payments on Telegram wallets are particularly important for individuals in developing countries, where people generally do not have access to comprehensive banking services. With the deployment of stablecoins on the TON network, cryptocurrency is one step closer to realizing the vision of programmable peer-to-peer money and a globally accessible decentralized financial system.
Conclusion: Still early, great potential
All in all, we believe that the TON network is still in its early stages, and we are very much looking forward to seeing the Telegram user base adopt its ecosystem and experience more new features that will be launched in the future.
In essence, Telegram itself embodies the spirit of cryptocurrency - open, free, and permissionless. The TON network has achieved a clever symbiotic relationship with Telegram, in which scalable smart contract functions and a powerful payment network make some breakthrough functions that cannot be achieved in the Web2 environment possible. Given Telegrams large user base, scalable infrastructure, thriving mini-program ecosystem, and native stablecoin payment functions, TON has the potential to tap into more value from this treasure trove of 900 million active users.
At Pantera Capital, we are excited about this investment and eager to continue supporting future builders in the TON ecosystem. If you are building on TON and would like to share it with us, please do not hesitate to contact us.
