At this Singapore Token 2049 conference, Telegram CIO (Chief Information Officer) and TON Foundation Chairman Steve mentioned in their speeches that they hope to have 500 million Telegram users in TON in five years. Whether it is the narrative of Crypto Mass adoption or Web 2 giants gradually moving towards Web 3.0, it is extremely attractive to Web 3.0 practitioners and investors.

The OP Crypto team had great interest in TON before the conference. Combining some past research and recent updates, let us explore the infinite possibilities of the combination of Telegram and TON as well as potential investment opportunities in this article.

What is Telegram?

Telegram is a free cloud-based instant messaging software founded in 2013 by brothers Nikolai and Pavel Durov, founders of VK (one of Russia’s mainstream social media). Currently Telegram servers are located all over the world, and the operation center and development team are located in Dubai, United Arab Emirates.

Telegram has a huge and global user base and has grown rapidly in recent years. It is reported that Telegram has nearly 900 million monthly active users (MAU) and more than 1.3 billion registered users.

Interestingly enough, Telegram is an “important front” for Crypto. More than half of the Channels and Groups with the largest number of subscriptions/members are related to Crypto content. Almost all Web 3.0/Crypto projects have Telegram communities to facilitate community communication, project updates, publicity, etc.

What’s also interesting is that many cross-border e-commerce sellers divert traffic to Telegram through the public domain (such as Tiktok) to complete transactions. Telagram is also an e-commerce consumer transaction place.

What is TON？

TON is a project launched by Telegram in 2018, but was subsequently accused by the US SEC of illegal fundraising. Therefore, in May 2020, founder Pavel Durov announced the end of Telegrams participation in blockchain development. However, after Telegram abandoned the project, it was accepted by the community to continue development. The project was changed from the original Telegram Open Network to The Open Network and the token TON Token was issued.

TON is a huge ecological project, not just a public chain, but also includes a P2P network (currently supporting settlement between Fiat and Crypto, etc.) and a bunch of service technology stacks, such as TON Proxy (hiding IP and information) and TON Storage (distributed storage launched by TON).

The Tech Stack currently provided by TON hopes to solve the problem of difficulty in using blockchain or distributed services for users of all social products, including Telegram.

The TON Blockchain is a public chain based on the PoS consensus mechanism and TVM smart contract calculations. It theoretically supports millions of on-chain transactions. If there are enough validators, it can support up to 2^92 shards. Currently, since the total transaction volume is limited (currently), there is currently no opportunity to verify its stability and security under high TPS, and TPS has been maintained below 6 w.

The core feature of achieving such high TPS is that TON Blockchain itself supports parallel transaction calculation and verification, as well as asynchronous processing of smart contracts. Its architecture is mainly divided into Masterchain, Workchain and Shardchain: it supports the registration and operation of a maximum of 2^32 Workchains, and each Workchain supports 2^60 shards and the corresponding Shardchain.

Each Shardchain can be understood as a ledger of one or more Accounts, and a batch of Validators perform block construction and verification; in the next time slot of the Workchain, all Shardchain validators under the Workchain perform PoS again to obtain blocks. award. All Workchain and Shardchain status will be updated to the Masterchain.Logically, there are 5 important points:

• Shardchain and Workchain are both parallel computing

• TVM can support asynchronous computation

• Support instant cross-shard communication

• The ledger has multiple copies, so the storage requirements are higher.

• Two PoS processes are required to ensure the decentralization of Shardchain and Workchain

The first three points form the theoretical basis of TON’s high TPS.

Interesting Connection between TG and TF

TON is currently mainly driven by the TON Foundation. TON Foundation has a team of more than 40 people, more than half of whom are from Russia, Ukraine and other countries. Most of the employees have VK and TG work experience.

TON Foundation One of the core founding members of TON Foundation, Andrew Rogozov, is the former CEO of VK.com.

TON Ecosystem Landscape

1. Validator

TON is a public chain based on PoS, so the scale of verification nodes can ensure its decentralized, stable and secure operation. TON currently has 342 verification nodes, with a pledge amount of 490 million TON, a pledge ratio of 9.6%, and APY that can be maintained stably at around 5.5%.

The conditions for becoming Validation Nodes are as follows:

• Stake at least 300k TON tokens

• Meet the hardware conditions

As for the Slash mechanism, TON is still constantly optimizing. Current validators can receive block rewards as well as user transaction fees (Gas), but if a validator misbehaves, then some or all of their shares will be slashed and an equal amount of TON tokens will be destroyed.

2. Dev Community

As of July 2023, there are 6,793 full-time developers on the entire network, and 21,338 monthly active developers. There are 39 full-time developers on TON and 174 monthly active developers.

At the technical development level, TON Foundation is actively expanding and supporting the developer community, and is helping developers become familiar with new languages ​​and deploy blockchain projects in a parallel computing environment by continuously improving developer files (parallel computing may lead to greater development volume and administrative costs). After this conference, there was a significant increase in attention, and some projects began to be launched on TON.

3.TON’s Application

The Web 3 part of the Telegram App ecosystem has expanded to Wallet, Game, Social, NFT, DeFi and other directions. The TON ecosystem is accelerating development, but currently it is mainly some wallets and DeFi projects:

a. Wallet 

There are currently many To C wallet projects, but most of them will be integrated with TONSpace in terms of use. In the future, there is the possibility of other leading wallet projects such as Metamask entering the game.

Telegram Wallet (@Wallet)

Telegram Wallet is Telegram’s native embedded centralized custody wallet, in which users can currently exchange TON, BTC, and USDT. Users can send and receive these cryptocurrencies with contacts through the dialogs attachments menu bar.

@Wallet supports remitting fiat currencies through bank cards or P2P markets. Users can choose the type of payment currency and also supports depositing Cryptocurrencies from other wallets. As of June this year, Telegram Wallet had more than 2.5 million registered users, and the number of users is growing rapidly.

TON Space

TONSpace is a non-custodial wallet embedded in @Wallet. In Tonspace, you can use mnemonics to import existing TON blockchain wallets or create new TON blockchain wallets through mnemonics. Users can also use Telegram account and email address. method to save the corresponding private key. Currently, in addition to on-chain Token transfers, TONSpace also supports NFT-related operations.

In the future, users will be able to directly use some TON on-chain facilities and applications through TONSpace, such as interacting with DeFi. The beta version of this product was announced for the first time on Token 2049, and the official version of the mainnet will be launched in November this year.

b. DeFi  

The current DeFi ecosystem is not perfect, with only spot DEX and Liquid Staking, but the progress of this development and development is accelerating, whether it is the developer side, the user side, or more bridge and token deployments.

Megaton Finance

Megaton Finance is an AMM-Based Spot DEX, which was developed by the Korean blockchain company OZYS for 6 months, and the current total value locked (TVL) reaches US$7.13 million.

The total amount of token MEGA is 100 million, with a circulating supply of 5.14 million and a circulating market value of approximately US$710,000. In March this year, it completed a US$1.5 million seed round of financing, led by TONcoin.Fund, with participation from Orbs, MEXC Ventures and others.

Bemo

Bemo is a liquidity staking project on TON, similar to the Lido mechanism. The current TVL is around $2.6m and the APY is around 5%.

4. TON Token

TON Token is the native token of TON Blockchain. The current supply of TON Token exceeds 5 b, which is mainly supplied by the PoW mechanism of the early TON Blockchain. All of them have been mined in June 2022. In addition, the supply of TON Token is unlimited and will be issued (approximately 30 million tokens) at an inflation rate of approximately 0.6% per year.

TON Token’s Utility is extremely differentiated. In addition to the investment attributes of mainstream currencies, Gas payment utility, and BTC as an alternative large-value payment tool, Telegram’s social scene can fully empower TON Token as a universal payment tool, and its larger application scenarios will be diversified social Transfers, deposits and withdrawals, advertising payments, application payments (including bots) and even product payments are options for users that exceed the WeChat payment experience. Telegram is already working on providing a more user-friendly and convenient secondary payment method.

Currently, TON’s average gas fee per transaction is around US$0.1-0.5, which is much lower than Tron’s US$1-2 and Ethereum’s US$7.

TON’s Comparison

The combination of TON and Telegram has made the ceiling of the entire ecosystem very high. At present, we have sorted out three more important comparison dimensions, mainly comparison of social platforms, comparison of blockchain development, and comparison of product forms within the Telegram ecosystem:

1. Social Platform Comparison  

Currently, the most mainstream form of acquaintance social platforms around the world is instant-messaging, such as Wechat and WhatsApp. We all believe that this type of project has a very strong moat, mainly reflected in the scale effect and network effect. With the continuous development of mini programs, the transaction volume in 22 years has reached trillions, and the MAU has reached 1.1 Billion so far. A large amount of value has been transferred to the built-in programs of the APP. This all proves that this integrated product form is favored by users. More preference.

Based on the blockchain and distributed technology architecture, Telegram can use the new product form of Internal-Dapp to develop physical and virtual economies in multiple countries and regions, and reduce transaction friction in cross-regional commerce to a greater extent. If we consider TON as a means of commercialization for TG, the story is very clear.

Of course, another perspective is the comparison between TApp and Web 3 Social products. A more mature user base and larger token usage scenarios create a better implementation environment for social products (including social games) on the TON chain than on other chains. A lot, and Telegram itself does not analyze user data. I think this will attract the attention of many developers and entrepreneurs.

2. Blockchain Comparison  

In terms of theoretical architecture, the difference between TON and Ethereum is mainly reflected in the number of shards and cross-shard communication. At the same time, shorter block time, support for parallel computing and asynchronous processing also make the technical requirements for TON project deployment more stringent. Safety considerations are higher.

Of course, the benefit is that the theoretical TPS will be higher, and TON is about 100,000 times that of Ethereum. Compared with Solana, the same thing is that its virtual machines support asynchronous computing, and the blockchain also supports parallel computing, but TON is obviously more Decentralization, and Solan does not have a sharding design, so Solana’s theoretical highest TPS (50,000 ~) is also lower than the current TPS performance of TON.

When we think about the growth space, we will find that TON faces a more intuitive growth point. Telegram is the worlds mainstream social platform (along with VK.coms traffic) and the largest encrypted group social platform. A large number of users are aware of Crypto and Web 3.0, and the cost of education is lower. This means that TON user development has relatively lower market risks.

The TON Token empowered by the giant social network will have more payment utility, which means that TON has a higher ceiling.

3. Telegram Bots vs TON App  

Telegram Bots is a new interaction method of the blockchain. It is implemented by integrating multiple functions on Telegram with the help of Bots module, allowing users to perform these functions by sending instructions to Bots. Currently, it is mainly related to transactions. The Bots projects here generally refer to projects that are connected to non-TON chains such as Ethereum.

Simply put, the difference between the current Bots project and TON App:

There are differences in product imagination: the picture on the left is Telegram Bots, the picture on the right is Internal App

Bots have limited response speed, single interaction method and poor multi-interaction parallelism; but TON App can better solve this problem. It is difficult for Bots to solve payments and deposits and withdrawals for users, but TON ecological applications can seamlessly connect with the corresponding infrastructure.

Bots will charge additional fees on DeFi, while TON DeFi applications only have one layer of lower fees

As summarized in the previous article, both Telegram Bots and projects on TON can better face users, but the interactive form of Telegram Bots is more like a monotonous agent page, while the projects on TON are more functionally interactive and composable. Strong APPs and projects listed on APP Center can be connected by @Wallet (a collection of wallets on multiple TONs and Fiat-to-Crypto). Therefore, the depth of TON and Telegram Bots projects is very different.

The development of the Bots project actually provides TON with a larger narrative space, that is, while increasing Telegram traffic, it can also seek to convert existing encryption users. Therefore, in the future, we are not sure whether these non-TON chain Bots are at risk of being blocked, but the TON Foundation is fully motivated to extend an olive branch to good Bots projects and try to convert them to TON.

Summarize

Facing risks from technical architecture, economic model, team, etc., TON is currently also actively responding: including large-scale investment in community developers to provide a more stable and reliable technical architecture, betting on community funds to disperse the concentration of funds, and cooperation with DWF Labs and others plan to redesign economic models and more.

The development of TON is backed by Telegram, and we are trying to draw a blueprint for the future: providing an on-chain low-fee, highly parallel transaction environment where users can experience a variety of user-friendly partially/fully decentralized applications and have a clear on-chain portrait. and social graph, to freely entering and exiting the encrypted world and the real world, etc. This is a complete life journey of an Internet user. Regarding the future outlook, we may not necessarily be able to accurately imagine whether the new balance will still tilt towards Web 2.0, but we can imagine how future network users will smoothly use various trust or trustless tools to meet their own needs. Web 3.0 may just be an option, but the new balance trend is what were after.

Generally speaking, the growth point of TON Ecosystem is intuitive, the ecosystem is accelerating development, and the projects deployed in the current ecosystem are also in a very early stage of development, but this also creates more investment opportunities, and the odds and ceiling are extremely suitable VCs are taking bets; plus, there are potential impact gains for institutions that enter new narratives too early.

However, unlike other public chains, TONs technological development is currently mainly followed by the TON Foundation and developers who have entered early involve. Opportunities from other projects to develop infrastructure are currently very uncertain, and it is difficult to determine the top-down The Infra project puts forward some forward-looking investment suggestions. A more suitable direction for institutions is to build as many connections as possible, look for existing problems, and understand the trends of TON itself. As for the development of decentralized finance (DeFi) projects in the TON ecosystem, it is more likely that leading projects will be migrated to TON. Since these projects may be more mature and have greater potential to obtain ecological support, I think it is also difficult to do so. Larger investment opportunities.

On the whole, based on the development status of TON, I am unanimously optimistic about the narratives of accelerating the development of TON, Internal-App is the best product form, and conforming to TGs new social paradigm and creating new value circulation. Here are the following: Here are some reasonable and lower-risk investment and entrepreneurial directions:

• Accelerate TON development

Dev Tools/Community

Social Payment and parallel payment infrastructure

• Internal-App as a better product form

Real-Yield Aggregator

• New value creation and circulation

Social Plus/Graph

Game and on-chain infra

• Traffic distribution platform

About OP Crypto

Erase borders, BUIDL the future 

OP Crypto is a leading early-stage venture capital fund in the encryption and blockchain industry. The fund focuses on supporting investments in pre-seed and seed-stage startups. Its investments include more than 30 projects, including Scroll Tech, Snackclub, Merit Circle, Omni and Fyde et al. At OP Crypto, we are committed to supporting innovative founders and working closely with them to maximize the scale and impact of their projects.

Author of this article: Serein
Finally, I would like to thank Vivi, Howard, John from the TON Foundation, Jerry from TONup, and my colleague Michael for their help.