What is fueling TON’s 2024 comeback?

Laobai (@Wuhuoqiu), a partner at ABCDE Investment Research, recently tweeted around insights from a financial advisor: "I recently chatted with a financial advisor who mentioned speaking to fifty or sixty venture capitalists," he shared. According to Laobai, "Some VCs are focused on infrastructure, others on gaming, and some on Bitcoin. But there is one track that every VC is eyeing without exception. Can you guess which one?"

"The answer is TON."

In this current market cycle, TON, The Open Network, originally Telegram Open Network, has gained significant attention. CoinMarketCap data reveal that TON now ranks eighth in market cap among all blockchains, with a staggering 423.26% annual increase.

Ref: https://coinmarketcap.com/currencies/toncoin/

DeFi Llama data show a 488-fold increase in TON's Total Value Locked (TVL) from $13.51 million in January 2024 to $665.02 million as of July 2024.

Ref: https://defillama.com/chain/TON

TON's appeal is further bolstered by the rapid ascent of its memecoins, exemplified by NOT. NOT has garnered significant attention, attracting 35 million active users and achieving listings on major exchanges. Within two weeks of its launch, NOT's value surged more than 300%. By early June, its transaction volume surpassed that of Bitcoin and Ethereum.

What sets TON apart since its 2018 launch, and what's driving its resurgence in 2024? 

Brief history of TON

TON was launched in 2018 by Telegram's founders to establish a scalable and efficient blockchain integrated with the Telegram app. The vision was to support diverse applications such as micropayments and decentralized apps (dApps).

Telegram conducted one of the industry's largest Initial Coin Offerings (ICOs) in 2018, raising $1.7 billion. However, legal challenges from the US SEC in 2019 forced Telegram to suspend the project and refund investors.

Following Telegram's exit from the project in 2020, the community took charge of TON's development, rebranding it as The Open Network. This transition continued to build upon Telegram's original vision. Community-driven efforts resulted in the successful launch of the TON mainnet, marked by ongoing improvements in scalability, efficiency, and user accessibility.

TON functions

TON functions as a Layer 1 blockchain engineered for scalable cross-chain interoperability, catering to dApps and facilitating efficient micropayments. Its whitepaper emphasizes bridging the gap between mainstream internet users, blockchain technology, and cryptocurrencies.

Ref: https://ton.org/en

TON employs a Proof of Stake (PoS) consensus mechanism. This method is energy-efficient compared to the traditional Proof of Work (PoW) and enhances the network's security and decentralization. Validators are chosen based on their stake in the network, which encourages widespread participation and secures the blockchain. As of June 26, 2024, TON has 355 validators distributed across 30 countries worldwide.

TON utilizes a sharding mechanism, its key element of scalability and efficiency. This feature, often described as the "blockchain of blockchains," partitions the network into smaller, manageable segments known as shards. Each shard operates independently, processing its transactions and smart contracts. This parallel processing significantly enhances the network's overall transaction capacity, enabling TON to handle over 100,000 transactions per second. This performance surpasses the most widely used centralized payment systems like VISA and PayPal.

Another essential element of TON is the TON Virtual Machine (TVM), which is optimized for executing smart contracts. Comparable to the Ethereum Virtual Machine (EVM), the TVM facilitates a wide range of operations essential for smart contracts, such as processing instructions, managing state changes, and executing intricate financial transactions. The TVM's functionalities empower developers to create sophisticated dApps efficiently.

Advantages of TON

Scalability and High Throughput: TON leverages an advanced sharding mechanism that enables the network to process over 100,000 transactions per second, surpassing many existing blockchain networks and even rivaling centralized payment systems like VISA and PayPal.

Interoperability Across Chains: TON is engineered to seamlessly interact with other blockchain networks, supporting a broad spectrum of decentralized applications (dApps) and microtransactions. This interoperability fosters a more interconnected and adaptable ecosystem by facilitating integration between diverse blockchain platforms.

Integration with Telegram: With over 900 million monthly active users as of March 2024, Telegram provides TON with unparalleled access to a vast user base. As the sole blockchain officially endorsed by Telegram, TON integrates blockchain functionalities directly into the Telegram app, enabling users to utilize TON’s features without requiring deep technical expertise.

A notable instance of this integration is Telegram’s initiative to distribute 50% of its advertising revenue to channel owners, employing the TON blockchain for payment settlements in Toncoin starting in March. This news prompted a 40% increase in Toncoin's value.

Ref: https://ton.app/

Challenges Facing TON

Regulatory Hurdles: TON initially faced legal challenges, particularly from the US SEC, prompting Telegram to halt active development. Ongoing regulatory scrutiny and compliance requirements across different jurisdictions may continue to pose challenges and limit the network's global expansion.

Decentralized Storage Risks: TON's innovative decentralized storage solutions may encounter inherent issues related to data security and reliability. Ensuring the consistency and availability of stored data across a decentralized network presents significant inherent technical challenges.

Technical Complexity: TON employs unique programming languages (FunC and Tact), which could present a steep learning curve for developers accustomed to more mainstream languages. Moreover, while sharding enhances scalability, managing cross-shard transactions and maintaining a consistent global state introduces complexities that require sophisticated technical solutions for effective network performance.

Closing Thoughts

At the end of March, the TON Foundation unveiled plans to distribute 30 million TON tokens over one month as part of a liquidity incentive program.

In April, Tether Operations Limited announced the integration of its US Dollar-pegged stablecoin, USDT, into the TON network, enabling direct minting and redemption of USDT on the TON blockchain.

As of June 21st, users can deposit and withdraw USDT on TON via Binance, significantly boosting liquidity and reducing transaction fees.

Ref: https://ton.org/en/roadmap

The TON roadmap outlines several upcoming features, generating anticipation for the future of this public blockchain. As TON attracts interest with new earning opportunities through Toncoin and other ecosystem tokens, users and developers are advised to approach engagement with informed participation and a measured outlook. This approach aims to navigate the evolving landscape prudently and leverage its potential effectively.

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