Exploring The Open Network (TON) & Toncoin

Introduction

The Open Network (TON) is a decentralized, layer-1 blockchain network that was initially developed by the team behind the popular messaging app Telegram. TON was designed to be a highly scalable and performant blockchain platform capable of supporting a wide range of decentralized applications (dApps) and services.

In 2018, TON gained significant attention through a $1.7 billion initial coin offering (ICO) for its native cryptocurrency, Gram. However, the project faced regulatory challenges from the U.S.SEC, leading Telegram to ultimately withdraw from the project in 2020. Since then, the TON project has transitioned to a community-driven, open-source development model, led by the TON Foundation and a global network of independent contributors.

Technical Capabilities & Performance

TON has demonstrated exceptional performance, recently setting a world record for transaction speed by processing 104,715 transactions per second (TPS). This achievement surpasses other major blockchains like Bitcoin, Ethereum, Solana, and even centralized payment systems like Visa and MasterCard.

TON's architecture also includes a feature called "dynamic sharding," which allows the blockchain state to be split into smaller pieces, enabling each set of nodes to only store and validate a subset of the data. This feature, combined with the multi-blockchain design, is claimed to theoretically allow TON to scale up to millions of transactions per second. However, the number is valid under suitable circumstances and an ideal environment.

Real-world Use Cases

Some of the key use cases of TON include:

1. Payments and DeFi: The high transaction speed and low fees of TON make it well-suited for payments and DeFi applications, such as instant off-chain value transfers, decentralized exchanges, and stablecoin usage.
2. Decentralized Storage: TON Storage, a decentralized file-sharing and data storage solution, allows users to store and exchange large amounts of data using the TON blockchain network, eliminating the need for centralized web servers.
3. Decentralized DNS: TON DNS provides a decentralized domain name system, allowing users to access decentralized applications using human-readable names rather than long strings of alphanumeric characters.
4. Telegram Integration: While Telegram is no longer directly involved in the development of TON, the project aims to maintain integration with the messaging platform, potentially leveraging Telegram's vast user base to drive adoption of TON-based applications.

Ecosystem & Growth

The TON ecosystem has continued to expand since the community-driven development model was established. Some key factors contributing to its exponential growth include:

• Popularity of TON-based Games: The emergence of popular "tap-to-earn" mini-games on Telegram that utilize the TON blockchain has driven a surge in network activity and user adoption. These games, such as "Notcoin," "Hamster Kombat," and "Catizen," have demonstrated the ability of TON-based applications to attract and engage a large user base.
• Telegram's Ad Revenue Sharing: In February 2024, Telegram announced a 50/50 revenue-sharing program with Telegram channel owners, where the ad revenue is paid out in Toncoin and facilitated through the TON network. This has helped onboard a large number of Telegram users into the TON ecosystem.
• Tether Integration: The integration of Tether's USDT stablecoin on the TON blockchain in April 2024 has been a major catalyst for growth, with the supply of TON-based USDT already exceeding 500 million within two months of launch.

All these factors have led to increased network activity. The TON network has seen a significant increase in activity metrics as the 7-day moving average of transactions on TON has risen from 645,000 at the start of 2024 to over 5 million, and the 7-day moving average of active addresses has surged from 26,000 to more than 340,000.

TON Tokenomics

Toncoin (TON) serves as the native utility and governance token of The Open Network. It has a total supply of 5 billion tokens, with 2.5 billion currently in circulation. Initially, 1.45% of the total supply was allocated to testers and developers, while the remaining 98.55% was distributed through Proof of Work (PoW) Giver smart contracts. Toncoin operates on a Proof of Stake (PoS) consensus mechanism, which allows for energy-efficient and secure block validation.

Toncoin is inflationary, with an annual inflation rate of 0.6%, which is determined by the payments made by the community to the validators. This design supports the network's security and incentivizes validators while maintaining a low inflation rate. The current market cap of Toncoin stands at around $18.91 billion, with its price fluctuating around $7.55 per token as of recent data​.

Key Aspects of Toncoin:

• Staking: Users can participate in staking, providing their tokens to validators to secure additional rewards, thereby contributing to the network's overall performance. Currently, the staking rewards are close to 3%.
• Governance: Toncoin enables participation in governance through TON VOTE, a platform that empowers the community to participate in decision-making processes.
• Telegram Integration: Toncoin is conveniently integrated into Telegram, allowing users to make commission-free crypto transfers to any Telegram user directly through the app.
• Economic Incentives: The economic model is designed to incentivize participation & investment in the network. Validators play a vital role in ensuring the blockchain's integrity and security, earning Toncoin as compensation for their essential services.

Fundraising & Investments

The Open Network (TON) has garnered substantial attention from venture capitalists, marking significant investments to support its growth and development. Notably, Pantera Capital has made one of its largest investments in TON, highlighting the network's potential to leverage Telegram’s massive user base and decentralized ethos.

Other prominent investors include venture capital firms such as Yolo Investments, which pledged $8 million into TON-related startups and initiatives. These investments reflect a strong belief in TON's capabilities to become a leading blockchain network.

Future Outlook

Looking ahead, the TON roadmap focuses on further enhancing the platform's scalability, user-friendliness, and integration with Telegram. The team aims to attract a broader range of developers and foster innovation within the TON ecosystem, with plans to improve features like TON DNS, TON Storage, and TON Payments.

Overall, the TON network represents an ambitious attempt to create a highly scalable and versatile blockchain platform that can support a wide range of decentralized applications and services. While the project has faced some early challenges, the community-driven development model and the network's technical capabilities suggest that TON may have the potential to become a significant player in the evolving blockchain landscape.