Initial supply increased by only 100 million tokens in the past four years.
(4) Current circulation: 2.4 billion tokens
The circulation rate is 47.61%, which is relatively low compared to the top ten tokens in terms of market value. This indicates that there is a higher amount of short-term lock-up, which is beneficial for price increase. However, in the long term, there is significant selling pressure.
(5) Current price: $7 per token (as of June 9th, 2024)
In June 2022, TON reached its lowest price of $0.73. After a bear market cycle, the token price has increased sevenfold in the current bull market cycle.
(6) Circulating market cap: $17 billion
Compared to the Solana public chain, which is also driven by strong capital, the circulating market cap of SOL tokens is $70 billion. Therefore, TON’s circulating market cap is not considered large.
(7) Total market cap: $35.8 billion
During the last peak of the bull market, SOL’s fully diluted market cap was $150 billion. Currently, it is $90 billion. Therefore, TON’s fully diluted market cap still has a high potential.
3.2 Token Distribution
TON’s token distribution has gone through ups and downs. Initially, a portion of the tokens was sold through an Initial Coin Offering (ICO). However, after regulatory intervention, the team adopted a more traditional Proof of Work (PoW) model for the initial token distribution, using mining hardware to distribute tokens fairly.
Since TON was designed with Proof of Stake (PoS) as the underlying consensus, the core team embedded a “Giver contract” in TON to implement the PoW token distribution model.
The total supply of tokens distributed through PoW will account for 98.55% of the total supply, while the remaining 1.45% will be held by the core development team.
In June 2022, the last TON token from a total of 5 billion tokens in the contract was successfully mined, marking the completion of the initial token distribution for TON.
Although the token distribution model used PoW, the early mining was mainly done by the TON project team, resulting in a concentration of TON tokens in the hands of the team. The large token issuance and concentrated token distribution are among the core issues faced by TON, which is a historical burden from the era of Telegram Open Network. However, the TON Foundation and the community are making efforts to address this issue.
On July 28th, 2023, the TON community, consisting of members from different language backgrounds, established the TON Believer Fund (TBF).
This organization launched a special smart contract that divided interactive funds into two parts: donations and deposits. All donations would be directly rewarded as additional deposits, while deposits would go through a 24-month lock-up period and then enter a 36-month linear unlocking period.
The fund received strong support from the TON Foundation on August 18th. The foundation highly recognized this self-initiated token economic optimization behavior and publicly pledged to donate 1 million TON tokens to support it.
Thanks to this support, TBF has experienced rapid development. Recent blockchain data shows that TBF’s contract address has locked up as many as 970 million TON tokens, with an annualized deposit interest rate exceeding 10%, which is almost double the yield of other staking methods on the mainnet.
3.3 Token Use Cases
TON tokens have two main use cases: public chain fees and Telegram service fees.
Telegram has built a platform called Fragment, where users can purchase various Telegram services with TON tokens. These services mainly include four scenarios:
(1) Purchasing usernames: Each username is an NFT that can be freely traded. Usernames are mainly for social showcasing purposes.
(2) Purchasing phone numbers: Registering a Telegram account requires a phone number, but users can use Toncoin on the Fragment blockchain to purchase anonymous numbers, enhancing privacy.
(3) Purchasing membership: This includes multiple advanced features within the Telegram application, such as more cloud storage, voice-to-text conversion, real-time translation, etc.
(4) Purchasing advertising services: Advertisers use TON tokens to purchase advertising services and can distribute the funds between Telegram and content creators.
04 Ecological Analysis
Wallets serve as the gateway, DeFi as the infrastructure, and games as the biggest advantage of the TON public chain.
4.1 Wallets
Wallets are the entry point for users to enter the public chain ecosystem and the first application they use.
Therefore, the user experience of wallets determines the threshold for users to enter the public chain ecosystem.
Currently, Telegram has integrated a wallet bot called Wallet.
Wallet Bot is very simple and smooth, and its appearance marks a milestone in Telegram’s transition to Web3. Since then, a large number of Telegram bots have emerged, and currently, the popular trend is various cryptocurrency trading bots that help users improve trading efficiency.
Wallet is a hosted wallet, and TON Space is an unhosted wallet expanded within Wallet.
When users use Wallet, they are actually assigned an address for their Telegram account by the application. This address is still controlled by the Wallet application’s project team, so it is a hosted wallet.
The advantage of a hosted wallet is that users do not need to understand the underlying logic of the blockchain. They can directly use the wallet address for payment and receipt. Additionally, when transferring funds to other Telegram contacts, no fees are charged, and the transaction is processed in real-time because these transactions are not recorded on the blockchain but rather as data flows. Wallet maintains account records among different users’ accounts.
However, the disadvantages are also apparent. If a user’s Telegram account is compromised or if the Wallet project team runs away with the funds, the user’s assets will be completely lost. Additionally, hosted wallets cannot interact with various applications on the TON public chain.
Therefore, TON Space, an unhosted wallet, has been developed within the Wallet application. Users need to secure their private keys, and they have complete control over their assets. Even if a user’s Telegram account is compromised or if the Wallet project team runs away, the user’s assets will not be lost. With an unhosted wallet, users can interact with various applications on the TON public chain.
Apart from the Wallet Bot wallet, there are several other popular wallets in the TON ecosystem, including Tonkeeper and MyTonWallet. However, these wallets do not have the same level of integration with Telegram as Wallet. Wallet has prominent entry points in Telegram’s personal information page, chat box, and wallet connection components.
The maturity of wallet applications lays the foundation for the development of various decentralized applications in the TON ecosystem. On the other hand, wallet applications meet Telegram’s payment needs and supplement its payment section. Payment is the most basic, explicit, and high-frequency financial scenario.
4.2 DeFi
Looking at the TVL (Total Value Locked) trend of the TON public chain’s DeFi applications, it can be seen that TON has experienced rapid growth since March of this year.
TVL only includes DeFi applications, but DeFi is the infrastructure of the public chain, representing its activity and capital. Therefore, TON’s ecosystem is rapidly rising and experiencing explosive growth.
What happened in March?
The TON Foundation started actively promoting the development of the TON public chain, such as announcing that the Telegram advertising platform would accept payments in Toncoin, distributing 30 million TON tokens for liquidity incentives, and partnering with Tether to launch the USDT stablecoin on the TON public chain. These significant moves have been extremely positive for the TON public chain ecosystem.
Furthermore, the current market is in the early stages of a bull market, but lacks exciting narratives. The integration of the TON public chain with the social media giant Telegram provides an attractive story, which has attracted attention from the market.
It can be said that the concentrated outbreak of the TON ecosystem in the past few months is the result of a combination of factors such as timing, favorable conditions, and human factors.
DeFi (Decentralized Finance) is an essential application for public chains.
Once assets are acquired, various financial instruments are needed.
The three pillars of public chains are exchanges, lending platforms, and stablecoins.
Looking at the top ten DeFi applications in the TON ecosystem based on TVL, it covers exchanges, derivatives, lending, and other applications.
More importantly, the top DeFi applications are liquidity staking, which is a typical financial application for PoS public chains. The flagship financial application in the Ethereum ecosystem, Lido, is also a liquidity staking platform.
4.3 Games
Games are the direction where TON can truly leverage the features of Telegram.
Currently, the TON Foundation is actively promoting a game project called Notcoin, aiming to make it a benchmark in the TON ecosystem.
Notcoin is a Click-to-Earn project on the TON ecosystem, utilizing Telegram bots to mine tokens by clicking on the screen of a mobile phone. Completing tasks such as check-ins, following Twitter accounts, and inviting friends can increase the number of clicks.
Due to its simple and straightforward model, Notcoin has attracted a large number of users, with over 35 million users and over 5 million daily active users. Of course, it remains to be seen how many users can be retained, but this is a remarkable experimental attempt.
Compared to other GameFi projects, this user base is definitely at the top. For example, the leading blockchain game Axie Infinity had a peak daily active users of 2.7 million, which is far lower than Notcoin’s 5 million.
NOT tokens have also been listed on the two largest global exchanges, Binance and Huobi. After being listed on top-tier exchanges, Notcoin’s market value has continued to rise, attracting more users to the TON ecosystem.
In addition to Notcoin, there are many similar games, such as the popular cat breeding game Citizen and the hamster game Hamster Kombat. These games are similar to Notcoin, where users can earn tokens by clicking and completing tasks.
The game track in the TON ecosystem is still in its early stages, and the game models are too simple, resulting in poor user retention. Only by deeply integrating with Telegram and leveraging the social relationships within Telegram can more interesting games be developed, such as the once-popular farming and parking games in China, as well as enduring card games, and so on.
05 Future Development
Compared to other public chain ecosystems, the TON public chain has three core advantages:
(1) Active promoters
The TON Foundation and its related organizations have been actively promoting the development of the TON public chain ecosystem.
In the development of public chain ecosystems, there are two schools of thought:
One is laissez-faire, where the public chain project team does not intervene too much in the development of the public chain. Instead, they mainly build a fully free market for the ecosystem and community to develop autonomously. A typical example is Arbitrum, which has become one of Ethereum’s top Layer2 solutions with a TVL of over $18 billion.
The other approach is strong guidance, where the public chain project team leads the development direction of the ecosystem. This approach allows for concentrated resource development and faster development speed. However, the downside is that it suppresses spontaneous innovation in the ecosystem. Solana is a typical example, currently one of the top five public chains by market value.
TON adopts the second development model.
(2) Well-developed infrastructure
The TON public chain’s project team has been proactive and dominant. Some infrastructure applications in the public chain ecosystem have been embedded in the TON blockchain from the beginning, rather than being separate applications built on top of the blockchain. These include decentralized storage, proxy layers, DNS domains, payments, and websites, among others.
(3) User traffic
Currently, Ethereum has less than 1 million daily active users, while Telegram has 400 million daily active users and over 900 million monthly active users. Therefore, the TON public chain has a huge user base. What TON needs to do is to build various application scenarios to successfully transition these users into the Web3 world.
The biggest challenge for the future development of the TON ecosystem is often thought to be the potential fraud risks associated with encrypted social media, as the freedom of the ecosystem may exacerbate various illegal activities. However, the reality is that blockchain technology can actually improve the ability to track and deal with criminal activities. Blockchain is a completely transparent and public database, where every transaction is permanently recorded on the chain. Therefore, it is easier to trace various illegal transactions.
Compared to fraud issues, the complexity of cryptocurrencies is the main obstacle to their widespread adoption by new users. Therefore, for TON, the strong guidance from the project team, combined with capital support and deep integration with Telegram, has essentially completed the project’s bootstrapping phase. The biggest challenge for TON now is how to successfully transition hundreds of millions of users into the Web3 world. This is also the most imaginative narrative for TON.
