This report mainly compiles the early ecological development, public chain updates, and development of TON Blockchain, analyzing the data growth, narrative perspective, and development trends of the TON ecosystem.

In September 2023, Telegram and the TON Foundation officially announced their cooperation, integrating the self-custody encrypted wallet "TON Space" launched by TON for Telegram users. This marks the official collaboration between the two parties after Telegram abandoned its "Telegram Open Network" project in 2020 due to compliance issues. Leveraging the traffic entry point of the Telegram community platform has become the core competitiveness of TON.

The combination of Web2 traffic, Web3 users, and community media platforms with a high-performance public chain has attracted significant attention from investors to the early-stage TON ecosystem. This report mainly compiles the early ecological development, public chain updates and development, on-chain ecological data, related financing information, and analyzes the data growth, narrative perspective, and development trends of the TON ecosystem for reference.

This report is jointly written and published by Starbase and Blocktempo, and we would like to thank TON and TonX Studio for their content suggestions and support.

I. Project Fundamentals

1. Project Overview

1.1 Team Information

Steve Yun : Chairman of the TON Foundation

Currently, the TON Foundation (formerly the NewTON team) is led by Steve Yun, Chairman of the TON Foundation.

Steve Yun previously served as the Chief Operating Officer at Koinvestor.

Bill Qian : Board Member

In September 2022, Bill Qian, former head of global M&A at Binance and responsible for Binance Labs, announced joining the TON Foundation as a board member.

Andrew: Board Member

Former CEO of vk.com.

John Hyman: Chief Investment Officer at Telegram

John Hyman, former Chief Investment Advisor at Telegram, was involved in Telegram's fundraising efforts.

1.2 Related Funding Information

In April 2022, the TON Foundation announced the establishment of the $250 million TONcoin Fund, with major investors including the venture capital departments of cryptocurrency exchanges Huobi and Kucoin. The fund will be used to finance, incubate, hackathons, educational programs, and grants for projects developed on TON. (In 2023, the TON Accelerator Program will allocate $25 million to advance ecosystem development.)

In April 2022, the TON Foundation also announced receiving a total of 176 donations from the community, totaling approximately 527 million Toncoins (about 10.54% of the total supply).

1.3 Code Updates

As an open-source protocol, TON has over 30 contributors to the code. In the past month, 3 members made 28 commits.

1.4 Product/Technical Features

（1）Positioning

The Open Network (TON) is an early decentralized computing network based on blockchain designed by the Telegram team and outlined in a whitepaper by Telegram founder Durov. It aims to become a Web3.0 network that includes the TON blockchain, decentralized storage, I2P network, instant payments, and user-friendly decentralized applications.

TON Blockchain is a tightly coupled multi-blockchain system (referred to as a collection of blockchains) with support for infinite sharding and customizable workchains.

（2）Core Features

To achieve higher TPS, the core of TON Blockchain lies in supporting transaction parallel computation and verification, as well as asynchronous processing of smart contracts. TON Blockchain sets up three structural layers: Masterchain, Workchain, and Shardchain.

Masterchain: Contains general information about the protocol and current parameter values, validator and their stake information, workchain and shard information, and the most important recent workchain and shardchain block hash collection.
Workchain: The "main" workchain supports a maximum of 232 running registrations, which include transactions and smart contracts. Different workchains can have different "rules," such as different account address formats, different transaction formats, different smart contract virtual machines, different base currencies, etc. Workchains must comply with basic interoperability standards for convenient interaction between different workchains. (This model can be compared to PolkaDot.)
Shardchain: Each workchain supports 260 shardchains, and their corresponding shardchains. Shardchains have the same rules and block format as workchains, but are only responsible for a subset of accounts, i.e., the system's built-in sharding method. (Homogeneous chain)

Workchain and Masterchain share validation nodes. TON introduces a mainchain for endorsement, reducing transaction confirmation time to growing a new block, i.e., 5 seconds.

（3）Public Chain Comparison

In November, TON globally broadcasted a new high TPS of 104,715.

1.5 Economic Model and Token Utility

TON has an initial total supply of 5 billion coins. From June 2020 to June 2022, all TON was mined through PoW, accounting for 98.55% of the total supply, with the team holding the remaining 1.45%. Toncoin was initially concentrated in the hands of miners, resulting in a slightly weaker degree of decentralization. The top 100 whale addresses hold 49.51% of the total Toncoin supply.

Currently, in the TON ecosystem, PoS miners receive TON rewards through staking, operating similarly to ETH.

According to CoinMarketCap, as of November 3rd, the total supply of TON is 50.47 billion, with an annual inflation rate of 0.6%. The current circulating supply is 34.31 billion, with a market capitalization of approximately $70.9 billion, ranking 11th. In 2023, the TON ecosystem voted to approve a proposal to burn half of the transaction fees to reduce the circulating supply.

Further reference to other data, according to tontech.io, at the beginning of this year, a total of 1,081,391,286.092 tokens were frozen in the large miner freeze list. According to tonviewer data, the recent belever fund lock-up data is 1,317,379,088.44 tokens. Taking into account the above data, the total currently not in circulation is 2,398,770,374.53 tokens, the current total supply is 5,097,272,074.94 tokens, and the current total circulation is approximately 2,698,501,700.41 tokens. (Data source: https://tontech.io/stats/#/early-miners; https://tonviewer.com/Believers.ton) Toncoin is its native cryptocurrency, directly used in the Web2 giant social APP as a cryptocurrency, and can be considered as the "fiat currency" in the Telegram ecosystem. It is mainly used for: - Executing smart contracts and transaction fees, DAPP payment settlements, cross-chain transaction fees. - Maintaining proof of stake in the blockchain, lending to validators to earn interest. - Participating in TON on-chain governance. - Paying for other TON network components, such as domain payments (subsequent plans to enable TON proxy and decentralized storage payments). For example, currently, you can get a 50% discount on value-added services within Telegram by paying with TON; purchasing advertising services within Telegram; and for value-added services for phone numbers/domains, etc. ## 2. TON Development and Plans ### 2.1 Historical Development Milestones - **2018**: Telegram founded the Telegram Open Network project, raising approximately $1.7 billion in ICO. - **2019**: Telegram was accused by the SEC of illegal fundraising. - **2020**: During the waiting period for the SEC ruling, TON Labs forked and released the "Free TON" version (later renamed Everscale). - **May 2020**: The Telegram team agreed to pay a $18.5 million fine to the SEC, settled with the SEC, abandoned the Telegram Open Network case, and refunded the funds; at the same time, the developer community took over, with developers from a group called NewTON continuing the development. - **May 2021**: Establishment of the TON Foundation, and the renaming of Telegram Open Network to The Open Network. - **April 2022**: Establishment of a $250 million ecosystem fund. - **June 2022**: Completion of PoW mining and testnet 2 token distribution, with most of the token holding information unknown; at the same time, the TON network has fully transitioned to PoS.

September 2023: The native wallet TON Space will be integrated with Telegram accounts, allowing access to various Web3 applications based on TON.

2.2 Team Development Plan

The official TON development focus for the fourth quarter of 2023 includes:

In the direction of cross-chain bridges, the official TON cross-chain bridge supports the transfer of assets between TON and ETH, BSC, while cross-chain bridges for other chains are still under development.

II. TON Ecosystem Development Status

1. Developer Growth Status

As of November 2023, according to the Developer Report, there are a total of 6,279 full-time developers and 19,279 monthly active developers worldwide. Among them, there are 28 full-time TON developers (0.0045%) and 124 monthly active developers (0.0064%), indicating that it is still in a very early stage.

Source: https://www.developerreport.com/ecosystems/ton

2. TON Ecosystem Data Overview

2.1 Node Data

According to TonStat data, there are currently 357 validators distributed across 25 countries. The total staking amount for TON is approximately 460 million tokens, accounting for 9.11% of the total token supply.

2.2 Funding Scale

Staking Data:

According to TonStake data, the total staking amount on the TON network is approximately 3.95 million USD, with an APR of about 5.54%. There are 193 active validators out of 326. (Meaning: there are 326 validators, and the dPoS consensus algorithm divides the nodes into A and B rounds, with an AB rotation every 18 hours, currently 193 people). Long-term TON holders may consider staking.

TVL:

According to DeFiLlama data, the current TVL of TON is approximately 9.56 million USD, ranking 64th in the total public chain rankings. The top three projects are Tonstakers in the Liquid Staking track ($12.97 M), bemo ($8.45 M), and Megaton Finance in the DEX track ($3.38 M).

2.3 On-chain Users

According to TonStat data, there are 3,650,140 TON accounts and 856,000 active addresses.

The number of new on-chain addresses experienced rapid growth from September 2022 to January 2023, mainly due to a short-term peak in on-chain transactions on TON (reaching a peak of $2.6 on September 20th). There was also rapid growth in May 2023, possibly due to liquidity incentives from the foundation and the launch of the official cross-chain bridge. During the same period, the popularity of Telegram bots also increased, driving market attention to the TON ecosystem itself.

Over the past year, the number of active addresses in the TON ecosystem has steadily increased, showing accelerated growth in early 2023. The number of TON accounts has also grown to over 3.65 million, indicating that users are entering the ecosystem at a faster pace compared to developers.

3. Mainstream Tracks, Representative Samples, and Financing Status

The TON ecosystem is mainly constructed in the form of an app store. The data from ton.app categorizes the TON ecosystem into 19 categories, including wallets, games, NFTs, staking, cross-chain bridges, social, gambling, and other areas. The distribution is as follows:

Source: https://ton.app/categories

According to incomplete statistics, there are a total of 551 projects in the TON ecosystem. The top five categories with the most projects are: Jettons (TON network token standard), NFT collections, Telegram channels, TON-based utility tools, and CEX exchanges. Although there are a large number of projects, many of them include Telegram groups. Overall, the ecosystem is still in a very early stage.

Selected representative cases and valuation situations for reference:

Excluding more general categories, the noteworthy tracks in the current TON ecosystem include:

DeFi & LSD

The DeFi products on TON have not yet formed a leading effect, and the LSD protocol and related products are still in the blue ocean.

Game & Gambling

This track is conceptually similar to WeChat mini-games, characterized by being backed by a large traffic entry, simple operation, easy to get started, short game cycles, and with a pay-to-win effect. Most early TON game developments are laying out this model.

Anonymous & Privacy

From the Telegram resource trading platform Fragment, it can be seen that there is a user demand for anonymous and privacy-related services, including usernames, purchasing of anonymous accounts, and secondary trading functions. For example, Telegram users use the Fragment platform to purchase anonymous numbers through TON, register accounts without a SIM card, receive verification codes, greatly protecting user privacy and security. Currently, the prices of such anonymous accounts in the secondary market are growing rapidly.

Wallet

After the official hosted wallet and the built-in non-custodial wallet TON Space were launched, the previous wallets will face significant challenges. For example, Tonkeeper, an open-source non-custodial wallet based on TON, supports iOS and Android mobile systems. Currently, most TON applications support wallet QR code login, indicating good ecosystem compatibility.

Cross-chain Bridge

Currently, the TON official has built a cross-chain bridge for the exchange between TON and ETH and BSC, supporting asset interoperability. The cross-chain fees are slightly higher, and official cross-chain bridges for other chains are still under development. Third-party cross-chain bridges are being gradually connected. Although the current number is still relatively small, the ecosystem is supplemented with Telegram bot tools to provide a more convenient way to meet users' cross-chain needs.

Currently, third-party cross-chain bridges include Orbit Bridge, Wallet Bridge, Tontake Bridge, and XP.NETWORK:

Source: https://ton.app/bridges; https://tlg.pm/channels/95101f58-ca7c-4ef8-b05f-297a963ce42c/

In terms of the cross-chain ecosystem of the TON ecosystem, the official support for cross-chain and EVM is not proactive. From the perspective of traffic within the ecosystem, Telegram has a greater influence on TON itself. At the same time, the cross-chain needs of users within the TON ecosystem can be met through Telegram bots, channels, official, and third-party cross-chain bridges. The rise of bots, in particular, allows users to trade and cross-chain in a fast, low-threshold, and user-friendly manner, making cross-chain not a very difficult problem.

Currently, third-party cross-chain bridges are gradually connecting to TON. Although the current number is relatively small, the number of cross-chain projects in the cross-chain track itself is sufficient. For most cross-chain projects, this is an additional phenomenon. From the perspective of traffic, TON + Telegram is more comparable to platforms like Discord or Weibo, and the cross-chain needs of other ecosystems are much greater than the cross-chain needs of TON itself.

It can be seen that the TON ecosystem is influenced and inspired by Telegram Bots. Bot services have widely penetrated into multiple areas such as trading, airdrops, data, communities, and cross-chain, directly connecting with users in existing application scenarios, providing a solution to the once widely discussed issue of "mass adoption" in the crypto field to some extent. It is expected that Bot solutions will continue to expand in the TON ecosystem and integrate with other narratives and applications to provide users with a better Web3 experience.

In addition, compared to the "pure text command interaction" mode of TG Bot, the next generation of mainstream interaction forms will also include TWA (Telegram Web Apps). In the future, Telegram will penetrate the platform, users, and ecosystem in the form of mini-programs similar to WeChat.

4. Official Ecosystem Support

Currently, the TON network ecosystem is led by the TON Foundation.

In April 2022, the TON Foundation established the $250 million TONcoin Fund, which includes investments from Huobi, KuCoin, MEXC, DWF, and others. According to public information, the fund is used for construction on TON and will concentrate investments in key projects in various fields. The investment amount for each project is between $50,000 and $250,000.
According to official public information, a total of 31 projects were funded in 2022, 10 projects were funded in the second quarter of 2023, and 5 projects were funded in the third quarter, mainly focusing on infrastructure.
In 2023, TON launched a DeFi liquidity incentive program and hosted the Hack-a-TON hackathon to attract top developers to the TON ecosystem.
In May 2023, the TONcoin Fund launched a universal accelerator program, allocating $25 million from the TONcoin Fund for ecosystem development.

3. Where is the Entry Point for the TON Ecosystem?

1. Market Size Expectations

The TON ecosystem is backed by Telegram users. Although "deployed on Telegram" and "deployed on TON" are not currently the same concept, the possibility of future cooperation and traffic bias between the two cannot be ruled out.

In January 2023, the data and consulting company Statista compiled and released a Telegram data report, which is currently the most comprehensive and reliable Telegram data on the market (data as of January 2023), while also referring to official Telegram public information:

Telegram has 800 million monthly active users, with a registered user base of over 1.3 billion, and over 2.5 million new users registering on Telegram every day. This data is 1.4 times that of Twitter (556 million), 61% of WeChat (1.309 billion), 86% of Facebook Messenger (931 million), and exceeds TikTok (715 million).

Telegram MAU Growth Trend (Monthly Active Users, in billions)

Referring to the monthly average number of Telegram users in previous years, the growth rate of Telegram users is very stable, estimated to grow by 15%-30% annually. Based on this estimation, the active users of Telegram are expected to reach 960 million, 1.15 billion, and 1.38 billion in the next 3 years.

The TON Foundation expects to bring 30% of Telegram users to TON. With a rough conservative estimate, the expected user base to be introduced into the TON ecosystem is projected to be 288 million, 345 million, and 414 million. Currently, the total number of accounts on the TON chain is only 3.65 million, indicating significant room for development.

In addition to its social attributes, the "e-commerce platform" attribute of Telegram has become more prominent in recent years. According to report data, in 2020, the sales of goods exported from China through Telegram reached $12 million, and in 2021, 16% of Russian C2C buyers shopped on Telegram. Therefore, the ecological valuation of TON is more suitable for comparison with the scale and market value of platforms such as Meta and WeChat.

After the ecosystem stabilizes, different service categories such as app stores, advertising systems, privacy services, and membership services can be segmented and valued. According to report data, the number of paid Telegram users (as of August 2022) has reached 257,000.

2. TON Ecosystem: Where is the Entry Point?

Unlike other public chains, TON enters from the Web2 scene with a very low entry barrier for C-end users. The relatively less proactive attitude of the TON official towards EVM compatibility indicates the potential for TON to develop on its own based on the Web2 scene, without the need to rush to replicate the development path of native public chains in the crypto field. Therefore, the idea of observing the TON ecosystem will mainly focus on acquiring and converting traffic.

Referring to the development process of the WeChat ecosystem:

The entire WeChat ecosystem is based on social networking, providing information (social networking), and then providing services (payment). Services shape the scene, such as mini-programs, live broadcasts, etc., ultimately allowing information, traffic, and services to all settle within the ecosystem. Among them, WeChat Pay is an important development node, subsequently connecting various online and offline payment scenarios, ultimately forming a commercial closed loop.

If we compare Telegram and TON with the WeChat ecosystem, benefiting from its user base, the best entry point in the TON ecosystem will revolve around traffic, focusing on payment, mini-programs, content platforms, and more. As an application-layer project, more emphasis will be placed on acquiring and converting traffic, and key factors in the original crypto field such as institutional endorsement and team branding may be weakened. At the same time, compared to other Web2 traffic platforms, Telegram and the TON ecosystem are more likely to attract and retain Web3 users.

Relatively speaking, the combination of Telegram and the TON ecosystem is more likely to face competition from platforms like Discord entering the crypto space.(Discord also has the rise of bot tracks and a large user base, but due to factors such as user safety and regulatory issues, DC has not fully focused on Crypto)

Again, referring to the user profile in the report:

In terms of user behavior, the average user spends 4 hours on Telegram per month in 2022. 59.5% of Telegram users also use Twitter.
In terms of content, 85% of users follow news, 62% follow entertainment channels, 58% follow educational channels, 13% follow adult content, and 4% are involved in black/gray market activities (related to dark web channels).

At the same time, considering the rise of the Telegram bot track, it can be estimated that the TON ecosystem has the potential to become a role of the third, fourth, or even lower-tier trading platform within the crypto industry to attract and retain crypto users. In addition to the form of bots, the mainstream form of future apps may be TWA (Telegram Web Apps), similar to WeChat mini-programs.

Currently, the TON ecosystem is still in its early stages, and there have been no breakout projects yet. Various tracks and projects are still in the stage of occupying the ecosystem or competing for market share.

The financial attribute demand of DeFi (DEX, lending) in the TON ecosystem may be relatively weak. Compared to WeChat, the user trading habits may involve small amounts but high frequency. In comparison, the TON ecosystem is naturally more suitable for entry points such as payment, bots, games, and social, and is more suitable for the narrative logic of application-side outbreaks. Therefore, due to the urgent need for traffic acquisition, in the future, other public chains may actively cross-chain with TON.

3. Risks

(1) Official support and endorsement from Telegram

Telegram is not limited to the TON ecosystem, and it allows various chains and protocols to integrate more conveniently, such as EVM ecosystem trading bots. Currently, the deployment on Telegram and the deployment on TON are still different concepts, and the degree of cooperation and the landing situation of traffic bias between the two need to be considered, as well as the openness of the TON ecosystem itself.

(2) Compliance process of TON

TON has sufficient users and traffic, but continued development still needs to follow a compliant path. TON's headquarters relocation to Zug, Switzerland, is generally seen as related to the generally positive attitude of the Swiss authorities towards the cryptocurrency industry.

(3) Degree of centralization

TON was initially criticized for its overly centralized token distribution, and later freezing was seen as a way to address this, but it is still considered to have a centralization suspicion.

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TON Ecology Report: Trends and Opportunities, How to Find Entry Points in the TON Ecosystem