Preface

As a research community WolfDAO that strives to understand market trends and deeply cultivate the blockchain, we have been closely following the rapid development and growth of the TON ecosystem. While reading related reports, we deeply feel that there is still a lot of untapped potential in the TON ecosystem, which is the reason for writing this series of reports.

TON not only has a huge user market, supporting its diverse innovation and emerging applications, but also brings tremendous impact and unlimited possibilities to the entire market.

In the first part "In-depth Analysis of TON Chain: Revealing the Core Strength of Future Blockchain Giants," we delve into the technical advantages, market performance, and development potential of the TON blockchain, revealing to readers the core strength of TON as a future blockchain giant.

You are currently reading the second part of the TON series of special reports; this report "TON Ecosystem Panorama: Uncovering Star Projects on the Chain and Future Opportunities" will showcase the outstanding performance of TON in decentralized finance, NFT, games, and other fields, as well as the huge potential it brings through detailed data analysis and case studies.

At the same time, in the third part "Compliance and Risk Assessment of TON Chain: Coexistence of Prospects and Challenges," we will delve into the compliance and regulatory challenges faced by TON while rapidly developing and their impact on future development. Will the rolling wheel of fortune stop due to the obstruction of the mountain? Please look forward to our in-depth analysis of this critical issue, to comprehensively evaluate the prospects and risks of TON for you.

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Overview of TON Ecosystem

In the TON ecosystem, there are 19 race categories, each covering different types of applications and services. These categories include CEX exchanges, DEX exchanges, Staking, wallets, explorers, bridges, utilities, channels, NFT collections, chat, social, gambling, Jettons, games, VPN, development tools, shopping, and launch platforms. Excluding the Jettons category with many duplicates, the most attention is on the gaming track, which has 128 projects and has become one of the most important development areas in the TON ecosystem.

Ton Ecosystem App Classification Source: TonApp

One of the key events driving the popularity of TON is the launch and popularity of the "Taptoearn" game Notcoin. This low-threshold, high-feedback game mode effectively attracted a large number of users and became the flagship project in TON's market promotion. However, relying on a single track is difficult to form a good feedback loop for ecosystem nurturing. Therefore, a healthy ecosystem requires balanced development, covering multiple key tracks. In the current ecosystem development, active developer communities, strong technical support, and a good user market are needed to achieve prosperity. The following text will provide a detailed analysis and discussion of these factors.

TON Ecosystem Developer Community

1. Developer Community Size and Activity

According to Artemis's statistical data, the number of weekly active core developers in TON has remained at around 50, with approximately 300 core commits per week. Compared to other public chain projects such as Solana and Aptos, the TON development community still has significant room for growth.

TON Weekly Active Core Developer Count Source: Artemis

TON Weekly Core Commit Count Source: Artemis

Current Status and Future Prospects of TON Developer Community

The main communication channel for TON developers is concentrated on Telegram, with high activity and participation. Currently, the English developer channel on Telegram has 10,548 users, with an average of 600 messages discussing code and deployment issues every day. At the same time, the Chinese developer channel on Telegram has 6,716 users, with an average of 400 messages discussing various technical topics daily.

Although TON has a relatively short online time, its ecosystem is relatively complete and active, and many popular projects have emerged. Therefore, we hold a very positive attitude towards the future development prospects of TON. TON has a strong technical foundation and an active developer community, laying a solid foundation for its further expansion and innovation.

2. Support Programs and Incentive Mechanisms (Detailed Introduction to TON's Support and Incentive Measures for Developers)

Analysis and Prospects of TON Developer Incentive Program

TON's developer incentive program is operated by the TON Foundation. Established in Switzerland in 2023, the TON Foundation is a non-profit organization fully funded by community donations, with a mission to serve the interests of the community by supporting various initiatives that contribute to the mission of an open network.

It is worth noting that the TON Foundation, without directly controlling TON technology, authorizes the operation of TON projects and is one of the many network contributors in the decentralized TON community. TON operates on the basis of open-source code, allowing anyone to contribute without single control authority.

TON's current incentive program is mainly divided into two categories:

• Token incentives for specific projects and communities

The TON Foundation has launched token incentives for specific projects or communities. For example, the recently announced TON/USDT liquidity pool incentive plan, worth $30 million. In addition, John, the head of the TON Foundation in the Asia-Pacific region, announced in "TON's achievement in the Asian Pacific region and TON society HK" that 1 million TON tokens will be provided as an incentive to developers of MiniApps in the Chinese-speaking region.

• OpenLeague

The TON Foundation launched the first season of the OpenLeague on April 1, 2024, lasting for one month, distributing 30 million TON tokens (currently worth approximately $200 million) as an ecological incentive. TON ecosystem projects compete monthly to win huge prizes, and TON chain users can participate in the event to receive generous rewards. This competition includes the following four parts:

• * The League
  • Token mining
  • Tasks and airdrops
  • Liquidity pool addition

Each part will attract participants with different identities, including developers and users, to enhance the activity and diversity of the entire ecosystem.

TON Ecosystem Node Operators

Global Distribution of TON Validation Nodes Source: TON Official Website

1. Node Distribution

TON validation nodes are distributed globally, mainly concentrated in Europe and the United States. As of June 3, there are over 300 nodes, with nearly 500 million TON tokens staked, accounting for nearly 20% of the total circulation.

2. Node Roles

TON adopts a Proof of Stake (PoS) consensus model, which means the security and stability of the network are maintained by a group of network validators. Anyone can become a validator and receive Toncoin as a reward for contributing to network security.

The validators are responsible for validating all user transactions, and if all validators reach consensus, the transaction is considered valid and will be included in the blockchain. Invalid transactions will be rejected.

Users pay a small amount of Ton as a reward for the validators' work in the transaction, and this amount is proportionally distributed to the validators selected during the validation cycle. In addition, new tokens are generated during the validation process, which are also distributed to the validators. The overall annual inflation rate is approximately 0.5%. Validators with an average staking amount receive an average daily income of about 120 Ton.

To receive block rewards, validators need to:

1. Successfully submit the election through validator election, requiring a staking amount of at least 300,000 Ton, and win the election with at least 400,000 Ton, while not being excluded due to reaching the maximum number of validators.
2. Successfully validate blocks throughout the validation cycle.

Penalty Mechanism

The following two behaviors may result in penalties for validators:

1. Inactivity: Prolonged non-participation in block creation and transaction signing during the validation cycle.
2. Malicious misconduct.

If a validator remains inactive or engages in malicious behavior during the validation round, they may be fined. If any network participant believes a validator's behavior is inappropriate, they can file a complaint. During the complaint process, the complainant must provide encrypted evidence of the misconduct for all validators to vote on. All validators running on the network will check the validity of the complaint and collectively vote on whether to pursue the complaint. Once 66% of validators agree, the validator will be heavily fined, and the corresponding amount will be deducted from their total staking.

3. Decentralization Level

The early tokens of TON were heavily concentrated in the hands of miners, and this concentration trend has continued to a certain extent. As of June 20, 2024, the number of holding addresses for TON is 3,600,868. Among them,

• The top 10 holding addresses account for 61.26% of the tokens.
• The top 20 holding addresses account for 70.72% of the tokens.
• The top 50 holding addresses account for 85.88% of the tokens.
• The top 100 holding addresses account for as much as 92.33% of the tokens.

These data indicate that although TON is continuously achieving token decentralization, large holders still have a significant influence on the entire network.

Compared to other mainstream public chains, TON's token distribution appears slightly more concentrated. For example, many mature blockchain projects have a more decentralized token distribution, with the percentage of tokens held by the top 100 holders usually significantly lower than TON. This level of concentration may bring higher centralization risks, especially in decision-making processes related to network governance, where a few large holders can have a significant impact on voting results.

Considerations may need to include:

1. Network Security: While a smaller number of major holders may enhance the early stability of the network, it also means that the malicious behavior of a few individuals could have a significant impact on the network.
2. Decentralized Governance: A high level of concentration may affect the fairness and democracy of on-chain governance. A few holders have the ability to control a large amount of voting power, thereby influencing major decisions.
3. Long-Term Healthy Development: To ensure the healthy and long-term development of the network, TON needs to continue efforts to increase the decentralization of its tokens. Incentivizing more new users and small holders to participate in the network can help increase decentralization and enhance the network's resistance to censorship.
4. Dynamic Monitoring and Adjustment: Continuously monitor the trend of token concentration and dynamically adjust through economic incentives and technical means (such as delegated proof of stake mechanisms, token distribution, etc.) to ensure a balance between decentralization and security.

User and Application Data Analysis in the Ecosystem

1. User Analysis

According to Artemis's data, TON (The Open Network) has recently shown significant growth, mainly due to the popularity of ecosystem projects such as NotCoin and Catizen. The number of new registered wallets, active addresses, and daily transaction volume on TON has all seen substantial increases.

From March 20, 2024, to June 18, 2024, the daily active address count on TON has remained at a high level, with an average of about 500,000 daily active addresses. It is noteworthy that during this period, the daily transaction volume on TON has exceeded 5 million multiple times, especially during certain peak periods, with daily transaction volumes even approaching or exceeding 8 million. Additionally, as of June 18, the daily transaction volume on TON has stabilized at around 5 million.

TON Daily Transaction Volume and Daily Active Addresses Source: Artemis

Compared to its main competitor Solana, TON has shown relatively higher growth potential in user activity and transaction volume. Solana's average daily active address count is about 1.6 million, and its daily transaction volume mostly stabilizes at around 350,000, significantly lower than TON. This data indicates that TON has not only surpassed Solana in user activity in the past few months but also demonstrated outstanding transaction volume.

In terms of decentralization, TON has shown a healthy development trend in its ecosystem through a large number of active addresses and high-frequency transactions. This data reflects the strong appeal and broad user base of TON in decentralized applications and services. In contrast, while Solana also has strong technological and application prospects, its relatively lower active users and transaction volume indicate certain challenges in the current competitive stage.

Solana Transaction Volume and Daily Active Addresses Source: Artemis

TON has performed excellently in terms of new user growth, active addresses, and transaction volume, demonstrating its enormous potential in blockchain technology applications and user ecosystem development. With the continued progress of projects such as NotCoin and Catizen, the future development prospects of TON are promising.

2. TVL Data Analysis

Compared to the popularity of small games on TON, the performance of DeFi applications on TON is relatively lackluster. As of now, the total value locked (TVL) on TON is $600 million. Although there has been explosive growth compared to the beginning of the year, in comparison to TON's current total market value ($17.042 billion), its TVL is not even one-tenth of other leading public chains. This phenomenon indicates that most of the user traffic on TON currently comes from small games on Telegram such as Notcoin and Citizen, and the more fundamental infrastructure and DeFi applications within the TON ecosystem have not yet formed significant attraction for users.

The data from the chart shows that TON's TVL showed a significant upward trend from the end of 2023 to the beginning of 2024, especially in recent times. The stablecoin market value ($44.928 billion) and 24-hour trading volume ($24.59 billion) also demonstrate the potential activity of some applications within the TON ecosystem. However, compared to other Layer1-level public chains in the entire crypto market, such as Ethereum and Binance Smart Chain (BSC), TON is still in the early stages of development in the DeFi field.

Although TON is still a very young Layer1 public chain, its future ecological development potential is still very promising. Considering its large user base backed by Telegram, TON has the potential to gradually attract more DeFi projects and infrastructure, thereby enhancing the diversity and user participation in its ecosystem.

Overall, TON's current ecosystem performance relies more on driving users through small games, and DeFi applications still need further development.

The TON ecosystem demonstrates strong development potential but also faces technical challenges and ecological health issues. As TON continues to develop in areas such as cross-chain interoperability, DeFi, enterprise-level applications, and privacy technology, its ecosystem will continue to expand and deepen.

Market Development Expectations

1. Market Changes Seen Through Wallet Addresses

Cumulative Wallet Count Source: [@obchakevich] TONERC20

TON has made significant progress in market expansion, with stable new users and continuous growth in cumulative wallet count, demonstrating its market attractiveness and user loyalty. According to the latest data, TON's market expansion shows a positive development trend.

In terms of new users, observation data from May 20 to June 16 shows that the daily new wallet count has remained at a relatively stable level, especially reaching peak values around June 4 and June 13. The daily new wallet count has reached approximately 200 on multiple days, indicating TON's excellent performance in market promotion and user acquisition, continuously attracting new users.

Furthermore, the cumulative wallet count continues to rise. The data on cumulative wallet count, indicated by the pink line, shows a trend of continuous growth. As of June 16, the cumulative wallet count has exceeded 4,000. This indicates the continuous influx of new users and good retention of existing users, expanding the user base of the TON ecosystem and demonstrating strong growth momentum.

TON User Count Source: [@obchakevich] / TONERC20

TON has a steadily growing user base. The continuous increase in the total user count indicates that the TON ecosystem continues to attract new users and has a high retention rate for existing users. Although there are fluctuations in the daily new user count, there is an overall stable growth trend, reflecting TON's strong performance in user attraction and retention.

Additionally, user activity remains at a high level. Despite fluctuations in the activity of existing and new users, it remains generally high, indicating the strong user stickiness of the TON ecosystem. Sustaining user activity is crucial for the healthy development of the ecosystem, and TON excels in this aspect.

2. Ecosystem Expansion

• Diverse Application Scenarios: TON's innovation in applications across multiple areas such as DeFi, NFTs, supply chain management, and digital identity has greatly expanded the application scope of its ecosystem. These application scenarios not only attract more users but also promote the activity and participation of existing users.
• Strong Developer Support: TON has attracted a large number of developers to join its ecosystem by providing rich development tools and resources, as well as incentive programs and technical support. Active developer participation drives technological innovation and application implementation, further enhancing the vitality and competitiveness of the TON ecosystem.

3. Future Development Expectations

• Continued User Growth: Based on the current growth trend, TON is expected to continue attracting more new users in the future and maintain a high retention rate for existing users. With the continuous expansion of the user base, TON's market influence will further increase.
• Robust Ecosystem Development: TON's diverse application scenarios and strong developer support will ensure the robust development of its ecosystem. In the future, TON is expected to play a key role in more industries and application scenarios, driving the popularization and development of blockchain technology.

Key Challenges Facing the TON Ecosystem

Despite demonstrating strong potential in technology and applications, TON blockchain still faces some key challenges in its future development. As part of the TON special series, this report mainly analyzes the historical ecological challenges and ecosystem health. For a basic understanding of the challenges, readers can refer to the first article in the TON special series by WolfDAO, titled "In-depth Analysis of TON Chain: Revealing the Core Strength of Future Blockchain Giants"; and for an analysis of compliance and regulatory risks and development trend risks, readers can look forward to the third article in the TON special series by WolfDAO, titled "Compliance Path and Risk Assessment of TON Chain: Coexistence of Prospects and Challenges".

1. Historical Ecological Challenges

TON Historical Development Roadmap Source: TON Official Website

According to TON's historical roadmap, there are significant issues and shortcomings in the development process of this ecosystem:

Underdevelopment and Issues

1. Early Regulatory Issues and Legal Barriers (2019 - 2020):

• In October 2019, the U.S. Securities and Exchange Commission (SEC) sued Telegram, accusing it of conducting an unregistered securities sale. This regulatory issue severely affected the progress of the TON project, leading Telegram to postpone the launch of TON and wait for the legal issues to be resolved.
• In May 2020, the Telegram team announced the cessation of TON development and support for testnet2, paying a $18.5 million settlement fee and agreeing to refund the funds to investors. This led to the project's suspension and uncertainty, affecting community confidence.

2. Turnover of Development Teams and Project Restructuring (2020 - 2021):

• After Telegram's exit, a small open-source development team, NewTON, took over to conduct in-depth research on code, architecture, and documentation, and restarted development. Although this transition maintained the project's continuity, there may have been issues with progress delays and resource reallocation during the handover of development teams.

3. Gradual Improvement of Infrastructure and Technology (2021-2023):

• In 2021 and 2022, TON introduced TONEthereum and TONBSC (Binance Smart Chain) bridges and launched features such as TONDNS, TONProxy, and TONPayments. While these new features enhanced the TON ecosystem, the gradual introduction of new technologies may also bring compatibility and stability issues.
• In the first half of 2023, TON introduced new features such as DAO & Liquidity Staking Contracts, decentralized encrypted messages, and TVM updates. Although these complex technical updates enriched the ecosystem, they also raised higher requirements for development and maintenance.

4. Ecosystem Development and Integration (2023 and beyond):

• In 2023, projects including integration with Telegram (Telegram×TON), TONSpace, WalletPay, and collaborations with Tencent Cloud were initiated. While these collaborations help expand the usage and user base, challenges in integrating different platforms and systems still exist, which may affect user experience and system stability.

TON's ecosystem has faced challenges in regulatory issues, team turnover, technological updates, and ecosystem integration during its development. Despite some shortcomings and issues, TON is striving to improve its ecosystem through continuous technological updates and strategic partnerships to achieve broader applications and greater stability. To overcome these challenges, TON needs to further strengthen its technical research and development, optimize user experience, and actively address regulatory and legal issues. This effort is evident in the team's ongoing efforts to improve the development roadmap.

2. Ecosystem Health

1. User Growth and Retention

• User Growth and Retention: TON's daily active addresses have remained around 500,000, with daily transaction volume exceeding 5 million multiple times, demonstrating strong user growth momentum. Compared to Solana during the same period, TON has performed exceptionally well, as user activity and transaction volume indicate TON's outstanding performance in user growth. Additionally, the stable number of new wallet addresses and continuous growth in cumulative wallet count reflect good user retention. Overall, the high user activity demonstrates the strong user stickiness of the TON ecosystem, laying a solid foundation for its long-term development.
• User Stickiness: While TON's ecosystem has shown excellent user growth, maintaining high user activity and stickiness remains a challenge. Continuous improvement of user experience and the introduction of new features are needed to enhance user engagement and satisfaction.
• Market Competition: The blockchain industry is highly competitive, and TON needs to continue investing in market promotion and user acquisition to maintain its competitive advantage and market share.

2. Ecosystem Diversity

• Diverse Ecosystem: TON's ecosystem covers 19 tracks, including DeFi, NFTs, gaming, and other areas, demonstrating a rich variety of application scenarios and showing a positive trend in ecosystem diversity. Particularly in the gaming track, the successful launch of projects like Notcoin has attracted a large number of users, proving the potential and attractiveness of this area. However, the TVL (Total Value Locked) in the DeFi sector is relatively low, indicating the need for further development of infrastructure and applications to attract more users and capital, thereby enhancing the overall diversity and health of the ecosystem.
• Expansion of Application Scenarios: While TON has made significant progress in DeFi, NFTs, and other areas, it needs to further expand into additional application scenarios such as supply chain management, digital identity, and the Internet of Things to enhance the diversity and richness of the ecosystem.
• Project Quality: Attracting and supporting high-quality projects to join the TON ecosystem, while avoiding the impact of low-quality or dishonest projects, is essential to ensure the healthy development of the ecosystem.

3. Community Governance

• Centralization Risk: TON uses a PoS (Proof of Stake) consensus mechanism and has over 300 globally distributed validator nodes, ensuring network security and decentralization. However, the early concentration of token holdings, with the top 100 addresses holding over 92% of the tokens, poses a certain centralization risk that needs to be mitigated through further governance optimization. Additionally, the TON Foundation provides various developer incentive programs, such as token rewards and ecosystem competitions, to attract more developers to participate in the TON ecosystem, driving technological innovation and application development. The high activity of the developer community provides strong technical support and momentum for ecosystem development.
• Decentralized Governance: Advancing the development of DAOs and achieving decentralized community governance requires a transparent, fair, and efficient governance mechanism. Balancing the interests of all parties and improving the participation and decision-making quality of community members is a key challenge.
• Incentive Mechanisms: Designing reasonable incentive mechanisms to stimulate the enthusiasm and creativity of community members, driving the autonomous development and innovation of the ecosystem.

4. Legal and Regulatory

• Legal Litigation and Settlement: In 2019, the U.S. Securities and Exchange Commission (SEC) sued Telegram, alleging that its TON project involved an unregistered securities sale. This lawsuit significantly affected the project's progress and led to Telegram abandoning the TON project in 2020, paying an $18.5 million settlement fee. This not only brought legal and financial pressure but also affected community confidence.
• Regulatory Uncertainty: Early legal issues with the SEC and Telegram's exit from the project have posed significant challenges and uncertainties for the TON ecosystem. The subsequent takeover by the new open-source development team, NewTON, may have also caused project delays and resource reallocation issues.
• Compliance: The legal and regulatory environment for blockchain technology is complex and constantly changing globally. TON needs to ensure that its technology and applications comply with laws and regulations in different countries and regions to avoid potential legal risks.
• Policy Changes: Constantly monitoring and responding to changes in global blockchain policies and regulatory environments, and adjusting strategies and measures in a timely manner to ensure that TON's development complies with regulatory requirements.

Conclusion

TON's innovation and development in technology, market, and ecosystem have set a new benchmark for the blockchain industry. Despite facing technological challenges and market competition, TON has demonstrated the potential to become a leading global blockchain platform through continuous technological progress, application innovation, and ecosystem development. In the future, TON is expected to play a key role in more industries and application scenarios, driving the popularization and development of blockchain technology. For a detailed analysis of ecosystem projects, please read the second part of this report, "TON Ecosystem Overview: Exploring Star Projects and Future Opportunities".

Despite these legal and regulatory challenges, the TON ecosystem continues to develop and improve. However, these early legal issues and regulatory barriers still have an impact on the trust and stability of the ecosystem, requiring ongoing legal and compliance management to ensure the healthy operation of the ecosystem.

Nevertheless, TON previously exited the market due to regulatory issues. In the current thriving development, compliance and regulation are key considerations for investors. Whether the rolling wheel will stop due to the obstruction of the mountain is a point we will further explore in the next report.

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We hope that through our series of reports, we can explore all aspects of the TON ecosystem in depth, from technical architecture, ecosystem participants, leading projects, to compliance risks, and more. We are committed to revealing TON's unique advantages, predicting its future development direction, and helping everyone better understand this emerging field.

At the same time, we look forward to inspiring readers' curiosity and exploration, jointly discovering more highlights and opportunities worth paying attention to in the TON ecosystem. Only through joint efforts can we more effectively promote the practical application and development of blockchain technology. Let's explore the unknown, discover new possibilities, and embrace a broader world together. We also thank our research team:

Quick Read:

Part 1: "In-depth Analysis of TON Chain: Revealing the Core Strength of Future Blockchain Giants"

Copyright: This article is created and published by WolfDAO (@10xWolfdao) and enjoys copyright. The content is for learning, communication, and interactive research purposes only. If reproduced or quoted, please indicate the source;

Contribution: Mat / Riffi / Sylvia

Editing and Proofreading: Punko

Special Thanks: Thanks to the above contributors for their outstanding contributions to this issue's content.

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