Over the past year, Telegram affiliated blockchain - The Open Network (TON) Layer 1 has drawn significant attention. With Telegram's massive 900 million monthly active users (MAUs), the platform represents one of the largest and most engaged distribution channels in the digital world. Telegram, often perceived as more secure and protective of user privacy, has established itself as a critical communication tool for the global crypto community. Its reach and influence have made it a prime candidate for spearheading the next wave of Web3 adoption.

The origins of TON network trace back to the vision of the Durov brothers, the founders of Telegram. Originally conceived as a blockchain that could seamlessly integrate with Telegram to drive the in-app economy, TON aimed to offer high scalability, speed, and efficiency. The initial fundraising for TON was a resounding success, with $1.7 billion raised through an initial coin offering (ICO) in 2018. However, this early success was met with significant challenges. In 2019, the U.S. Securities and Exchange Commission (SEC) intervened, alleging that the ICO constituted an unregistered sale of securities. This legal battle forced Telegram to officially abandon the project in 2020, returning funds to investors and halting further development.

Despite this setback, the open-source community refused to let the project die. In a true reflection of the decentralized ethos of the crypto world, a group of developers and enthusiasts revived TON, rebranding it under the TON Foundation. This community-driven effort not only kept the project alive but also laid the foundation for what TON would eventually become—a robust and scalable blockchain platform with the potential to revolutionize multiple sectors, from gaming to decentralized finance (DeFi).

In 2023, the Durov brothers rekindled their involvement with TON through strategic partnerships and integrations, most notably with the announcement that Telegram would integrate TON as its primary payment rails. This move was a watershed moment for the project, realigning TON’s original vision while ensuring compliance with regulatory requirements by keeping TON as an external partner.

At the heart of TON’s capabilities lies its innovative multi-layered architecture. The TON blockchain is designed as a hierarchical system consisting of a masterchain and multiple workchains and shardchains. This structure allows TON to process millions of transactions per second. The masterchain, the central element of TON's architecture, oversees the entire network. It manages crucial network functions such as protocol changes, validator elections, and the overall configuration of the network’s workchains. These workchains are individual blockchains within the TON network, each capable of operating independently and handling specific applications or use cases. The workchains themselves can be further divided into shardchains, which are smaller chains that manage subsets of the transaction load, ensuring that the network remains efficient even under heavy use.

One of TON’s standout features is its dynamic sharding mechanism. This allows the network to scale by splitting and merging shardchains based on transaction volume, maintaining high efficiency and speed. For example, during periods of high activity, new shardchains can be created to distribute the load more evenly, preventing bottlenecks and ensuring that transactions are processed quickly. This sophisticated architecture enables TON to achieve a time to finality of just five seconds, making it one of the fastest blockchains in operation today. TON’s consensus mechanism is Proof of Stake – similar to most smart contract networks. While TON’s technological infrastructure is impressive, its real advantage lies in its integration with Telegram, which serves as a massive distribution channel for Web3 applications. Telegram’s role as the fifth largest messaging app in the world provides TON with access to a global audience, many of whom are already familiar with or active in the crypto space.

One of the most exciting developments within the TON ecosystem is the rise of hypercasual clicker gaming applications. TON has quickly become a hub for clicker games. One of the standout successes has been Notcoin, a tap-to-earn game that reached over 40 million users within just a few months. Its token, $NOT, launched on Binance with a fully diluted valuation (FDV) exceeding $1 billion, and it has since solidified its position as one of the top gaming tokens in the ecosystem.

Clicker games with a user-friendly interface are enabled by Telegram’s HTML5 integration, allowing for animations and game-like interfaces to be designed and launched inside Telegram. Clicker games typically involve mindless finger tapping by users to directly or indirectly earn in-game currencies with the expectation of a future airdrop. The first example was Notcoin, which attracted over 40 million users and a peak DAU of 6 million. Notcoin eventually evolved into TON’s first memecoin and achieved a FDV of over $1B valuation. Given Notcoin’s success, the current top 10 applications on Telegram mostly comprise clicker games. The top 10 clicker games have an average subscriber set of over 12 million. It is possible to build more complex and engaging games via HTML5 on Telegram and several games are currently in development. Another viral success is Hamster Kombat, a game that has amassed over 200 million registered users and more than 30 million daily active users (DAU). This echoes the early days of social gaming on platforms like Facebook, where games such as Farmville quickly gained millions of users. However, TON’s integration with Telegram provides a modern twist, combining the social engagement of traditional gaming with the financial incentives of the crypto world.

Beyond gaming, TON is also being used for other innovative applications within Telegram. The TON token has become the currency of choice for purchasing Telegram handles and ad space on the platform. This integration allows users to conduct transactions within Telegram seamlessly, further enhancing the app’s utility and user experience. The introduction of features like TON Payments, which enables peer-to-peer transfers within Telegram, and the launch of TON Keeper, a non-custodial wallet, have significantly lowered the barriers to entry for new users. These tools make it easier for people to engage with blockchain technology without needing to navigate the complexities typically associated with crypto wallets and transactions.

The growth in on-chain metrics has been equally impressive. TON has seen an increase of 23x in daily transactions and 75x in daily active wallets on-chain over the past year. The current transactions are 4.6 million per day and daily active wallets are over 443,910. The TON Foundation has played a crucial role in driving this growth through various initiatives, including ecosystem incentives and grants to developers. Currently, the lion’s share of TON’s on-chain activity is due to the trading of Notcoin and other smaller altcoins, termed “Jettons” on the chain. The chain has a TVL of $760M, the majority of which is in DEXs. Reflecting this strong growth, TON’s FDV has increased almost 5X over the past 12 months to $34.2 billion.

Daily active wallets on TON

Source: Tonstat

Moreover, TON's partnership with Telegram has unlocked new monetization opportunities for developers. The introduction of stars, a native in-app currency for Telegram, has provided a stable revenue stream for mini-games and other applications within the ecosystem. Developers receive a 70% share of in-app purchases (IAPs) made with stars, which can be converted to $TON, creating a seamless bridge between Web2 and Web3 monetization strategies.

The TON Foundation's commitment to fostering innovation is evident in its numerous growth initiatives. The Foundation had established a $90 million ecosystem fund in 2022, as well as a 30 million $TON community rewards initiative earlier this year, aimed at incentivizing the development of native dapps on TON. The Foundation's accelerator program has also gained significant traction, with a recent $5 million TONX Accelerator Program designed to fuel the aggressive growth strategy of the ecosystem.

Looking ahead, TON is well-positioned to become the breakout chain of this cycle, much like Solana was in the previous one. The combination of a high-performance blockchain, a massive user base through Telegram, and a vibrant ecosystem of viral apps has created the ideal conditions for rapid adoption. The TON Foundation has set an ambitious goal of bringing 500 million people into the crypto ecosystem by 2028. WHile this target is undoubtedly ambitious, the early success of apps like Notcoin and Hamster Kombat suggests that TON has the potential to achieve it. These easy to learn tap-to-earn games have already proven their ability to onboard millions of users, many of whom are new to the crypto space.

However, for TON to truly succeed, it will need to address some of the challenges that come with rapid growth. The limitations of FunC, TON's native programming language, and the reliance on incentives to drive adoption are potential risks that the ecosystem will need to navigate. Additionally, the current inaccessibility of Telegram's native wallets to U.S. users due to regulatory constraints is another hurdle that must be overcome.

Despite these challenges, the outlook for TON remains overwhelmingly positively. The unique combination of a mobile-first approach, deep integration with a leading social platform, and a focus on user-friendly applications positions TON as a frontrunner in the race for mass adoption. As the ecosystem continues to evolve, TON's role as a distribution channel for Web3 apps and its potential to become a leading blockchain platform will only grow.

TON's emerging ecosystem

Source: DWF Labs