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- TON Ecosystem - The Key Growth Powerhouse of the Crypto Market
TON Ecosystem - The Key Growth Powerhouse of the Crypto Market
Bitget Research
2024/09/17
TLDR;
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TON blockchain has emerged as one of the fastest-growing and most popular public chains in 2024, with over 10x growth in on-chain key metrics, including transactions number, Total Value Locked (TVL), and decentralized exchange (DEX) trading volume.
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User base - Backed by Telegram’s massive user base of nearly 900 million, TON has established a strong foothold among users in regions such as the CIS (Commonwealth of Independent States), South Asia, Southeast Asia, Brazil, and Nigeria. This wide reach offers TON a solid foundation for user acquisition and ecosystem growth.
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dApps - As of now, the TON ecosystem consists of 1,159 decentralized applications (dApps), with leading projects emerging across sectors like DeFi, GameFi, Meme tokens, and utility tools.
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Key Features and Shortcomings - The chain distinguishes itself with innovative mechanisms such as mass airdrops with Tap-to-Earn games and task platforms. However, the ecosystem still faces certain shortcomings, most notably a relatively weak DeFi infrastructure. Currently, TON’s DeFi TVL stands at just $350 million, indicating room for further growth in this segment. Additionally, Telegram's regulatory issues might pose a threat to the TON ecosystem in the long-run.
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Potential Opportunities -
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Airdrops: There is significant potential in the free airdrop campaigns within the TON ecosystem.
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Tap-to-Earn: Opportunities exist in the Tap-to-Earn sector, a novel concept attracting increasing attention.
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DeFi: As TON ecosystem continues its rapid expansion, users, institutional investors, and exchanges are expected to find potential upside in its DeFi sector.
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Future Development and Bottlenecks -
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TON requires greater support from developers and continuous technical upgrades to improve the blockchain’s performance.
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TON must prioritize the growth of its DeFi ecosystem, which remains underdeveloped relative to its overall potential.
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To accelerate growth, TON needs to enhance its global user engagement strategies.
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The regulatory environment surrounding Telegram could pose significant challenges for TON's ecosystem, potentially affecting its global expansion and adoption.
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Based on the analysis, the Bitget Research Institute has summarized five key predictions for the future trajectory of the TON ecosystem. These predictions will shape the roadmap and investment outlook for TON as it seeks to overcome challenges and capitalize on its growth momentum.
Introduction
TON Network, initially launched by Telegram in 2018, is positioned to become a key growth engine in the upcoming bull market, with its ecosystem backed by Telegram’s massive user base of nearly 900 million active users. As the price of TON continues to rise in 2024, combined with the TON Foundation’s incentive policies, most Telegram Bot projects have chosen to deploy their tokens on the TON chain. The increasing popularity of Telegram Bot projects has further brought the TON ecosystem into the market’s spotlight.
While the TON ecosystem is still in its early stages, there are promising early alpha investment opportunities. As of now, there are 1,159 projects within the ecosystem, spanning across sectors such as cross-chain bridges, DeFi, Launchpads, infrastructure, and more. Additionally, more Telegram Bot projects are being developed, exploring new and innovative use cases.
This report provides an in-depth analysis of the TON ecosystem, offering a comprehensive overview of its current state. The aim is not only to assist individual investors in identifying wealth-building opportunities within the TON ecosystem, but also to help institutions and Web3 project teams better understand its development patterns and future potential.
TON Overview
1. Current Status of TON Blockchain
1.1 TON On-chain Data
Since April 2024, while the
cryptocurrency market has experienced a general decline, the TON ecosystem has shown remarkable resilience. The price of TON tokens reached as a peak of $8.23 this year, fluctuating around $5.50 as of the end of August.
Source: Bitget
According to data from Artemis.xyz, the core metrics of the TON blockchain have seen substantial increases in 2024. As of August 2024, the key statistics for the TON blockchain are as follows:
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User Data:
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Active Addresses: The number of daily active addresses (DAA) on the TON blockchain has surged from less than 50,000 per day at the beginning of the year to 450,000 DAA, peaking at nearly 900,000 in August, reflecting almost 10-fold growth within the year.
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Transaction Volume: Daily transactions processed by the chain have steadily increased, rising from 100,000 transactions each day to approximately 1.2 million daily, a 12x increase.
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DeFi Development:
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TVL Growth: With the rise in TON's price, enthusiasm among builders to develop DeFi applications within the TON ecosystem surged significantly. The TVL in TON's DeFi sector skyrocketed in 2024. It grew from merely $20 million at the beginning of the year to nearly $350 million currently, representing an 18x increase in just half a year.
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DEX Trading Volume: Similarly, as more assets within the TON ecosystem launched their TGE (Token Generation Event), the daily trading volume on TON's DEX platforms also steadily increased. Currently, the DEX trading volume in the TON ecosystem sits at approximately $40 million per day, a 20x rise from the $2 million daily average seen at the start of the year.
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On-Chain Data:
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Transaction Fee Revenue: With the growing number of users engaging with the TON blockchain, and given that TON tokens are required as gas fees for transactions, the network has seen a significant increase in fee revenue. On average, users spend approximately $75,000 daily on transaction fees. This contributes roughly $37,500 daily in income for TON blockchain validators.
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However, it is noteworthy that on August 23, following the arrest of Telegram founder Pavel Durov in France, the fundamentals of the TON Network changed significantly before and after his arrest. A comparative analysis shows:
After the arrest of Durov, TON's token price plummeted quickly, dropping over 17% within 48 hours. The total open interest for TON futures contracts surged by 59.21% during this period, indicating a market-wide shift towards risk aversion and short selling, contributing to the downward pressure on the token price. Simultaneously, the TVL (Total Value Locked) in the TON ecosystem fell by around 40.2%, primarily driven by substantial risk-off withdrawals from ecosystem users and the drop in TON's price itself.
Additionally, there was a significant spike in DEX trading volume and on-chain activity, primarily due to the congestion caused by the launch of a well-known Telegram project, DOGS, on August 26. Despite these challenges, the TON ecosystem showed remarkable resilience. The community rallied behind the "Free Durov" slogan, and we saw the sudden popularity of on-chain meme tokens like Resistance Dog (REDO), indicating the strength and adaptability of the TON ecosystem in the face of external shocks.
1.2 Key Regions for TON Growth
The key regions driving TON's popularity can be analyzed through the lens of Telegram's user distribution and the user base of prominent projects within the TON ecosystem
Firstly, Telegram, the social media giant, serves as the cornerstone of the TON ecosystem. In 2022 and 2023, Telegram had 700 million and 800 million monthly active users, respectively. By the end of 2024, this number is expected to reach 900 million. According to Telegram's download statistics and traffic distribution in 2023, India and Russia ranked first. India's top position for downloads is likely due to the high demand for bot accounts, sock puppet accounts, and other automated services, which are often created with IP addresses based in India due to cost and various considerations.
Overall, The CIS region, led by
Russia and Ukraine, remains the primary user base for Telegram. Other major user bases include
India, Brazil, and
the United States. Additionally,
Southeast Asian countries such as
Indonesia and
Vietnam also boast a substantial number of Telegram users.
Additionally, analyzing the traffic distribution for popular TON ecosystem projects such as Notcoin and Hamster Kombat reveals further insights. For Notcoin's website (notco.in), the traffic distribution over the past six months shows that more than 66% of the total visits come from CIS countries, including Russia, Belarus, Uzbekistan, and Kazakhstan. The second tier of traffic is represented by Asian countries such as Indonesia, Vietnam, China, and India. Similar traffic patterns are also observed for getgems.io, the NFT trading platform within the TON ecosystem.
Whereas Hamster Kombat’s website, hamsterkombatgame.io, shows a traffic distribution where Russia, India, and Nigeria are the top three countries. This distribution aligns well with Telegram’s overall user demographics.
In summary, the primary traffic for the TON Network is dominated by CIS regions, including Russia, Ukraine, and Uzbekistan, followed by South Asian countries such as India and Pakistan. Furthermore, Telegram Mini Bot projects that offer free token rewards are increasingly popular among users in third-world countries like Nigeria, similar to the initial popularity of Axie Infinity in the Philippines.
Traffic from Chinese-speaking users is challenging to accurately measure due to various factors, including VPN usage. However, based on community data from project teams, exchanges, and wallets, Chinese-speaking users are actively participating in TON ecosystem projects and can be considered a significant part of the second-tier user base.
2.How has the TON Blockchain Developed
The TON blockchain's rapid growth in 2024 can be attributed to two core factors:
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The TON ecosystem effectively leveraged Telegram's vast user base of nearly 900 million through Telegram Mini Apps, facilitating the transition from Web2 to Web3
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The TON Foundation implemented effective development strategies, including strong support for projects within the ecosystem through initiatives like Open League, attracting numerous talented developers and projects to build within the TON ecosystem.
2.1 TON's Integration with Telegram's Traffic
TON, Telegram, and the TON Foundation are closely linked historically and technically. Originally designed by the Telegram team, the TON project was abandoned by Telegram in 2020 due to legal issues. The development was taken over by the NewTON team, which established the TON Foundation to continue advancing the project, focusing on technology development, community building, and ecosystem expansion.
The deep integration between TON and Telegram includes features like an official wallet embedded within the Telegram app, allowing users to send, receive, and manage tokens directly in Telegram. This facilitates a smoother introduction for Telegram users to crypto wallets inducing millions of new users to buy their first digital assets.
Telegram’s support for various Bots and Mini Apps further integrates users into the TON ecosystem. Users who engage with these Mini Apps can effortlessly transition into the TON ecosystem through simple game experiences. The TON Foundation also launched The Open League to encourage developers and projects to create Mini Apps within Telegram, thereby converting a large number of Telegram users into the TON ecosystem. High-traffic Mini Apps such as Notcoin, Hamster Kombat, and Catizen are prominent examples of this trend.
2.2 Effective Development Strategies by the TON Foundation
In addition to leveraging Telegram's traffic, the development of the TON blockchain has been significantly influenced by the TON Foundation’s development strategies. These strategies primarily include the formulation of ecosystem incentive policies, innovation in operational approaches, and collaboration with industry veterans. Detailed aspects are as follows:
Policy
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nitiatives: In early March, the TON Foundation launched the Open League trial run, which had a remarkable impact on ecosystem development. Within two weeks, the blockchain’s Total Value Locked (TVL) increased by 70%, and daily active wallet users surged by 370%. Consequently, on March 20, the TON Foundation announced an ecosystem incentive program of 30 million TON (approximately $115 million). This initiative marked the official start of the Open League season, aiming to create a “positive feedback loop” for ecosystem growth by focusing on core areas such as ecosystem development, token mining, tasks and airdrops, and capital promotion.
Source: TON
I
nnovation in
O
perational
a
pproach: In the Open League App Battle, the scoring criteria incorporated users' on-chain and mini-app data, facilitating the transition of Telegram users to the TON Network. This approach led to the emergence of high-traffic mini-apps such as Notcoin, Catizen, and Hamster Kombat. Notcoin’s success notably ignited interest within the Telegram ecosystem, leading to a surge of Telegram mini-apps that quickly attracted users through simple gameplay and daily tasks. This strategy has effectively harnessed Telegram’s massive traffic advantage, accelerating the growth of the TON Network and increasing user and capital activity on-chain.
C
ollaboration with
i
ndustry
v
eterans: At the TOKEN2049 conference in Dubai in April, Tether announced the integration of USDT on the TON Network, making it directly usable within the Telegram Wallet. In May, a partnership was formed between the TON Foundation and Oobit to develop a crypto payment solution. This native integration of USDT offers greater stability and convenience compared to previous cross-chain solutions, likely advancing DeFi development on the TON Network and fostering mobile payment applications, thereby enhancing the economic benefits and impact of the ecosystem.
Beyond Tether, the TON Foundation has also partnered with HashKey Group to expand fiat on- and off-ramp channels in the Asia-Pacific region. Additionally, investment from institutions such as Pantera Capital has increased, and several exchanges and institutions have launched TON ecosystem funds. Collaborations with Fireblocks and DWF Labs have further accelerated the overall development of the TON ecosystem, supported by these industry veterans.
3. Current Status of the TON Ecosystem
3.1 Technological Characteristics of TON Blockchain
TON (The Open Network) blockchain differs significantly in design from traditional Ethereum or EVM-compatible blockchains in several key aspects:
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Multi-Chain Architecture: The TON blockchain consists of a master chain as well as multiple workchains and shard chains. Each workchain can have distinct rules, account formats, transaction formats, and virtual machines. However, these workchains must adhere to the basic interoperability standards of the TON blockchain. Depending on the requirements of each workchain, multiple shard chains can be created to maintain account states, facilitate communication, and transfer information among different shard chains.
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Asynchronous Smart Contract Calls: Smart contracts on the TON blockchain utilize asynchronous message passing and non-atomic transaction processing, which significantly differs from the execution of smart contracts on Ethereum. This asynchronous approach makes the design and implementation of smart contracts on the TON chain more complex, but they also offer greater scalability and flexibility.
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Distributed Hash Table Storage: The Distributed Hash Table (DHT) storage system, utilized on the TON blockchain, is an efficient and reliable distributed storage solution similar to Kademlia's protocol. The system supports effective data retrieval and storage while ensuring data availability and security, allowing the TON blockchain to support large-scale distributed applications and services. While the DHT used in TON enhances the efficiency and reliability of data storage and access through high availability and decentralization, it presents challenges regarding data consistency. In contrast, Ethereum's Merkle root offers advantages in terms of data integrity verification and simplicity of implementation but has limitations in scalability.
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TON Proxy: TON Proxy is a crucial component within the TON ecosystem, designed to enhance network privacy and security. It is akin to the I2P (Invisible Internet Project) and is used to obscure the identity and IP addresses of network nodes. For high-value nodes handling significant cryptocurrency transactions or block validation, TON Proxy provides additional protection against DDoS (Distributed Denial of Service) attacks. As a distributed system without a central server, TON Proxy allows all nodes to participate in data routing and forwarding, enhancing the network's decentralization.
These four features distinguish the TON blockchain from Ethereum or EVM-compatible chains, demonstrating its strengths in large-scale applications, scalability, and privacy.
On August 29, the TON network experienced two extended periods block non-production, primarily due to the Token Generate Event (TGE) of the popular token DOGS on the chain. The massive user base of DOGS generated tremendous traffic that overloaded the validating nodes for a prolonged period, causing them to fail consensus and leading to the entire network's failure to produce blocks.
Data indicates that the TON network has 361 verification nodes. The base configuration of these nodes might not have anticipated the network traffic generated by DOGS, leading to temporary processing issues. To address such peak traffic situations, dynamic planning and automatic scaling solutions could be considered to enhance the network’s capacity to handle spikes in traffic.
3.2 TON Tokens' Performance
3.2.1 TON Tokens in the Secondary Market
According to data from CoinMarketCap (CMC), the price of the TON token was $0.78 in August 2021, and it peaked at $4.50 during the bull market of the same year. Initially, the daily trading volume for the TON tokens was less than $200,000, but now it surges to an average of around $300 million per day, representing an almost 1,000x increase in market trading volume in less than three years. As the community demand for trading the TON token grew, major exchanges began to recognize the importance of the TON ecosystem and its backing by Telegram, leading to the listing of the TON token on various exchanges. Below are some of the major exchanges along with their listing dates and current trading depth data:
Currently, Bitget is the earliest exchange to offer trading for TON tokens, providing substantial trading depth and attracting a significant portion of TON ecosystem traders.
3.2.2 $TON Tokenomics and Circulation
Based on the project's white paper and publicly available market information, the tokenomics and circulation of the TON tokens are summarized as follows:
In addition, there is considerable concern about the centralization risks of the TON token. Our analysis of on-chain data reveals the following:
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Currently, whales and institutional investors hold 58% of the total circulating TON tokens, indicating a certain degree of centralization risk.
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However, over the past year, the centralization risk of the TON token has improved. The proportion of holdings by whales has decreased from 70% at the beginning of the year to 29% as of now.
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With official investments from institutions such as Pantera Capital, the proportion of tokens held by institutional investors has increased slightly.
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The most significant growth has been observed among retail users, with the proportion of holdings by retail investors rising from 14% at the beginning of the year to the current 42%.
In summary, while the TON token does exhibit some centralization risk, this risk appears to be mitigating as retail interest in investing in TON token continues to increase.
Source: Intotheblock
3.3 TON Ecosystem Overview
3.3.1 DeFi
TON’s unique characteristics offer native DeFi projects on the TON blockchain a distinct advantage, given that mature projects in the EVM environment cannot easily migrate to TON. Here’s an overview of some representative DeFi projects on TON:
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DeDust: DeDust is a leading DEX on the TON blockchain, with a TVL (Total Value Locked) of $130 million. It offers features such as AMM Swap, LP pools, token staking to earn protocol fees, and cross-chain bridges. The largest trading pool on DeDust is the TON/USDT pool, with a TVL of $100 million and a 24-hour trading volume of $11.17 million. Other token trading volumes and pool sizes are relatively low compared to TON.
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Tonstakers: Tonstakers is the leading liquid staking project on TON, with a TVL of $170 million. It has accumulated 65,000 stakers with an annual percentage yield (APY) of 3.69%
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EVAA Protocol: EVAA Protocol is the leading lending project on TON, with a TVL of $32.13 million. It offers various stablecoins, TON tokens, and liquid-staking TON tokens, with stablecoins providing an annual return of approximately 9.09%.
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Tonkeeper: Tonkeeper is the earliest self-custody wallet on the TON blockchain. It supports multiple platforms and browser plugins, offering comprehensive support for various TON ecosystem projects, including swap, earning, payments, TON domain trading, and NFT trading.
3.3.2 GameFi
Although the TON ecosystem is still in its early stages, its massive user base from Telegram provides immense growth potential. The TON Foundation has announced various grant projects to support innovation in gaming, DeFi, and other areas. The combination of strong funding and Telegram’s large user base has led to a surge in gaming projects within the TON ecosystem. These projects are experiencing rapid growth in user numbers and project popularity, thanks to the large user base and market provided by Telegram.
By integrating mini-program games into Telegram, projects are easily accessible and engaging, fitting the user profile of Telegram. Here are some representative GameFi projects:
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Catizen:
Official Website: https://catizen.ai/
Catizen is the second Telegram Bot product from Pluto Studio, a studio focused on the release of Web 3.0 mini-games. Pluto began its foray into the Telegram x TON blockchain ecosystem over a year ago. In August 2023, the team launched its first mini-app based on a Telegram Bot within the TON ecosystem — Tap Fantasy, a large-scale 2D MMORPG, which has gained 730,000 users globally.
As of June 21, the number of players on Catizen has exceeded 20 million, with on-chain users reaching 1.13 million and nearly 2.2 million daily active users, making it one of the fastest-growing projects in the Web 3.0 gaming ecosystem. Following the success of Notcoin, Catizen's user base has surged, solidifying its position as one of the fastest-growing projects in Web 3.0 gaming. The main reasons for its rapid growth are as follows:
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Innovative Game Mechanism: Catizen combines several key concepts, integrating the metaverse, GameFi, and AI. The introduction of the play-to-airdrop model allows players to earn future airdrops while playing the game. This model not only captures the players' main concern — the enjoyment of gaming — but also addresses the key to player retention — the additional benefits derived from the game.
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Launchpool Model: In the Catizen game, players are encouraged to stake game assets through the Launchpool model in exchange for in-game points ($wCATI). This approach enhances player engagement and loyalty through rewards and incentives.
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Hamster Kombat
Official Website:
https://hamsterkombat.io/
Hamster Kombat is a tap-to-earn game with players simulate the role of a cryptocurrency exchange CEO. Players collect game points by clicking on hamsters on the screen. The game offers multiple avenues for players to earn rewards, encouraging community interaction and collaboration to unlock even more benefits.
For example, players can gain additional points and speed up their point accumulation by purchasing and combining special cards, daily check-ins, following official social media accounts, and referring friends.
This click-based game, built on the Telegram platform, has attracted a large user base with its "click-to-earn" mechanism. Since its launch in March this year, the user count of Hamster Kombat has rapidly grown, reaching 200 million, with 9.8 million subscribers on the X platform and 28.7 million on YouTube.
3.3.3 Memecoin
As one of the key sectors in this bull market speculation, meme tokens have also shown significant wealth effects within the TON ecosystem. However, due to the relatively low trading volume on the TON blockchain's DEX market, the overall number and trading data of meme tokens are not comparable to those on traditional meme token-focused chains like Ethereum and Solana. The trading volume of leading meme tokens ranges from $1 to $2 million, with the most widely held meme token, FISH, having only 47,100 holders.
Currently, there are no meme token projects with a market capitalization exceeding $100 million. Overall, although meme tokens have demonstrated high price increases and favorable wealth effects, their performance often suffers from prolonged downturns after a brief period of explosive growth due to insufficient trading volume and a lack of ongoing market interest and speculation within the TON blockchain ecosystem.
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REDO
REDO is a dog-themed meme token on the TON blockchain. This project ranks fifth in trading activity on the TON chain and is the highest in trading volume and market capitalization among meme tokens. Today, its trading volume reached $2.51 million, with 1,242 transactions in the past 24 hours and over 25,900 holders. The token enjoys a high level of community engagement, with more than 39,000 followers on Twitter and an average tweet engagement of over 15,000 views.
The character of the dog in a hoodie, also known as the Resistance Dog, was originally drawn and named by Pavel Durov, the founder of Telegram and TON, in 2018. Since then, REDO has served as the unofficial mascot of Telegram's vision to "resist" censorship, with the TON official account featuring the hand-drawn Resistance Dog logo as part of its profile. However, because of its meme nature, major exchanges have refrained from listing it due to associated risk considerations.
3.3.4 Utility Tools
The concept of utility tools encompasses a wide range of products directly linked to blockchain, including browsers, development tools, shopping mini-apps, VPNs, and other products that primarily use TON as a payment method. These products can be categorized into two main types: web-based tools and Telegram bots.
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Tonviewer
Tonviewer is the most widely used utility tool within the TON ecosystem and serves as the primary blockchain explorer. It allows users to browse various data on the TON blockchain, including transactions, contracts, NFTs, and Jettons. This platform provides users with comprehensive insights into the TON ecosystem. Additionally, Tonviewer offers a robust API that enables developers to build DEXs on the TON blockchain without needing to handle the complexities of underlying technology. The API covers multiple functionalities, including blockchain transactions, messaging, configuration, and account management, and provides real-time API and GraphQL support. According to SimilarWeb data, its website has reached 2.588 million monthly views
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Unique Features and Potential Challenges
1.Unique Features on TON
1.1 Mass Airdrops
Led by the DOGS project, bots that airdrop to all Telegram accounts have virally spread the culture of cryptocurrency and Web3 airdrops via Telegram. Users can easily participate and earn points simply by joining relevant channels and activating the bots. This no-barrier approach to token airdrops has rapidly expanded its reach, effectively bringing a large number of Web2 users into the Web3 world. Following the explosive popularity of DOGS, similar projects like CATS and MAJOR have emerged.
1.2 Tap-to-Earn
Notcoin pioneered the Tap-to-Earn model on TON and gained immediate popularity, allowing users to earn NOT tokens by clicking on the screen. Coupled with pre-market trading, participants can profit before the token’s TGE, setting higher profit expectations. The major advantage of this model is its extremely low barrier to entry—users only need to click on the screen to receive rewards, making it perfect for casual entertainment.
Following the success of Notcoin, Hamster Kombat emerged, combining combat elements with the Tap to Earn mechanism. This added interactivity and competition to the game, embedding more complex monetization mechanisms and advertising slots that allowed the mini-app to achieve profitability more quickly.
1.3 Enhanced Playability in GameFi
The pet-raising mini-app Catizen is a notable example, allowing users to adopt, feed, upgrade, and care for virtual pet cats while earning rewards through tasks and interactions. The pet-raising process is interactive and growing, enhanced by a charming art style and anticipated financial rewards. By mid-June, Catizen had surpassed 20 million total users and plans to donate 1% of its revenue to nonprofit organizations, receiving positive market feedback. In early July, Catizen announced the launch of Catizen SDK, enabling developers to deploy games on Telegram with a single click, providing participants with greater creative possibilities.
Emerging games like Gatto and other TON mini-games have also appeared, showcasing a variety of pet types and development paths, allowing users to collect and nurture different virtual pets while earning rewards through competitions and events.
1.4 CeDeFi Customer Acquisition on Telegram
Blum is an exchange that combines CeFi and DeFi functionalities, allowing users to operate directly through Telegram. It leverages Telegram’s vast user base for customer acquisition, enabling transactions and interactions in a familiar chat environment, thereby lowering the barrier to entry and shortening the referral process.
1.5 Task Distribution Platform
PEPE Miner Bot is a task distribution and reward acquisition platform based on Telegram, where users can join the bot to earn PEPE tokens, along with more PEPE rewards for completing various tasks. It functions like a mini-Galxe integrated into Telegram, similar to Coinpayu. The PEPE Miner Community, associated with this project, currently has over 680,000 subscribers, showcasing impressive traffic. Given Telegram's substantial user base, creating task distribution platforms similar to Galxe and Zealy appears to be a promising area for growth.
1.6 Native Crypto Wallet
The integration of a native wallet via a Telegram bot greatly expands the application scenarios of cryptocurrency wallets within this super social application. This integration simplifies user experience and lowers the barriers to using cryptocurrencies, further promoting the development of the entire TON Network ecosystem.
Upon accessing the wallet, users can see their holdings of USDT. In May of this year, Tether collaborated with the TON Foundation and Oobit to build a cryptocurrency payment solution. Looking ahead, users may be able to use USDT in Telegram Wallet for everyday payments and other practical scenarios. Additionally, users can easily send USDT assets directly through their contacts, resembling traditional internet mobile payment systems. As infrastructure continues to improve, the native crypto wallet on Telegram will further enhance the proliferation of crypto payments and convenience in users’ daily lives.
2. TON's Potential Challenges
According to data from Defillama, the total value locked (TVL) in the TON blockchain is $356 million, accounting for only 0.43% of the total across all blockchains, placing it in 21st position. There are only 20 DeFi projects listed on Defillama, making it one of the blockchains with the fewest DeFi projects. This highlights a significant characteristic of the TON ecosystem: its DeFi sector is relatively weak, both in terms of project quality (measured by TVL) and quantity compared to other top ten blockchains.
Additionally, following the arrest of Telegram founder Pavel Durov, there was a significant capital outflow, leading to a 40.2% decrease in TVL within a week, which dealt a substantial blow to DeFi projects within the TON blockchain ecosystem.
Source: DeFillama
Currently, the primary user base of the TON ecosystem comes from Telegram Mini Apps. However, the lack of robust DeFi development on TON significantly limits its growth potential, attributed to three main reasons:
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Low Trading Volume: The trading volume of leading DEXs on TON, such as DeDust and STON.fi, has recently hovered around $15 million in the last 24 hours. This is starkly lower compared to the $1 billion in daily trading volumes seen on DEXs like Uniswap and Raydium. Furthermore, the TON/USDT trading pair accounts for over 70% of the trading volume on the TON chain, indicating poor trading activity for other tokens.
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Weak Lending Demand: The current largest lending protocol on TON, EVAA Protocol, has a TVL of less than $33 million. Overall, financial demand, such as lending services, is not strong within the TON ecosystem.
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Summary: The fundamental causes of both the low trading activity and weak lending demand stem from a lack of yield-generating opportunities and the absence of popular trading tokens, leading to a liquidity shortage. From a liquidity perspective, the TON blockchain is not lacking stablecoins, with the authorized issuance of USDT on the TON chain having reached approximately $618 million. Currently, TON has become the ninth-largest blockchain by USDT issuance.
Source: DeFillama
However, due to the limited number of projects and the absence of liquidity mining opportunities, these stablecoins have no viable avenues for utilization. Additionally, the migration of trading activity for native hotspots like NOT and DOGS has resulted in only 0.3% of NOT’s trading volume occurring on the TON chain, with DOGS at a mere 0.14%. This has led to insufficient LP earnings, causing liquidity providers to withdraw from providing liquidity on-chain.
On a positive note, there are signs of proactive solutions from the TON team. At the Ethereum Community Conference (EthCC) in July, they revealed intentions to address these issues actively. TON is set to launch its own Layer 2 network based on Polygon technology, named the TON Applications Chain (TAC). This will undoubtedly facilitate EVM developers in creating new applications for Telegram users and may pave the way for the development of DeFi within the TON ecosystem.
Potential Upside and Opportunities
1. High-Potential Sectors
1.1 Free Airdrop Sector
The free airdrop segment leverages Telegram’s user base of 900 million to distribute tokens. A prominent example is the recently popular DOGS project. These airdrops typically determine the amount distributed based on factors such as the duration of a user’s Telegram registration and whether they have activated a Premium account. This no-barrier approach to airdrops allows for extensive reach and resembles a fair distribution model, making it highly appealing to users.
Though DOGS is fundamentally a meme project, its advantages such as fair distribution and no pre-sale have contributed to its widespread dissemination and positive wealth effects. Furthermore, the traffic advantages of Telegram have introduced a large number of new users to the blockchain world, differentiating DOGS token holders from traditional blockchain users. This distinction has made DOGS highly attractive to exchanges, allowing it to be listed on multiple leading CEXs almost instantaneously. This is a crucial reason for the wealth-building effect of free airdrop tokens within the TON ecosystem.
1.2 Tap-to-Earn Sector
Despite the abundance of Tap to Earn projects, user accumulation has been rapid, exemplified by Hamster Kombat, which achieved 239 million registrations in just three months, becoming one of the hottest Tap to Earn games and gaining over 10 million subscribers on YouTube in a week. According to its white paper, 60% of the upcoming token airdrop is designated specifically for players. Based on Bitget Premarket pricing data, the total market capitalization of its token reaches $1.28 billion, implying that the airdrop value for Hamster Kombat alone could amount to $768 million.
A similar trend is evident in other projects. Notcoin, as the first Tap to Earn project to be widely listed on exchanges, has driven the frenzy of this segment on the TON blockchain, accumulating over 30 million participants since its launch in January 2024, with 5 million daily active users, briefly ranking fifth in data on Telegram. According to their official Twitter announcements, Notcoin’s airdrop is larger than the combined totals of ZKsync and LayerZero, with over 11.5 million tokens claimed by users, totaling an airdrop value of more than $2.5 billion.
Source: https://x.com/trade_tg/status/1805583263399854113
1.3 DeFi Sector
The DeFi applications on the TON blockchain saw a significant surge in 2024. According to data from DeFiLlama, the TVL on the TON blockchain reached approximately $14 million in early 2024 but skyrocketed to around $730 million by July. However, following the arrest of Telegram's founder, the TVL has retreated to $357 million. Within the DeFi sector, the following main categories exist:
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DEX: DEXs are essential infrastructure for any blockchain. Due to the unique design of the TON blockchain, mature projects from EVM chains cannot be easily migrated, which gives the native DEXs on TON early wealth-building potential. Currently, the DEXs with the highest TVL on the TON blockchain are primarily DeDust and STON.fi. Users can create liquidity pools (LP) with corresponding tokens on these DEXs to earn trading fees and additional token incentives.
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Liquid Staking: The TON blockchain allows users to stake TON tokens to receive token rewards, making liquid staking one of the mainstream DeFi projects on the TON blockchain. The largest liquid staking project on TON is Tonstakers, where users can stake their TON tokens and earn an annual percentage yield (APY) of approximately 3.69%.
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Lending: Lending projects are among the best cash flow generators in the DeFi sector and have consistently contributed significant TVL across various blockchains. The largest lending project on the TON blockchain is EVAA Protocol, which currently has a TVL of $32.13 million. This project provides an APY of about 9.09% on USDT, along with additional protocol points for users.
2. Opportunities and Risks for Industry Players
2.1 Retail Investors/ Users Perspective
Opportunities:
Tap-to-earn projects like Notcoin and Catizen offer a simple way to participate, with high potential returns. For users, it is almost possible to acquire airdrops at little to no cost. For instance, with Notcoin, users may only need to spend about a minute each day to earn around $100 during token distributions, resulting in an exceptionally high return on investment.
Risks:
In terms of trading, there is a risk of dishonest projects absconding with funds after raising money through IDOs and similar methods, potentially leading to user losses. Similarly, users face risks while using DeFi projects, such as fund theft or falling victim to phishing scams through mistaken clicks on links in community forums.
2.2 Investment Institutions Perspective
Opportunities:
The TON token, as the native token of the TON blockchain, can be staked to earn POS revenue. Institutions have the option to buy TON tokens directly at a discount through OTC transactions.
As the user base for TON continues to grow, but the infrastructure is still underdeveloped, institutional users can choose to invest in the infrastructure of the TON ecosystem to gain more influence and bargaining power in the TON ecosystem, making early investments more likely to yield excess returns.
Current valuations for Telegram Bot projects are relatively high, with low development costs and short "investment-to-exit" cycles offering attractive returns.
Risks:
High Compliance Risks: Different countries have varying regulatory attitudes toward Telegram, which may face scrutiny. This could directly affect the price movements of TON blockchain tokens and ecosystem project tokens.
2.3 Exchanges Perspective
Opportunities: CEXs can collaborate closely with Telegram Mini Bot projects through two main avenues: pre-depositing airdrop tokens and integrating new user acquisition tasks within the bots. These partnerships provide significant user acquisition benefits for CEXs.
For example, with the support of pre-depositing, Bitget attracted nearly 1 million new users through the popular DOGS project. Most of these users had never traded cryptocurrencies before, and the Telegram Mini Bot successfully facilitated the seamless transition of Web2 users to Web3, making the partnered exchanges the first stop for these new users in crypto trading.
Risks: The TON ecosystem features a mix of projects, many of which are grassroots initiatives lacking VC investment. This introduces multiple risks related to contract enforcement and maintaining token value within Telegram Mini Bot projects. For exchanges, identifying quality projects and mitigating risks is a significant challenge.
Future Development and Bottleneck
1. Technical Aspects
The ongoing development of the TON ecosystem demonstrates its intention to leverage Telegram’s advantages to transition traditional internet users and a massive base of Telegram users into the blockchain and Web3 ecosystem. According to official plans, the TON blockchain is expected to evolve in the following technical directions:
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TON Blockchain Expansion: The TON blockchain will continue to develop features related to Jettons, cross-chain compatibility with mainstream cryptocurrencies, stablecoin tools, node function separation, and sharding. The TON team aims to enhance interaction with other mainstream blockchains, providing better and more convenient means of interaction while continually optimizing the user experience for a large number of users.
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TON Proxy: In the future, all major TON services (such as ton.org, dns.ton.org, bridge services, major markets, and DEXs) will operate on the TON site. All primary TON wallets and TON browser extensions will support the TON site, progressively transforming from public entry nodes to local entry nodes on each user’s device. A standalone TON proxy application will be offered for each major operating system.
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TON Payment System: The TON blockchain intends to build a TON payment network, similar to Bitcoin's Lightning Network, where users can set up payment channels through a single intermediary node, enabling them to perform microtransactions via that node.
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TON Storage: The TON blockchain will develop a storage marketplace, where storage nodes will be registered and ranked based on criteria such as disk size, reputation, and geographical location. Customers can consult this registry to find suitable storage nodes. These storage nodes will earn compensation for storing files and will also receive micropayments via the TON payment network based on data traffic.
Through these development directions, we can see TON's vision for its future growth. The TON blockchain aims to continuously optimize the user experience for a large user base through solutions like node function separation and sharding, while also enhancing user privacy with the TON Proxy and developing a seamless payment network.
Anticipated
Bottlenecks
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Complexity of Multi-Chain Architecture: The multi-chain and sharding mechanisms enhance scalability but introduce complexity in management, cross-chain communication, and state consistency, increasing development and maintenance challenges.
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High Performance Requirements: Running and maintaining TON nodes require significant computational and network resources, posing challenges in balancing performance and resource consumption, especially during high-traffic token distributions.
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Lack of Developer Community Support: Compared to mature platforms like Ethereum, the TON ecosystem is relatively new, with a smaller scale of DApps and developer community. It will take time and resources to cultivate this community and attract more developers and users to engage with the platform.
2. Ecosystem and Operational Aspects
The TON ecosystem currently relies on wide-ranging airdrops and Tap to Earn mechanisms to gather and convert an impressive amount of traffic. However, for a blockchain project to achieve long-term prosperity and sustainable development, it is essential to find ways to keep users’ funds on-chain and ensure that these funds circulate and are utilized within the ecosystem. Therefore, the TON ecosystem urgently needs to rapidly develop its DeFi infrastructure to retain user funds. Additionally, there remains substantial potential for traffic growth in European and American markets.
2.1 Addressing DeFi Shortcomings
As mentioned in the prior analysis, the development and propagation of DeFi infrastructure represent a pronounced deficiency within the current TON ecosystem. The TVL within the TON ecosystem is presently at $700 million, predominantly contributed by stablecoins issued by Tether and the native TON token itself.
However, the TVL and the liquidity activity of DEXs, lending protocols, and other DeFi applications within the ecosystem remain suboptimal. Should TON fail to adequately establish its DeFi infrastructure, this will significantly constrain the upper threshold of the ecosystem's TVL. Moreover, there exists a tangible risk that following each cycle of intense speculation, an unavoidable and substantial outflow of TVL could occur over certain periods.
Building DeFi on TON is not an easy task. The non-EVM nature of the blockchain makes it challenging for projects from Ethereum and other EVM-compatible blockchains to migrate easily to TON. Project teams will need to invest considerable effort to redevelop their projects to fit the TON framework. However, the upcoming launch of the TON Applications Chain (TAC), based on Polygon technology, may greatly simplify these issues, although it will still require time to assess its effectiveness.
2.2 Regional Imbalances
The unique background and historical factors of TON have made the CIS region the primary battleground for its ecosystem. Over the past two years, TON has also garnered significant traffic in certain South Asian and Southeast Asian countries. However, there remains substantial growth potential in European and American markets, as well as in countries like Japan and South Korea. Moreover, a key challenge for the TON ecosystem will be figuring out how to expand its user base beyond Telegram. This expansion is crucial for determining whether TON can break through its current traffic ceiling and achieve further growth.
3. Regulatory Aspects
The development of TON is heavily reliant on the traffic generated by Telegram, and the deep integration of TON with Telegram’s wallet and user base creates a significant dependency on the messaging platform. Consequently, the regulatory risks associated with Telegram loom over the TON blockchain like a "Sword of Damocles."
Telegram offers end-to-end encrypted "secret chat" features, ensuring that only the communicating parties can read the messages. Additionally, Telegram allows users to create anonymous accounts without providing a phone number, further protecting user privacy. However, this end-to-end encryption and anonymity can make Telegram a platform that is difficult to monitor and regulate. As a result, some governments may perceive Telegram as a potential cybersecurity threat, particularly concerning politically sensitive content and social dynamics. Countries such as Russia, Iran, Indonesia, and Pakistan have imposed restrictions on Telegram.
On August 25, 2024, French media reported that Telegram CEO Pavel Durov was arrested by police after landing at Le Bourget Airport in northern Paris. The arrest was part of an investigation into the lack of regulation on the Telegram platform, with French authorities believing that this has allowed a variety of criminal activities to proliferate, such as the spread of misinformation and hate speech. Reports indicate that Durov is facing accusations related to the existence of drug trafficking, an arms black market, and child pornography on Telegram, following the platform's refusal to cooperate with police.
The news of the arrest has had a significant impact on the TON ecosystem. As a result, the price of the TON token has dropped over 17.6% in the week following the arrest. Furthermore, according to DefiLlama data, the TVL (total value locked) on the TON chain has also seen a sharp decline, with a single-day drop exceeding 60%.
Summary
TON is one of the fastest-growing blockchains in 2024, supported by Telegram's 900 million user base, and is poised to become the largest growth engine in the cryptocurrency market. This analysis primarily explores the TON ecosystem from four dimensions: "Overall Situation," "Unique Features and Potential Challenges," "Potential Upside and Opportunities," and "Future Development and Bottlenecks."
Overall Situation: the TON blockchain was initially designed by the Telegram team, but due to legal challenges, the NewTON team took over development and established the TON Foundation to continue advancing the project, encompassing technical development, community and ecosystem building. The year 2024 is expected to be a breakout year for the TON ecosystem, as the price of the TON token rises and the TON Foundation provides significant support for the ecosystem, leading to notable increases in blockchain interactions, TVL, and DEX trading volumes throughout the year. Key areas like DeFi, GameFi, and Meme projects within TON are gaining prominence.
Unique Features and Potential Challenges: TON’s unique features include widespread airdrops, Tap-to-Earn models, and task platforms. As Telegram Bot valuations rise, more developers are likely to create innovative projects. However, the ecosystem still faces challenges, particularly in DeFi, where both trading and lending activities are relatively low.
Potential Upside and Opportunities: TON offers significant wealth-creating potential in three main sectors:
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Free Airdrops: High potential for broad distribution and viral growth.
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Tap-to-Earn: Rapid user acquisition and high return opportunities.
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DeFi: While currently underdeveloped, it presents significant future potential.
Users, investors, and exchanges have opportunities to benefit from these sectors, though they should be mindful of risks, particularly regulatory challenges related to Telegram.
Future Development and
challenge
s
TON needs continued developer support and performance upgrades to handle increased on-chain interactions. The ecosystem also requires robust DeFi development and global user expansion beyond Telegram’s traditional markets. Lastly, regulatory issues facing Telegram present serious risks that could impact the TON ecosystem considerably. Addressing these challenges will be essential for the long-term sustainability and growth of TON.
Predictions for TON ecosystem by 2026
In conclusion, based on the comprehensive research conducted by Bitget Research above, we anticipate the following developmental changes in the TON ecosystem over the next two years:
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In the long run, as the ecosystem develops and infrastructure improves, there will likely be a trend towards "de-Telegramization" to mitigate regulatory risks associated with Telegram.
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With support from Web3 funds and TON Foundation, TON token is expected to rise in tandem with broader market trends, likely outperforming BTC’s spot returns in a bullish market. Additionally, more institutional support are anticipated, opting for OTC (over-the-counter) purchases of TON tokens.
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The valuation of Telegram Bots will continue to remain high in the short to medium term, attracting more developers to engage in the development of Telegram Bots and the construction of the TON ecosystem. With more developers joining, more variety of projects are expected to emerge, providing the community with innovative gameplay and use cases.
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One or two native Meme tokens may emerge with substantial returns and gain support from major exchanges.
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The development of the TON ecosystem will attract more traditional users to the cryptocurrency market, making it a key driver in crypto adoption.
