Protocol Highlight: The Open Network (TON)

Lean about TON from Justin Hyun, Director of Investments. Also Key Metrics on TON 👀

Welcome to the 1st Artemis Protocol Highlight of the Month

Our mission is to help shape crypto into a fundamentals-driven asset class and help every investor and builder understand blockchains clearly.

Every month, we highlight a protocol to understand what the project does, its history, what users are doing on the protocol, and what the key drivers and metrics are.

This month, we highlight The Open Network (TON), and interview Justin Hyun, Director of Investments at TON.

Read on to learn more about 👇

  • Why Justin decided to join TON as the first business hire

  • What is the story of TON and Telegram?

  • Key metrics + insights on TON from our data scientist, Andrew.

Interview: Justin Hyun, Director of Investments at TON

What is your role at TON? How did you learn about TON and decide to join TON?

My current role is Director of Investments. I interface with partners who seek exposure to TON and the TON ecosystem. Prior to this role, I also headed the Growth department and incubation efforts. The current grants program, as well as the TON Society, have a lot of my early workings rooted in their philosophy. I first learned about Bitcoin in 2017 (more so from a trading perspective), and then my interest dropped until it was reignited during the DeFi summer of 2020. After a brief stint at BlockFi as my first crypto role, I transitioned to a full-on community-led initiative at TON. The current President of The Open Network Foundation and I share an alma mater, and I was brought on as the first business personnel hire for the TON Foundation back in early 2022, and have not looked back since.

What is the story of TON? What is the relationship between TON and Telegram?

The original idea behind what was then known as the Telegram Open Network was a blockchain powering the Telegram economy. Telegram was not successful in being the issuer of the token and launching the network due to US regulatory hurdles. Since Telegram left and open-sourced the project in 2020, a decentralized network of communities took over the development. As a result, the testnet left by Telegram was switched to mainnet and rebranded as The Open Network. Collectively, those working towards the mission of The Open Network are known as the TON Foundation.

It is important to note that Telegram is not an issuer of Toncoin. Although Toncoin is a rebranding of the testnet tokens issued by Telegram in 2019, this token was not intended to have value or even have a name. It was out of the open-source phenomenon that the community came to recognize this network as the one to succeed the community who was building on the original Gram ecosystem rather than two other competing networks who forked TON source code. Toncoin is also a rebranding of the testnet tokens originally issued but abandoned by Telegram in 2019. The rebranding was processed organically as a result of the consensus achieved in 2021 by the community members involved in the ecosystem of TON, two years before The Open Network Foundation was incorporated in Switzerland.

As part of the commercial agreement to promote the utility of the TON Blockchain, The Open Network Foundation has paid fees to Telegram, much like how Google pays Apple so that Google remains the default search engine in Apple devices. As a result, Telegram is an independent party building products on the TON network similar to over 300 projects in the ecosystem.

The Open Network is now more resilient than ever due to its commitment to the open-source approach and growing a diverse developer community (targeting APAC and Eastern Europe).

How do users use TON?

Users can use TON for a variety of purposes

  • Gas fees for running TON smart contracts and sending/receiving/trading Jettons (TON’s version of ERC-20) 

  • Paying for Telegram Premium, tokenized Telegram usernames, and tokenized anonymous phone numbers

  • Paying for Telegram Ad Platform placements and receiving channel owner revenue share

  • Buying NFTs in TON

  • Token value accrual is via a 50% burn of network fees, which took effect on 17 June 2023. 

  • TON based subscriptions and donations via https://t.me/tribute

  • Wallet Pay for Telegram-based commerce looking to accept crypto as form of payment

What are some interesting dapps built on TON? What are the dapps that you get most excited about on TON?

  • Fragment offers a comprehensive suite of Telegram related blockchain services that are usable via TON as a form of payment. Given the expansion of Fragment from initially tokenized usernames to now anonymous phone numbers, Telegram Premium, and Telegram Ad Platform, we are excited about other ways Telegram will incorporate TON in its plans for monetization.

  • Outside of Fragment, there are vertical leaders across NFT marketplace, DEX, GameFi, etc. and the unique thing about all these applications is that they have a very accessible UI/UX for Telegram users via Telegram Mini Apps. For example, https://t.me/dedustBot is the Telegram Mini App version of the popular DEX on TON called DeDust. As a result of building out the Telegram Mini App, Telegram users can simply connect their Wallet in Telegram (native in settings and attachments menu) to trade tokens in the TON ecosystem. https://t.me/StormTradeBot is another good example of a Telegram Mini App powering perps on TON (via connectivity with the Wallet in Telegram). Exciting thing about a lot of these primitives on TON is that these protocols have yet to launch a token and/or airdrop to its royal users additional incentives. We anticipate a “Jetton Summer” whereby users on TON will get rewarded more and more based on their level of participation.

  • Outside of naming individual projects, I would say keeping a close eye on The Open League is a sure bet to finding alpha on TON based projects and the incentives that are coming its way. Starting in April, The Open League Season 1 kicks off with 30mm TON ear-marked for airdrops to most active users. And as always we are making the entry easier via a Telegram Mini App (https://t.me/Open_league_bot).

Why should developers build on TON?

We believe developers should build on TON because it is the only way for them to onboard both crypto and non-crypto users quickly while keeping their customer acquisition cost sufficiently low. One of the main issues of blockchain protocols is the high CAC associated with crypto user acquisition. This comes in the form of airdrops, KOL campaigns, incentives, etc. 

However, when protocols are able to utilize social viral mechanics as part of their onboarding process, they are able to draw in millions of (Telegram) users without needing to engage in such expensive tactics. For example, Notcoin amassed 25 million users even before the protocol issued a token and brought these users on-chain. And 95% of these users were onboarded through referrals from other Telegram users. We are encouraging developers to learn from this and deploy similar simple and viral mechanics to onboard more Telegram users. 

Lastly, as mentioned earlier, through the Wallet in Telegram, crypto protocols are able to for the first time monetize non crypto-native user base by the way of accepting simple crypto payments. This is a blue ocean for developers who are well versed in the rise of min-apps in super apps across Asia (e.g., WeChat).

How should institutional investors think about the tokenomics and business model for TON? 

From a TON utility perspective in the context of rise of the network and its associated activities, token value accrual via 50% burn of network fees is the best way to think about the business model of TON.

Also, many services already accept TON as a direct form of payment (including Tribute and Fragment), and we anticipate this trend continuing.

From a Telegram adoption perspective, if institutional investors are bullish about the further adoption of TON for Telegram monetization, then the business model for TON is that of further utility for future Telegram based service offerings.

Congrats on TON becoming a top-10 token in crypto! What drove up the recent price increase, in your view?

As always, many things factored into the price action, but based on my personal observations the major catalysts included 1) Telegram’s announcement regarding further monetization efforts via TON (e.g., Telegram Ad Platform), 2) The Open League and start of major incentives on TON (and thus growth in the broader ecosystem development) , and 3) Binance perps listing. We are also gearing up for exciting news on April 19, 2024 (when the founder of Telegram will take the stage during Token 2049 Dubai).

How does TON use or hope to use Artemis?

We first look to start with TON based analytics and apples-to-apples comparison of our metrics against other top L1s. As soon as we are able to feed more TON based applications data, we hope Artemis can show unique views related to traction of TON based applications as well as providing more insights into Telegram’s TON based monetization efforts.

Key Metrics: TON vs L1 Networks

TON Key Metrics Teardown

Andrew here, data scientist at Artemis! You can also find me on X here

🚨 Artemis will be adding TON metrics on chains page- stay tuned

Here are takeaways from TON Key Metrics

  • The recent rise in TON price is highly correlated with fees generated: we’ve found that as TON Gas USD or Fees rose, price similarly followed. Correlation doesn’t imply causation but it's an interesting insight.

     

  • TON stakers have HIGHEST liquid staking rate: We were looking at the liquid staking rate of different chains, and TON Stakers is doing an incredible job of attracting liquid TON and is well ahead of established protocols. 

  • Active Address Growth: TON Chain has seen explosive growth since the beginning of 2024. While TON ranks below Bitcoin and Ethereum, it recently surpassed AVAX in terms of DAA. 

  • Transaction Growth: Transactions have also increased on the TON network and are up over 100% since mid March and TON is closing in on BNB chain in terms of transactions per day. 

  • Fees: The high performance nature of TON allows it to have low fees. While the uptick of addresses have caused fees to slightly increase, fees are still below Bitcoin/Ethereum and are comparable to Avalanche and Solana. 

Chain

Avg Fee (Apr 15th)

Bitcoin

$12.09

Ethereum

$8.45

Avalanche C-Chain

$0.35

TON

$0.06

Solana

$0.05

Sui

$0.01

Aptos

$0.01

Artemis Disclaimer: The authors, affiliates, or stakeholders of Artemis may hold interests in the tokens or protocols mentioned in this content. This disclosure highlights potential conflicts of interest and is not an endorsement to buy or invest in any specific token or protocol. The content is for educational and informational purposes only and should not be construed as investment advice in any form.

Readers should approach this information cautiously and consider their unique circumstances before making investment decisions. The views and opinions expressed are subject to change without notice, and Artemis bears no liability for any loss or damage arising from the use of this information.

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