Conclusion

Previously Telegram Open Network, this chain was renamed to The Open Network. It was originally created for the sake of monetizing the Telegram messaging app without advertising. 

Telegram funded the project from a token sale but the US SEC stopped them from distributing the token to the buyers as it was deemed an unregistered security. This halted the project in place, forced Telegram to pay back the buyers, and they had to stop development altogether. Before they stepped back from the project, they held a contest for independent developers to gain access to the code. In September 2019, the competition was won by Anatoliy Makosov and Kirill Emelyanenko. They, and a small team of volunteer devs, independently developed the network and the mainnet launched in May 2021. The code has changed significantly since Telegram’s time developing it, but the TON blockchain has integrated fully with the Telegram app.

We can picture the relationship between TON and Telegram to be rather like an app on the app store, where TON is an app and Telegram is the app store. The TON Foundation – the registered non-profit group that essentially manages marketing and development of TON, and acts as the centralized governance system – describe the relationship as Telegram using the TON blockchain as an independent third party, building on it without direct involvement with the Foundation. While the TON blockchain is technically separate from Telegram now, it is important to note some serious concerns about the Telegram messaging app, especially because of the inherent integration. A primary concern is that by default, the app continuously stores all contacts, messages and media with their decryption keys on its servers, and doesn’t enable (by default) end-to-end encryption for messages. This is primarily so users can access their data across devices, but it poses a major security risk for people who believe the app is private and secure. How does this apply to TON blockchain? Since the TON wallet was integrated directly into the wallet that was already on Telegram, there may be some privacy concerns with the data storage practices, but it’s unclear where the data is being stored – on the TON Blockchain, Telegram’s servers, or both.

A good question to ask is why TON decided to integrate with Telegram almost exclusively at this point. On an Unchained podcast in July 2024, the TON Foundation claimed that this was due to it being easier for user onboarding. They described it as “two taps to create the wallet in telegram and then one tap to open the mini-app.” They do note that devs don’t have to exclusively rely on Telegram – they can direct users off the app – but the initial user interaction is within the Telegram app. This is actually a fairly smart marketing strategy because there are over 900m users on Telegram already, and they don’t need to know that the mini-app or wallet they are interacting with is blockchain based. They don’t need to know how it works, just that it works.

We’ve mentioned mini-apps, but what are these? Basically, TON is set up as the layer 1 on top of which anyone can create a project that runs parallel to it. The most popular mini apps are games. The games’ on-boarding mechanics have been compared to FarmVille on Facebook where you would share your referral link with all your friends automatically; anyone playing one of these games on Telegram can share their referral link to all their contacts with a few clicks, so it’s incredibly easy to get more users involved. The TON Foundation is marketing this as a funnel to get users into web3, which it may well be but it’s too early yet to say if the users will actually go off Telegram into web3 native architecture or not. One concern is that these games are working with the strategy of building a community to raise funds before fully developing their projects – which isn’t necessarily a bad thing but there’s no guarantee that the in-game tokens–or even the TON coin–will have utility longer-term. So, sustainability is in question.

What about the effectiveness (speed and scalability) of the network? TON aims to be the fastest chain there is, which it would need to be to handle over 900m users at any given time. In October 2023, Certik and TON did a test of how many transactions per second (TPS) they could reach, and reportedly reached over 100k TPS. Despite this, as of June 2024, the average TPS for the network is only 175, which is lower than Solana, Sui, BSC, and Polygon. That may be because of volume – there may not have been enough transactions pinging the network to reach higher throughput – but it’s hard to say with the data we have. Live updates on TPS can be found on Tonscan.org.

The documentation on the TON Blockchain is scattered. The docs themselves point to the original whitepapers, but the TON Foundation stated in 2024 that the code/build changed dramatically since then; it’s not clear how it has changed, just that it supposedly has. The most coherent information was found to be written by third parties (news sites, Medium articles, Reddit posts, etc) off TON’s own website/documentation, so there is lack of consistency and it is uncertain if these can be trusted. As far as can be gathered about the technology itself, the most recent report that seems reliable (published by a Chainlink advisor) at time of publishing claims the following:

• TON Blockchain now uses a Byzantine Fault Tolerant (BFT) Proof-of-Stake (PoS) consensus mechanism, but between 2020 and 2022 they used an “Initial Proof-of-Work (IPoW) mechanism to pre-mine the total token supply. (Their mining history is officially on ton.org) Approximately 85% of the pre-mined tokens minted by a small number of miners affiliated with the TON Foundation.
• Validators are required to stake a minimum of 300,000 TON and receive block rewards and transaction fees, and are punished by losing some or all of their staked funds. The lost funds are either burned or given to the people who identified the bad behavior.
• People can delegate funds to validators and receive a portion of the staking rewards.
• Fees are paid by developers, similar to how Internet Computer Protocol does it, but there are fees paid by users (usually 0.005 TON) for specific services, such as storage fees and messaging fees.

The network requires the agreement of 66% of validators for any changes, which is a high number (most require 51% or even 33%), but it’s important to note that while the validators can vote on proposals at ton.vote, the votes are not binding and the TON Foundation ultimately decides what to enact or not. There is also evidence that approximately 66.9% of validators received funds from the pre-mined TON addresses likely controlled by the TON Foundation.

Overall adoption of the network was dramatically increased when it integrated with Telegram. Before February 2024, there were less than 5 million accounts on the network, and by July 2024 there are over 42 million. This rapid growth could show that integrating with Telegram is a good thing for the ecosystem, but it could also show that it isn’t necessarily sustainable – if Telegram goes down, people lose interest in the mini app games, or the games don’t end up growing into larger ecosystems, then the number of accounts could mean very little. There is a serious lack of liquidity with exchanges accounting for mostly less than 10% of the volume of trades, which tells us the majority of trades is likely happening within Telegram itself, and thus the ability to off-board is limited. Since most of the activity is within Telegram, and within the mini-apps, there is huge risk of scams since it’s so easy to get people to engage in the mini app with a single click.