29.08.2024
One of the central themes in Karl Popper's book “The Open Society and Its Enemies” is that authoritarian societies tend towards closed systems and see a threat in everything that represents an open management model because they cannot control it.
Pavel Durov's arrest by French authorities has stirred controversy and sparked discussions centered around censorship and freedom of speech. These issues revolve around the nature of Telegram as a communication media—known for its enhanced security and privacy features and its resistance to censorship. The arrest has been viewed suspiciously by observers worldwide: It was strangely underreported by large media companies, despite the huge social media buzz around it
Our focus in this article is on the cryptocurrency ecosystem that has emerged from the minds behind Telegram and its interactions with the messaging app. Telegram, similar to Twitter (now X), is a favored platform within cryptocurrency communities for its ability to support large group chats, send extensive messages, and facilitate automated bot interactions.
The Open Network, a decentralized blockchain developed by the Durov brothers, who founded Telegram, was launched in 2018. It was designed for secure and rapid transaction processing and Dapp creation. Following a legal dispute with the U.S. Securities and Exchange Commission (SEC), which accused Telegram of conducting an unregistered securities sale through its ICO, Telegram had to step back from the project. The legal battle concluded with a fine and approximately $1.2 billion returned to investors. Subsequently, an independent group of open-source developers and the TON Foundation took over the project, eventually launching the network and its native token, TONcoin.
The Open Network (TON) and its native token, Toncoin, have seen remarkable growth throughout 2024, propelling it into the top 10 by market capitalization at $13.5 billion, surpassing other more established chains like Cardano. It has been the fastest-growing Layer 1 blockchain of the year, with a current Total Value Locked (TVL) of $319 million, a significant increase from about $14 million at the start of the year. This growth has been parallel to the expansion of Telegram, primarily driven by the deep integration of the network with the messaging app, which boasts nearly 800 million active users.
Source: DeFiLlama
What has made TON grow so rapidly and sustainably? Some aspects are related to its technology, and others concern the development of its ecosystem.
Blockchain of Blockchains.
The initial purpose of developing the Open Network, in addition to seeking integration with the Telegram app, was to offer services such as VPN and DNS, as well as the development of DApps. TON is designed to function as a network where other blockchains can easily converge. To achieve this, it operates through a layered architecture consisting of a master chain, work chains, and shard chains, which alternate for network efficiency and scalability. The master chain coordinates the entire network, the work chains support smart contracts and DApps deployment, and the shard chains allow parallel transactions.
The TVM (TON Virtual Machine) processes the execution of smart contracts and ensures they run consistently across all nodes. TON uses a Byzantine Fault Tolerant Proof-of-Stake (BFT PoS), which enables validation through Toncoin staking and prioritizes block confirmation by a majority of “honest” validators.
TON Ecosystem.
We could say that TON is in an early phase of ecosystem development compared to heavyweights like Solana, but its rapid evolution is also due to the way it integrates with the Telegram app. For example, Telegram's compatibility with setting up a crypto wallet provides unique access to the app's millions of users.
Crypto projects like Hamster Kombat or Catizen, which have not yet done a token airdrop, already have millions of users. Access to the game interfaces, as well as the wallet for receiving rewards or making purchases and transactions, is done directly through the Telegram app.
Source: Catizen
Catizen is a cat-themed game in the Tap-to-Earn and Play-to-Airdrop style, where players can earn tokens by feeding virtual kittens. Additionally, players can literally help and feed stray and sheltered cats by purchasing a package in the game.
The power behind the launch of crypto projects on TON is so significant that the token claiming using the TON wallet for the DOGS memecoin, a token from its ecosystem, caused the network to have its "Solana moment," halting block production for a few hours. Memecoins dominate the TON ecosystem, but GameFi projects stand out, especially those that have created a sub-genre called Tap to Earn, with Notcoin being the largest project by market capitalization.
Notcoin is the leading Tap-to-Earn project within the TON ecosystem and has paved the way for the development of this model. With a community of over 15 million subscribers on Telegram, and reaching up to 2.5 million active users in a single day, Notcoin has successfully distributed tokens to its users through engagement in its games. In 2024, where traditional airdrops have often failed to distribute rewards equitably, these participation-based models have proven that sustained growth is achieved through the active involvement of users.
Additionally, one of the main reasons for the growth of the TON ecosystem was the launch of the Open League rewards program, featuring a prize pool of 150 million to be distributed across various categories, such as NFTs or DeFi.
One of the most exciting developments is the integration of a wallet with the Telegram app, which allows for functionalities such as receiving, purchasing, holding, and sending various crypto assets. Setting up a wallet in Telegram is literally just a click away. Any user looking to engage within the TON ecosystem needs to set up their wallet, which is straightforward.
Source: TG Wallet
In May, the TON Foundation and Tether announced their collaboration to bring stablecoins to the TON network and enable payments using Telegram's wallet functionality. Currently, users can purchase stablecoins supported by Tether and conduct cross-border payments to other addresses and fee-free transfers to other Telegram users.
Integration and Legal Challenges.
The integration of The Open Network with Telegram, utilizing the app's extensive reach and user base, represents an intriguing development that showcases the potential of blockchain technology when merged with traditional apps that already have an established user base. This merger significantly expands the functionality of both platforms.
Following Pavel Durov's release and his indictment, which includes charges related to "illicit transactions," there is no specific mention of activities related to cryptocurrencies or The Open Network. However, we cannot rule out the possibility that implications involving these areas may emerge as this legal case evolves.
Currently, TON has 349 validators in 25 countries, making the network healthily decentralized on this front. However, the foundation of one of its strengths is also its weakness: its intrinsic relationship with Telegram. We cannot dismiss the possibility that the issues surrounding the app and its founder also extend to the crypto functionality of the environment. If the app, through the wallet, is capable of processing cross-border payments, wouldn't this be an aspect under the regulators' scrutiny?
This issue is fundamental in the current environment, where centralized authorities are questioning open models and resistance to censorship. It is crucial that all fronts remain vigilant, as freedom is not a concession but a conquest.