Unraveling History Development of The Open Network : The Phoenix Shall Rise from the Ashes
The formal collaboration announcement between TON and Telegram has once again thrust this long-silent public chain into the limelight of market attention. Indeed, TON is not a nascent chain to Web3; the project was initiated in 2017, it emerged almost simultaneously with Ethereum. Hence, TON tends to envelop people in a mystifying aura, but as one peels back its layers, it reveals itself to be a tale of “a phoenix rising from the ashes” in the web3 fields.
Feathered Fall: The Termination of a $1.7 Billion ICO
In late 2017, amid the first bull market of the cryptocurrency realm — with Bitcoin’s price catapulting from approximately $800 to nearly $20,000 — numerous projects, armed with grand narratives, were gearing up for successive ICOs. It was at this juncture that Telegram announced its intention to develop its blockchain platform — Telegram Open Network (TON). From its inception, TON was enveloped in high anticipations and successfully conducted two ICO rounds in February and March of 2018, collectively raising $1.7 billion, thus etching its name in the ICO history books.
（Data From: CoinMarketCap）
In May 2019, TON, was steadily marching towards its promised land with the on-schedule launch of its testnet. Yet, a sudden intervention by the U.S. Securities and Exchange Commission (SEC) represented the first hurdle to its ascent to the throne. The SEC alleged that TON sold 2.9 billion tokens to early investors, with 1 billion sold to investors in the United States, violating U.S. securities laws. Consequently, the SEC filed an “emergency action” in order to halt the TON token offering.
(Source: Official SEC Document)
Stephanie Avakian, then-co-director of the SEC’s enforcement division, said: “Our emergency action today is intended to prevent Telegram from flooding the U.S. markets with digital tokens that we allege were unlawfully sold.”
The SEC’s crackdown directly resulted in the TON mainnet’s planned launch in October 2019 being inevitably postponed. Despite the TON team’s strenuous appeals, the SEC’s decision stood firm. After numerous unfruitful negotiations, TON proposed a refund plan for the investors. At this point, the collaboration between TON and Telegram seemed to have reached its finale.
Pavel Durov, Telegram’s founder, expressed his regret on his personal channel and formally announced the end of the collaboration between Telegram and TON. However, Durov also adopted cautious wording regarding a relationship with a “potential new TON”: “While networks based on the technology we built for TON may appear, we won’t have any affiliation with them and are unlikely to ever support them in any way.”
（Sourced From：Durov Personal Posts）
The New King Returns in Defeat, but the Truly Strong Never Complain About their Surroundings.
In June 2020, internal members of TON reached a consensus. Led by core developer Tolya, they decided to decentralize the entire organization and launch the testnet from the Telegram era as the mainnet, aspiring to genuinely realize Durov’s vision for the Web3 world.
This decision also marked the onset of a new chapter for the well-acquainted TON (The Open Network). In June 2020, through community decision-making, TON chose to adopt the more traditional PoW model for initial token distribution. This was a bold move, as TON had always been designed with PoS as the underlying consensus. To achieve this objective, the core team embedded the “Giver Contract” on TON to execute the distribution.
According to this mechanism, tokens distributed via PoW would occupy 98.55% of the total supply, with the remaining 1.45% being held by the core development team. Notably, the TON core development team and the TON Foundation operate as two independent organizations. Two years later, in June 2022, the last TON token out of a total of 5 billion in the contract was successfully mined, symbolizing the successful completion of TON’s initial token distribution phase.
The Crown Prince: The battle for orthodoxy between TON and FreeTON.
The community self-governance plan of Telegram Open Network (TON) did not receive unanimous support from all community members. Before TON’s decision to become community-driven, developer Ron Millow had already hard-forked the Telegram Open Network and named it FreeTON, later rebranded as EverScale.
According to its official telegram chat group, the history of FreeTON can be traced back to May 7, 2020. On that day, Ron Millow announced in the group that FreeTON was officially launched. It’s worth noting that FreeTON fully adopted the TON white paper written by Telegram founder Durov. From that point on, a fierce debate began between the two projects about “which one is the true TON.”
(The Chat History of FreeTON, Sourced From:Telegram Chat Group)
Despite FreeTON capturing the attention of a segment of the community due to its rebellious nature and securing some funding and traffic support, it’s viewed by the majority as merely a standard fork project without establishing any genuine ecosystem connection with Telegram. Owing to the limited number of developers in the FreeTON community, its development progress has been relatively slow. Many features mentioned by Durov in the whitepaper, such as cloud storage and privacy gateways, have yet to be realized. Consequently, FreeTON doesn’t enjoy a favorable reputation among public opinion.
Contrastingly, TON(The Open Network) demonstrated traces of its orthodoxy right from the outset of its rebirth. The most representative of this is the TON Community’s official channel. This channel was not newly created later but existed since mid-2018, back when Telegram was still spearheading the development of TON. Currently, the channel has garnered the attention of over 350,000 followers.
Furthermore, insiders have revealed that the leader of the TON core development team, Tolya, was one of the key person even during the Telegram Open Network era. Hence, from a foundational technical perspective, The Open Network holds a deeper lineage and connection to Telegram Open Network.
Even more significant is the fact that the VK platform, often dubbed the “Russian Facebook,” was also spearheaded by Telegram’s founder, Durov. Its former CEO, Andrew Rogozov, announced on January 21, 2022, that he was joining the TON Foundation. Many perceived this as a solidification of TON’s legitimacy.
However, even before Andrew’s announcement about joining the TON Foundation, the FreeTON team had already recognized the shifting dynamics. In October 2021, they decided to undergo a “rebranding” of the project. After a community vote, FreeTON was officially renamed EverScale. With this, the year and a half long debate over TON’s legitimacy finally came to a close.
The Enigma: Who Holds $TON?
Despite TON’s adoption of the PoW mechanism for an initial token distribution, its token allocation strategy has perpetually held the focus of investors. Current statistics reveal a significant presence of “whale” addresses on TON, each holding up to several hundred million $TON. However, these addresses have exhibited zero transaction activity over an extended period, sparking suspicions of being in a dormant state.
The TON Foundation, currently spearheading the development of TON as a non-profit organization, while its establishment date is indeterminate. Nevertheless, an examination of the mainnet data shows its wallet address becoming active around April 1, 2021. Without a doubt, it seems that the TON Foundation’s primary funding source is tied to the “genesis addresses” associated with Giver contract mining. Not long after the foundation’s wallet was established, these addresses shifted all their funds into the TON Foundation’s public address.
(Large-Scale Funds Flow into TON Foundation Address ，Data Sourced from Tonscan)
(One of the “Genesis Wallets”, Data Sourced From Tonscan）
In a bid to enhance transparency and address community apprehensions, the TON Foundation has brought forth numerous proposals. On February 15, 2023, the Foundation introduced a tokenomic optimization proposal on community channels, aimed at freezing the wallets of early miners that have long been inactive, with a freeze duration of 48 months. A week later, this proposal garnered widespread support from the community and was successfully deployed to the TON mainnet. According to data, approximately 194 wallets have been frozen, involving up to 1.1 billion $TON.
(Frozen Address List, Data Sourced From TON Foundation Statistic)
While this measure effectively reduced TON’s circulation, substantial opposition persists within the community. The main points of contention revolve around two aspects:
- Firstly, the scope of TON Foundation’s power is questioned, with critics arguing it has no authority to freeze any wallet funds, potentially leading to centralization issues.
- Secondly, doubts are raised concerning the origin of the frozen funds, speculating that these assets might be affiliated with the TON Foundation or Telegram.
Undoubtedly, opposition voices continue to increase within the community. However, from a data standpoint, $TON token’s circulation has conspicuously decreased to 3.4 billion. This implies that its circulating market cap has dropped 20% from once surpassing ten billion USD, undoubtedly offering mid-term investors greater potential value.
Nonetheless, a circulation of 3.4 billion fails to alleviate all investors’ concerns. Voices in the market still suggest that TON’s market value is overly inflated and might necessitate a prolonged price adjustment process.
On July 28, 2023, TON enthusiasts from various linguistic backgrounds united to form the TBF (TON Believer Fund). This organization introduced a unique smart contract, wherein interacting funds are split into donations and deposits. All donations are directly distributed as additional rewards for deposits, while deposits undergo a full 24-month lock-up period, followed by a 36-month linear unlock.
The fund received robust support from the TON Foundation on August 18. The Foundation highly commended this spontaneous token economic optimization activity and publicly committed to donating 1 million $TON token in subsequent community voting as support.
Owing to such backing, TBF’s development momentum is formidable. The latest blockchain data indicates that TBF’s contract address has locked up to 970 million $TON token, with the annualized deposit interest rate even exceeding 10%—nearly double the returns of other staking methods on the mainnet.
The overabundance in issuance and supply concentration is one of the core issues currently faced by TON, and also a historical burden left from the Telegram Open Network era. Nonetheless, we are pleased to witness the Foundation and community earnestly striving to address this issue. The existence of TBF further curtails $TON token’s circulation, which is projected to keep increase until October 23. All things considered, whether through official or unofficial actions, after these two tokenomic adjustments, $TON token’s circulation has already halved from 50 billion to approximately 25 billion. The code of the lock-up contract reveals that this figure will be maintained for at least two years.
TonUP Note: For the actual supply, please refer to CoinMarketCap, as the Foundation has verified the data with CMC, and the TBF locked funds have not yet been updated on the data website.
Ambitious Outlook: TON’s Steadfast Determination to Serve 800 Million Users
If TON is the new emperor who is about to take the throne, then Telegram Bot is the lion who will open up the land under the throne. As early as December 2021, First Stage Labs (now TOP) constructed the @wallet within Telegram. At a time when Wallet Bot stood out on the platform mainly utilized for chatting, it became an experimental project. In its early version, the bot only supported the transfer and reception functionalities for two digital currencies, $TON and $BTC, lacking the ability to send checks between friends and not being added to the paperclip menu.
(Wallet Bot Early Version）
Not until August 2022 did Wallet Bot unveil a significant update with its 2.0 version, merging seamlessly with Telegram in the form of a Telegram Web App. Notably, the ‘mini-program’ version of the Wallet Bot was updated even before the formal release of the Telegram Web App, sparking speculation about the relationship between the Wallet development team and Telegram officials.
Armed with its user-friendly interface, smooth interactive experience, and deep integration, Wallet Bot 2.0 emerged as a milestone in Telegram’s transition to Web3. Subsequently, a host of Telegram Bots made their debut.
However, @Wallet is not the sole innovation of TON within the Telegram ecosystem. Concurrent with @Wallet, TON announced a partnership with Telegram Donate, launching @Donate, a payment tool specially designed for private channels. Through this bot, content creators can establish private channels with an interactive mode akin to OnlyFans. According to data as of June 15, 2022, @Donate has serviced over 3,000 Telegram communities and channels.
Additionally, the TON Foundation unveiled an anonymous E-Sim card service named @mobile in June of the same year. Although the product ensures user privacy through cryptocurrency payment and direct E-Sim card binding, its pricing strategy faced scrutiny. Taking the United Arab Emirates (UAE) as an example, the current price for a 1GB 7-day data package in the region is $12.60, significantly above the market average.
From TON’s inception, Durov specified in the white paper that it was a public chain prepared for large-scale social applications. Perhaps in TON’s macro design, the crypto community is just a tiny fragment of its domain; what Durov has always sought is a ‘super platform’ serving eight hundred million users.
TON, born with a golden key, desires a new era of revolutionary character.
Expansion: The Emergence of Fragment
On October 28, 2022, Telegram officially launched the Telegram Username NFT based on the TON blockchain and concurrently rolled out the interactive platform - Fragment, which combines auction and management functionalities. To boost its appeal, Telegram specially unlocked the creation rights for 4-byte Usernames for the Fragment platform (previously, Telegram usernames could only be up to 5 bytes).
According to publicly disclosed data from Fragment, top-tier 4-byte Usernames with commercial potential all fetched auction prices far exceeding 100,000 $TON, especially at a time when the price of $TON fluctuated between $1.6 and $2.0. Particularly eye-catching was the @news Username, which was snapped up for a staggering 994,000 $TON.
Even amidst the backdrop of the significant setback faced by the stablecoin project Terra, and the turbulence experienced by the renowned cryptocurrency fund Three Arrows Capital within that half-year, the digital market’s panic did not dampen the community’s enthusiasm for Fragment. Within less than a month of its launch, Fragment successfully sold Username worth over $50 million USD, showcasing remarkable success.
(Data from: Fragment)
By the end of December, Telegram had sequentially introduced the Anonymous Number and Premium membership services payable in cryptocurrency on the Fragment platform. Notably, Anonymous Number is a unique identity verification system built on the TON blockchain. By merely owning the Anonymous Number NFT, users can register or bind their Telegram account without a phone number, significantly bolstering Telegram’s anonymity. This provides a more secure login method for users with restricted access.
However, what TonUP wishes to highlight is that the potential of Anonymous Number is certainly not limited to just logging into Telegram; it is essentially a DID (Decentralized Identifier) that Telegram has constructed on TON.
The debut of Fragment unquestionably injected tremendous confidence into the TON ecosystem. In November 2022, even against the backdrop of the collapse of the top-tier cryptocurrency exchange FTX, often dubbed the “Lehman of the crypto world”, $TON’s price remained steady. In fact, it even rallied counter-trend during the market’s nadir. By mid-December 2022, its price briefly touched a near two-year peak of $2.9.
（Data From：CoinMarketCap）
The Phoenix Shall Rise from the Ashes，just like setbacks will not stop the true king from ascending the throne, but only make it stronger. The new era of TON has just begun.
Coronation: A Long-Awaited Reunion at Token 2049
Before we delve deep into Token 2049, let’s take a moment to review several significant recent events. According to a Reuters report, on July 13, 2023, the renowned cryptocurrency project XRP claimed victory in its legal battle with the SEC, providing pivotal evidence towards it not being viewed as a security.
This preliminary ruling in the case implies that the SEC doesn’t have as absolute jurisdiction over most cryptocurrency projects as they thought, rendering previous enforcement actions somewhat groundless. News of XRP’s win led to a brief manic surge in “previously SEC-sanctioned” related concept stocks, with the market showing signs of a mini-bull run for a short period.
As for TON, as early as June 25th, the SEC’s 3-year restriction order issued in 2020 had expired, with the SEC not applying any new restrictive measures, signifying an end to the legal sanctions against Telegram and TON.
(Source: SEC Enforcement Document)
XRP’s legal triumph has bolstered confidence in the possibility of a TON and Telegram reunion, while the expiry of the SEC’s restrictive document provides practical room for such a probability.
A series of signs seem to subtly hint that this is a perfect timing, where the all favorable factors get confluence, with the right-time, right place and right people align.
Finally, at the global top cryptocurrency summit, Token 2049, on September 13, 2023, Telegram’s CTO John Hyman and TON Foundation President Steven Yun represented their respective teams in a joint presentation entitled “Transforming Telegram to Web3 with Toncoin”, marking the first public appearance of TON and Telegram together after three years.
During the event, John Hyman formally announced the collaboration plan with TON and shared Telegram’s strategic blueprint in the Web3 field, also unveiling the soon-to-be integrated TON decentralized non-custodial wallet, TON Space. Steven Yun offered a future outlook for TON and posed a widely attended prediction: “We estimate that about 30% of Telegram’s active users will use the TON blockchain within the next 3-5 years.”
The throne of the Valhalla will always await its new emperor, even if the pathway is full of bumps and thorns. But more than remembering the ups and downs, it is worth waiting for the new emperor to open up new territory and bring crypto to thousands of households.
With the massive user base behind Telegram, will TON experience a new peak? Will the market fully support Telegram becoming the leader in SocialFi? How will Telegram lay out its strategies in the Web3 domain? All of these remain unknowns, and the story continues…
About This Article
This article is the first article in the TONversation column under the Public Goods project by TonUP. TONversation is a column project launched by TonUP, aimed at bringing more in-depth knowledge of TON and perspectives on ecological expansion to the community, exploring the rich ecosystem of TON together. TonUP is not only a leading launchpad on TON but has also received investment support from the TON Foundation grant and TONCoin Fund.
The authors of this article, Graham, Leo, and Freya, have also contributed to this work. This work is ©2023 by TonUP, and is licensed under a CC BY 4.0 license. Anyone can distribute, remix, adapt, and build upon this work in any medium or format, even for commercial purposes, but must provide appropriate credit to the creators.