Produced by: CGV Research
Author: Satou
In the blockchain space, The Open Network (TON) has been making significant strides in the payment sector due to its unique advantages and substantial user base. In 2024, the TON ecosystem has demonstrated robust growth across multiple areas. According to recent data, as of July 21, 2024, over 730M USDT has been issued on the TON network, serving as a crucial driver for the development of the TON payment ecosystem. Additionally, TON gaming platforms like Notcoin, Hamster Kombat, and Catizen have achieved remarkable success, attracting 35 million, 230 million, and 25 million users, respectively.
As the TON ecosystem continues to mature and expand, its application prospects in DeFi, GameFi, and SocialFi are becoming increasingly clear. The CGV research team delves into TON’s “ambitions” in the payment sector, exploring how it leverages its strengths, overcomes challenges, and strives for long-term development in crypto asset management and DeFi.
Unique Advantages of TON: Backed by Telegram’s Massive User Base
According to Statista, as of April 2024, Telegram boasts 900 million monthly active users, ranking eighth among global social networks. In comparison, the blockchain with the highest number of monthly active addresses, Solana, has an estimated 14 million monthly active addresses, which is just 2% of Telegram’s user base
From a regional distribution perspective, aside from its origins in Russia and Ukraine and the diverse population of the United States, Telegram users are primarily located in developing countries such as Southeast Asia, Africa, and Latin America.
Based on user demographics, Telegram has a massive user base, but the average income per user is relatively low, making Telegram more suitable for traffic-related businesses rather than serving high-net-worth individuals.
Unlike other social network projects, Telegram introduced its own encrypted public chain very early on and tightly integrated it with its social network.
In 2017, Telegram founders Pavel Durov and Nikolai Durov began developing the blockchain project named Telegram Open Network (TON) and planned to launch its native cryptocurrency, Gram. In 2018, they raised approximately $1.7 billion through an ICO, which also attracted the attention of the U.S. Securities and Exchange Commission (SEC).
In 2020, due to regulatory issues, Telegram announced its withdrawal from the TON project, returning development work to the community. The project was taken over by the TON Foundation, renamed “The Open Network,” and the token was renamed Toncoin, with ICO funds refunded.
After several twists and turns, in 2023, Telegram officially announced TON blockchain as its preferred Web3 infrastructure and plans to integrate it into the Telegram app interface. In contrast, Facebook’s Libra (Diem) cryptocurrency network, after two and a half years of various setbacks and regulatory pressures, announced it would no longer launch.
Additionally, Telegram’s emphasis on privacy and lack of regulation makes it more crypto-friendly, to some extent supporting gray industries that cannot pass regulatory scrutiny, which were early widespread applications of cryptocurrencies. As a result, Telegram hosts a large number of crypto users.
Overall, TON’s ecosystem has leveraged Telegram’s advantages from the start, giving it a head start in developing cryptocurrencies.
Monetizing Traffic: Overview of TON Mini-Games
Compared to fully on-chain games that were once popular on Ethereum, the recent hit on TON might be fully off-chain games. These casual (and sometimes slightly juvenile) mini-games attract users through economic incentives. Fully on-chain games adopt a grand narrative of autonomous worlds, attracting users through potential cultural identity, but often fail to gain widespread adoption. TON’s mini-games are more straightforward: open your phone, tap a few times, and you can earn a point, which can be exchanged for tokens with real value in the future.
Recently, the explosion of TON game projects seems to reveal the infinite potential of the industry.
Notcoin: With extremely simple gameplay, users earn coins by tapping the phone screen, which can be exchanged for Notcoin tokens. It has attracted over 35 million game users, launched on Binance and OKX, with its token price soaring post-listing, reaching a market cap of nearly $3 billion.
Hamster Kombat: Also using the Tap to Earn model, it offers additional ways to earn rewards through card purchases/synthesis, daily check-ins, social media tasks, and referrals. It has gained over 230 million registered users in less than four months.
Catizen: A casual cat-raising game that combines game monetization with airdrops to directly establish cash flow. It has over $10 million in revenue, more than 25 million players, and has converted 1.4 million on-chain users.
Notcoin has opened up the imagination space for the track, Hamster Kombat is leading the way in traffic, and Catizen represents a more refined and sustainable approach, hinting at the future direction: it’s not just about tapping but establishing a cash flywheel from day one.
On one hand, simple game design allows more users to participate, leading to better user data. On the other hand, due to the simplicity, the cost of brushing data is low, so the data might be significantly inflated.
In the future, TON mini-game projects will inevitably shift from competing for simple user traffic to competing for user traffic conversion rates. This requires not only better game design but also a sophisticated monetization system to generate sustainable cash flow and maintain the capability for sustainable development.
Insights from Official Channels
According to the TON official website, Mini Apps, GameFi, and DeFi are the key product types they wish to onboard.
The TON Foundation’s Grants program explicitly mentions supporting these categories and provides examples for each. Here are some key statements:
Telegram Mini Apps: Social Web3 Use Cases
SocialFi: Creator economy
E-commerce: Trade market for electronic or physical goods
Utility: Daily tools with embedded Web3 elements
Community & Brand management: Tools for managing Telegram communities
Onboarding platforms: Bringing new users to @wallet or custodial TON wallets through simple scenarios
DeFi
Lending protocols
Derivatives DEXs
DEXs with weighted pools (like Balancer.fi)
Yield aggregators
Liquidity layers
Restaking
GameFi
We are always happy to support web3 games with easy onboarding, viral social mechanics, referral programs, elements of competition (squads, leaderboards, group challenges), and exciting gameplay.
From the above content, it’s clear that Mini App support for Social Web3 use cases will be a development focus. For DeFi, the TON ecosystem aims to enrich the types of DeFi applications. For GameFi, the TON ecosystem can assist games with user onboarding, viral social mechanics, referral systems, competitive elements, and engaging gameplay.
Predicting the Near-Term Future of TON: The Reds and Blacks
Why [Temporarily] Not DeFi
The explosion of the DeFi sector depends on a key metric: TVL (Total Value Locked). Currently, Ethereum leads with a DeFi TVL of $60 billion, surpassing the combined TVL of all other blockchains. This is due to Ethereum’s high native asset value (ETH), a complete DeFi ecosystem where nearly all DeFi innovations occur, the introduction of wBTC to supplement DeFi liquidity, and the release of large amounts of LST/LRT through staking & restaking mechanisms, significantly boosting TVL.
For TON, the largest asset on-chain is Toncoin, with a market cap of about $17.5 billion. The second-largest asset is USDT authorized by Tether, surpassing 730M as of July 21, ranking fifth among all blockchains. According to DefiLlama, TON’s current TVL is $757 million, indicating a clear shortfall.
From the CGV Research team’s perspective, TON’s DeFi ecosystem lacks the following conditions for an explosion:
Onboarding of BTC and ETH: The most traded assets on CEXs are usually BTC and ETH. Therefore, a high-security, low-slippage, low-fee cross-chain bridge for BTC and ETH is needed to bring a large amount of BTC and ETH into the TON ecosystem. Currently, TON’s cross-chain bridge infrastructure is still under construction.
More diverse liquid staking products: TON transitioned from PoW to PoS, with initial supply distributed to miners and the team. After transitioning to PoS, it can only choose to reward PoS miners through an annual inflation rate of 0.6%. Compared to other PoS blockchains, TON’s staking rate is less than 10%, which is not high. Therefore, more liquid staking products are needed to increase staking levels, enhance chain security, and boost TVL.
More secure wallet infrastructure: The @wallet wallet built into Telegram is a custodial wallet, and given Telegram’s unregulated nature, high-net-worth individuals often do not trust TON’s security. TON needs to introduce more secure wallet infrastructure, such as MPC wallets, and undergo thorough audits to gain the trust of high-net-worth users.
These conditions are unrelated to Telegram’s biggest advantage — user traffic — meaning that it might be an uphill battle.
Why Payments
Native USDT is being issued on the TON network at a very high growth rate. As of July 21, over 730M USDT has been issued. The blockchain with the most USDT issued is Tron, with over 60B TRC20-USDT issued. Tron’s data reveals the vast potential of the stablecoin payment track.
The TRON network has over 235 million users, with over 7.8 billion transactions and $450 million in annual fees (network revenue). On average, 2–3 million user accounts transfer over $10 billion daily. Most USDT holders on Tron are “retail” or small holders. Holders with balances below $1,000 number 52.6 million, even growing during the 2022 bear market. In contrast, the $1K-$10K group has 359,000 holders.
From on-chain activity, Tron’s transactions are primarily USDT transfers, with minimal DeFi adoption, almost no NFTs, and none of the hot LST/LRT or Memecoins from other blockchains. Yet, it sustains 7.8 billion transactions. Tron can be described as a blockchain designed for stablecoin payments.
The reasons for Tron’s large-scale stablecoin payment adoption are:
Lower transaction fees, faster speeds, and higher TPS than Ethereum
Early adoption triggering a positive feedback loop of users and merchants
Long-term stable service earning user trust
TON’s payment business has the following advantages over Tron:
Higher TPS: With sharding, it can support up to millions of TPS, with cheaper fees than Tron
Closer to users: TON wallets are directly integrated into Telegram, making them more convenient and versatile, comparable to WeChat Pay
More diverse on-chain activities: TON has more applications that can retain funds on-chain, not just simple fund transfers.
The TON Foundation is also actively promoting USDT usage on TON:
5 million TON allocated to reward USDT Farming Pool, with up to 50% APY in Toncoin for USDT deposits
On July 1, Tether partnered with Web3 shopping and infrastructure company Uquid, allowing Filipino citizens to pay social security funds with USDT on TON
Fee-free, instant USDT transfers using the built-in Telegram wallet, with the ability to transfer USDT to friends without needing addresses
Products like subscriptions, VPNs, gaming platforms, and eSIMs on Telegram can be paid directly with USDT on TON
Payments will also serve as a key primitive, empowering Telegram Mini Apps and various types of Social Web3 Use Cases. For instance, the creator economy (SocialFi) requires payments for subscriptions and tipping; e-commerce needs payments for goods purchases. More importantly, Telegram Mini Apps could become a Web3 version of the AppStore, requiring payment functionality for managing paid apps. Telegram may follow Apple’s example by charging fees for paid services of apps listed on its AppStore, further diversifying its revenue model.
Currently, TON has integrated multiple third-party payment service platforms, enabling merchants to accept payments in various ways.
However, compared to WeChat Pay, TON’s payment business still has risks. The most critical is that Telegram’s privacy protection and unregulated characteristics may prevent many legitimate businesses from integrating TON payments due to compliance issues. The TON Foundation is actively seeking solutions, such as requiring KYC for rewards in the USDT Farming Pool, indicating a proactive attitude towards compliance.
Conclusion
In summary, the CGV Research team believes that TON’s rise in the payment sector is not accidental but the result of its strong user base, technical advantages, and ecosystem strategy. Although there are still many challenges, such as regulatory issues and user trust, TON showcases strong growth potential with its innovative payment solutions and close integration with Telegram.
In the future, with more high-quality applications and user traffic conversion, TON is poised to secure a significant position in the global payment market, becoming a vital force in the blockchain payment field.
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About Cryptogram Venture (CGV):
CGV (Cryptogram Venture) is a crypto investment institution headquartered in Tokyo, Japan. Since 2017, its fund and predecessor funds have participated in investing in over 200 projects, including the incubation of the licensed Japanese yen stablecoin JPYW. CGV is also a limited partner in several globally renowned crypto funds. Since 2022, CGV has successfully hosted two editions of the Japan Web3 Hackathon (TWSH), supported by Japan’s Ministry of Education, Culture, Sports, Science and Technology, Keio University, NTT Docomo, and other institutions and experts. CGV has branches in Hong Kong, Singapore, New York, Toronto, and other locations. Additionally, CGV is a founding member of the Bitcoin Tokyo Club in Tokyo, Japan.
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