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Key Takeaways:
- Toncoin (TON) has rapidly become one of the top cryptocurrencies since its revival, demonstrating robust technology and great marketing.
- Despite its impressive growth, TON still lags behind competitors in Total Value Locked (TVL), indicating it has yet to fully capture user and developer engagement compared to leading blockchain networks.
- TON’s close association with Telegram provides access to a massive user base, enhancing its potential for widespread adoption.
The year was 2018, and the messaging giant Telegram, led by the visionary Durov brothers, Pavel and Nikolai, was dreaming big. Their ambitious plan? To create a blockchain that would revolutionize the digital landscape: the Telegram Open Network (TON).
Their vision was a digital world where millions of transactions could instantly zip across the globe, with absurdly low fees. At the heart of this grand idea was a new cryptocurrency called Gram, poised to power this lightning-fast network run atop Telegram.
The crypto community was electrified. Investors, caught up in the excitement, poured a staggering $1.7 billion into the project through an Initial Coin Offering. It seemed like nothing could stop TON’s meteoric rise.
But fate had other plans. In 2020, the SEC dropped a bombshell, suing Telegram and declaring Gram an unregistered security. The Durov brothers found themselves caught in a regulatory tempest, forced to abandon their brainchild and return their investors’ money.
But from the ashes of the original project, a group of passionate developers and enthusiasts formed the TON Foundation. They breathed new life into the project, rebranding it as “The Open Network” and transforming Gram into Toncoin (TON).
And so, against all odds, Toncoin’s journey began: a tale of vision, setback, and rebirth.
Today, the TON Foundation’s efforts, along with its strategic marketing campaigns and legacy association with Telegram, have helped Toncoin gain significant traction. TON has rapidly climbed the ranks to become one of the top cryptocurrencies by market capitalization and is now just outside the top 10 chains by total value locked.
Key Fundamental Data
- Daily Active Users (DAU): TON’s active user base has been growing significantly, recently reaching an all-time high of over 500k DAU and even surpassing Ethereum. As of now, it records over 363k DAU: comparable to Ethereum’s 372k DAU but still lagging behind other Layer-1 networks like Solana (1.09m), Tron (2.12m), and BSC (795k).
- Fees and Revenues: TON's revenue model is both sustainable and scalable. It primarily generates revenue through transaction fees, which are then used to compensate validators who process and validate transactions. According to Token Terminal, TON is expected to generate approximately $21 million in 2024.
- Market Cap: Toncoin boasts a market cap of over $18 billion, reflecting a 260% increase from the previous year. This impressive growth positions it ahead of Tron ($11bn), Cardano ($15bn), Polkadot ($9bn), and Avalanche ($11bn), while it remains behind Ethereum ($421bn), Solana ($80bn), and BSC ($87bn).
Market Analysis
- Problem that it solves: TON operates as a Layer-1 blockchain with the primary goal of efficiently providing blockchain services to millions of regular users. It addresses the need for a scalable and effective blockchain platform by facilitating fast and secure transactions.
- Customers: TON's user base encompasses various demographics, ranging from crypto enthusiasts and developers to individuals seeking decentralized services on the TON network. And of course, TON targets Telegram's user base, which is 58.6% male and 41.4% female, with the majority aged 25-34 years.
- Value creation: Adopting TON adds value by offering fast and cheap transactions and access to a diverse range of decentralized applications and services.
- Market structure: The layer-1 niche is relatively saturated with Ethereum as the clear leader. TON is ranked 11th by TVL, so it still has some ground to cover to bridge the gap between itself and the top networks.
- Market size: The potential market for TON is significant, as the project aims to cater to millions of regular users. Its close association with Telegram could help achieve this goal.
- Regulatory risks: TON's size and popularity make it subject to regulatory scrutiny, combined with its historical legal challenges involving the SEC.
Our analysts rated TON a 2.7 out of 5 for market analysis. Download the complete scorecard here.
Competitive Advantage
- Technology/blockchain platform: Toncoin operates on the TON blockchain, which was built from the ground up and launched in 2020.
- Lead time advantage: TON does not have a lead time advantage as it competes with already thriving projects like Solana and Ethereum, which have established strong market positions.
- Contacts and networks: TON benefits significantly from its association with Telegram, giving it access to key industry players. Notable individuals such as Andrew Rogozov, formerly Vice President at VK, Russia's largest social media network, and other experienced professionals joined the TON project after its revival.
Our analysts rated TON a 2.3 out of 5 for competitive advantage. Download the complete scorecard here.
Management Team
- Entrepreneurial team: TON was created by Nikolai and Pavel Durov, two successful entrepreneurs, and developed by the Telegram team. Following the SEC saga, independent developers took over the project under the TON Foundation led by Andrew Rogozov.
- Industry/technical experience: The present TON team comprises experienced developers, including successful entrepreneurs like Andrew Rogozov. Despite the early challenges, the team has done a commendable job executing the Durov brothers' initial vision, and the coin has grown to become one of the largest by market capitalization.
- Integrity: TON has a controversial history, particularly due to its SEC history. However, the revived project has maintained a clean slate.
Our analysts rated TON a 3.7 out of 5 for the management team. Download the complete scorecard here.
Token Mechanics
- Token required: Toncoin plays a central role in TON, serving various functions such as securing the blockchain through staking, covering transaction fees, and participating in project governance.
- Value added: Toncoin does not necessarily add any new type of value; it functions similarly to most other native tokens.
- Decentralized: Toncoin exhibits decentralization to some extent, but the oversight of operations remains with the non-profit TON Foundation.
- Token supply: Toncoin is an inflationary cryptocurrency with a total supply of 5.1B tokens as of this writing.
- Public exchange: Toncoin is listed on some major exchanges such as OKX, KuCoin and Bybit.
- MVP: TON has been fully operational since it was revived in 2020.
Our analysts rated TON a 3.5 out of 5 for token mechanics. Download the complete scorecard here.
User Adoption
- Technical Difficulty: TON aims to attract users to its blockchain through various strategies, such as its partnership with Telegram. This taps into Telegram’s massive user base to make it easy for newcomers to crypto to join and use the blockchain.
- Halo Effect: TON is strongly associated with Telegram, one of the most popular messaging services, and investors such as MEXC Ventures.
- Buzz: TON has an impressive following on social media, with 2.3 million followers on Twitter and over 1 million subscribers on its Telegram channel.
Our analysts rated TON a 4.3 out of 5 for buzz. Download the complete scorecard here.
Potential Risks
- Team: TON is backed by a highly capable team of experienced developers and entrepreneurs. Despite initial challenges, the team has successfully executed the vision of the Durov brothers, leading to significant growth in market capitalization. They have also maintained a strong reputation without major controversies.
- Financial: The Open Network Foundation, the biggest contributor to TON, relies on donations from the community. In 2022, the foundation revealed that it raised over $1 billion (527 million Toncoin) from users. The $1 billion donation from users was made in the project's native token, Toncoin, with no information available on whether the holdings were diversified to mitigate financial risk.
- Regulatory: TON had a challenging start with SEC issues that led Telegram to abandon the project. The revived TON project has since avoided SEC conflicts, but regulatory risks remain due to its size and association with Telegram.
- Smart Contract: TON's smart contracts have been audited by the reputable security firm Certik, and the project maintains an ongoing partnership with them. Additionally, TON offers a public forum for reporting bugs and rewards of up to $100,000 for identifying vulnerabilities.
- Traction: TON boasts a robust following, evidenced by its impressive social media presence. This is partly thanks to its strong association with Telegram, which helps TON onboard new crypto users by making it easy for them to use the blockchain. It maintains the same traction on-chain, boasting over 363k daily active users.
- Behavioral: It's likely that some users are investing in the long-term potential of the project due to its technology and vision. However, others are likely to invest in the project due to FOMO and greed, especially because of its strong association with a massive company, such as Telegram.
Our analysts rated TON a 2.4 out of 5 for risk (Note that for this section lower = better). Download the risk scorecard here.
Investor Takeaway
Toncoin has rapidly ascended to become one of the top cryptocurrencies, thanks to its strong association with Telegram and the efforts of the TON Foundation. It has demonstrated impressive growth, with over 363k daily active users and a significant market cap of $18 billion.
Despite its achievements, there’s still a big gap between TON and the top blockchain networks. TON lags in terms of TVL, indicating that it has yet to fully capture user and developer engagement, compared to competitors. And blockchains are only useful if people use them!
Overall, our analysts rated TON a 3 out of 5, based on its impressive growth and strong user base, tempered by the need for greater adoption to compete with leading blockchain projects. Download the complete scorecard here.
This analysis is to help make you a better-informed investor; it is not financial advice. The future may look different than the past. All investing involves risk; see our investing approach for how we manage risk through diversification. Never invest more than you’re willing to lose, and see losses as learning.
