What is Toncoin (TON)? Telegram’s Official Coin Explained

Onboarding new users into the cryptocurrency world is becoming increasingly important. Web3 applications still have far fewer users than Web2 applications. Blockchains like Ethereum and Solana often feel like echo chambers, mainly filled with crypto enthusiasts waiting for more retail users to join. Investors also need more liquidity to maintain asset prices, and without widespread adoption, the desired “supercycle” remains out of reach.

However, crypto platforms’ user interfaces and experiences are still too complex for newcomers. To address this, the industry needs major players to remove common obstacles that new users face. Over the past year, efforts have been made to solve this problem.

Enter Toncoin and Telegram

TON, a Layer-1 blockchain partnered with Telegram, has firmly joined the onboarding race, eyeing Telegram’s massive Monthly Active Users (MAUs) as an enticing distribution channel. The TON Foundation has outlined an ambitious goal of onboarding approximately 500 million people to crypto by 2028. This number is multiple times larger than the current crypto user base in its entirety. While TON states that 500 million users represent only 30% of Telegram’s projected MAUs, half a billion is a significant number that raises skepticism about how they’ll achieve such a feat and whether it is even possible.

What is Toncoin?

Toncoin is a cryptocurrency trading under the ticker TON. It primarily serves as a settlement token within a much broader ecosystem called the Open Network. Understanding the Open Network is vital first, making it easier to comprehend the role of Toncoin (TON) crypto within the said network.

History of The Open Network

The Telegram Open Network (TON) was launched by Telegram co-founders Pavel and Nikolai Durov in 2018 to fund Telegram’s operations. The network raised $1.7 billion through the sale of its native token, GRAM. By late 2018, they introduced the TON Virtual Machine and two test networks.

In October 2019, the U.S. SEC sued Telegram, resulting in a 2020 settlement where Telegram returned $1.2 billion to investors and paid an $18.5 million penalty. Telegram stopped working on TON but released its code on GitHub, allowing other groups to continue its development. This led to three independent projects: Free TON (later Everscale), New TON, and TON Community Blockchain.

Evolution of New TON

New TON was founded in May 2020 by Anatoliy Makosov and Kiril Emelyanenko and has since grown into a team of over 40 open-source developers known as the TON Foundation. In May 2021, they renamed the original test network released by Telegram as The Open Network (TON) Mainnet. The TON Foundation has been maintaining and developing the original TON code as an independent community project, aiming to create a fully decentralized internet.

In September 2023, the TON Foundation became a Swiss non-profit organization to enhance its credibility and accountability. That same month, they announced that TON would be integrated into Telegram’s self-custodial, The TON Space. The launch gave Telegram’s 900 million users (outside the U.S.) seamless access to crypto purchasing and holding services.

The Open Network Ecosystem

The Open Network, which many also refer to as the TON Network due to its abbreviation as TON, is a complex blockchain system known as a Layer-1 Proof-of-Stake (PoS) network. This system includes several key components: TON Blockchain, TON Virtual Machine, TON Payment, TON DNS, TON Storage, and TON Sites. To keep everything running smoothly, TON uses a special protocol called “Catchain Consensus,” which ensures the network reaches agreements, creates new blocks, and verifies transactions.

TON’s structure is unique because it operates as a “masterchain” that can support many “workchains” (up to 4 billion). These can be further divided into “shardchains” based on transaction volume and account activity, thus helping to balance the workload by either splitting busy shard chains into smaller ones or merging underused shardchains. 

When a user sends tokens from their wallet to another on the TON blockchain, the transaction initiates in the shardchain where their wallet is located. Validators in this shardchain verify and include the transaction in a block. 

If the recipient’s wallet is in the same shardchain, the transaction is processed directly. If the recipient’s wallet is in a different shardchain, the transaction message is asynchronously transferred to the recipient’s shardchain, where it is again validated and included in a block. 

The state updates from both shardchains are then summarized and sent to the masterchain in a strict logical order, finalizing the transaction and ensuring network-wide consistency. This bottom-up approach enables efficient handling of numerous transactions simultaneously.

Currently, TON operates with a single active workchain known as the basechain, running the TON Virtual Machine. All current TON activities are processed by the shardchains within the basechain. Additional workchains can be added if the community decides it is necessary or beneficial.

Is TON Blockchain Scalable Enough? 

In a performance test of the TON blockchain, the Foundation achieved a record-breaking TPS (transactions per second) of over 104,000, setting a new benchmark for blockchain speed. 

However, these results were obtained in an ideal test environment. In real-world conditions, TON has managed to process over 8 million transactions daily (approximately 92 TPS) at its peak without any issues. 

Nevertheless, problems emerged during TON’s inscription craze when the basechain rapidly split into 11 shardchains. Intense loads on certain validators caused the processing speeds of select shardchains to drop to 1 TPS, revealing that test results can be unreliable under real-world stress conditions. 

Despite this, TON’s record TPS serves as a proof of concept, demonstrating its potential as the technical community works to address issues like validator hardware requirements over time. Notably, while TON’s hierarchical structure creates scalability, it also adds latency, where TON lags behind peers like Solana.

Currently, TON hosts 362 validators. In November 2023, Animoca Brands announced that they had become the largest validator on the TON network. Additionally, crypto research company Whiterabbit’s holder analysis found that 170-182 validators are likely early participants with ties to the TON Foundation. These validators, associated with the Foundation, can influence decisions and support the Foundation’s objectives.

TON Blockchain vs. Ethereum, Solana, and Cardano

Here’s how the TON Blockchain differs from other prominent Layer-1 blockchains like Cardano, Solana, and Ethereum:

1. Cardano: Cardano uses a layered architecture with a settlement layer (for transactions) and a computation layer (for smart contracts). While it aims for scalability through sidechains and future updates like Hydra, it doesn’t inherently support the dynamic sharding seen in TON.
2. Solana: Solana focuses on high throughput and scalability through a single global state and innovations like Proof of History (PoH). It doesn’t utilize a multi-chain structure; instead, it achieves high performance within a single chain.
3. Ethereum: Ethereum’s current structure is a single-chain model, but it’s ongoing transition to Ethereum 2. introduces sharding. Ethereum 2.0 will have multiple shard chains to distribute the load, but unlike TON, which can dynamically split or merge shards based on activity, Ethereum’s shards are static partitions of the blockchain.

Toncoin Utility Within The Open Network Ecosystem

Toncoin is a defacto settlement currency of the Open Network ecosystem, primarily the TON blockchain. That is akin to how ETH serves the same for the Ethereum blockchain — an asset that powers every service, feature, application, and whatnot that runs atop its native blockchain.

That said, here are some of the key use cases of Toncoin

Transaction Fees

Toncoin is used to pay transaction fees on the TON blockchain. This includes fees for transferring TON between users and executing smart contracts.

Storage Fees

TON is used to pay for data storage on the TON blockchain. Users can store data securely and decentralized, paying fees in TON. Find more info here:

Staking and Validator Incentives

Users can stake TON to become validators or delegate it to validators. Validators are rewarded in TON for securing the network and processing transactions. Find TON staking apps here.

Defi Applications

Toncoin can be used within decentralized finance (DeFi) applications built on the TON blockchain. This includes decentralized exchanges (DEX) like DeDust and StonFi, as well as liquid staking services such as EVAA Protocol, Tonstakers, and Bemo. 

NFT Marketplaces

TON can be used to mint, buy, and sell non-fungible tokens (NFTs) on marketplaces within the TON ecosystem. For example, TON Diamonds, GetGems, etc.

In-app Purchases and Micropayments

Users can utilize Toncoin for in-app purchases and micropayments within applications integrated with the TON Blockchain, including Telegram’s own ecosystem. For instance, viral gaming app Notcoin enabled the same features by launching its native token NOT atop the TON blockchain.  

Governance

TON holders can participate in governance decisions affecting the TON blockchain. Voting on proposals and network upgrades requires holding and using TON. Find more info here.

Advertising and Promotions

Projects developed on the TON platform can use TON for advertising on Telegram’s advertising platform, Telegram Ads.

Cross-Border Payments

TON facilitates fast and low-cost cross-border payments, making it an attractive option for international transactions. For instance, Telegram’s Wallet, TonKeeper, and Ton App Pay offer these features.

The TON Network is running over 900 applications in association with Telegram, each requiring Toncoin as a native asset. These apps can be found here.

Toncoin Tokenomics

Toncoin launched with a total supply cap of 5 billion TON but has since exceeded this limit due to inflationary characteristics typical of many proof-of-stake (PoS) assets. As of now, the total supply stands at over 5.2 billion TON, with approximately 2.45 billion TON in circulation.

In June 2023, the TON Community voted for a deflationary burn mechanism that burns 50% of all transaction and storage fees collected by validators. Despite this, the TON’s annual supply rate remains net positive at 0.6%, meaning more Toncoin enters circulation than is burned.

Initially, 1.45% of the total supply was allocated to testers and developers, while the remaining 98.55% was distributed through the Proof of Work (PoW) Giver smart contracts to promote decentralization. This mining phase ended on June 28, 2022, when all available tokens were distributed.

After PoW mining concluded, Toncoin transitioned to a PoS system. Validators stake Toncoin to secure the network and process transactions, receiving rewards for their efforts. This PoS model generates approximately 0.6% of the total supply annually and aims to enhance scalability and efficiency, aligning with the evolving needs of the TON ecosystem.

How to Buy and Sell Toncoin With or Without KYC

Self-Custodial Wallets

• TON Wallet: The official wallet for managing Toncoin, providing secure storage and transaction capabilities.
• TON Space: Integrated within Telegram, this wallet allows users to manage and transact Toncoin seamlessly.
• Trust Wallet: A popular multi-currency wallet that supports Toncoin, known for its ease of use and security.

Centralized Exchanges

• OKX: Offers Toncoin trading pairs and supports various payment methods, including credit/debit cards and crypto deposits.
• KuCoin: Provides Toncoin trading options with multiple pairs, known for its user-friendly interface and wide range of supported assets.
• Gate.io: Supports trading Toncoin with different pairs and offers competitive fees and a robust trading platform.
• Crypto.com: Facilitates Toncoin trading with fiat currencies and offers a comprehensive trading platform.
• Bybit: Known for its advanced trading features, including futures and perpetual swaps, and supports Toncoin trading.

Decentralized Exchanges (DEXs): For Non-KYC TON Selling and Buying

• TON Swap: Enables trading Toncoin without KYC through decentralized liquidity pools, offering privacy and direct peer-to-peer transactions.
• PancakeSwap (via TON Swap): Another DEX option where users can trade Toncoin anonymously by connecting their wallets without undergoing KYC.

Key Considerations

• Transaction Fees: Centralized exchanges typically have lower fees but require KYC verification, while DEXs offer higher privacy because of higher fees and potential slippage.
• Security: Always ensure to use platforms with strong security measures to protect your assets. For long-term storage, consider using hardware wallets like Ledger or Trezor.

Toncoin Price Predictions 2024, 2025, 2026, until 2030

Strong fundamentals, led by high-profile investments and ecosystem growth, could see the demand for Toncoin grow in the coming months and years. At the same time, external market factors such as the impact of Bitcoin Halving—a pre-programmed event into the Bitcoin blockchain that cuts its supply by half every four years—on the altcoin market may accelerate TON’s price boom in the future.

Based on the historical logarithmic price movements of Toncoin and the impact of BTC halving cycles, the yearly low for Toncoin in 2025 is estimated at $7.68. Additionally, the price of Toncoin is predicted to reach as high as $36.23 next year. Using a similar analysis, here are the Toncoin price predictions for 2026, 2027, 2028, 2029, and 2030:

Risks And Challenges Associated with Toncoin

The Open Network and Toncoin face several risks that could impact their development and adoption.

Regulatory Risks

• Legal Uncertainty: The cryptocurrency sector is subject to evolving regulations. TON and Toncoin must navigate various legal frameworks across different jurisdictions. Regulatory changes could impose restrictions or additional compliance requirements that could affect their operation and user adoption.
• Regulatory Scrutiny: Past regulatory actions, such as the SEC’s lawsuit against Telegram, highlight the potential for ongoing scrutiny. Any new regulatory actions could adversely impact the perception and value of Toncoin​.

Technical Risks

• Network Security: As with any blockchain, TON is susceptible to security risks, including potential vulnerabilities in the code that could be exploited by malicious actors. Ensuring robust security measures is crucial to prevent hacks and breaches. 
• Scalability Issues: While TON’s sharding mechanism aims to enhance scalability, any technical flaws or limitations in its implementation could hinder the network’s ability to handle large volumes of transactions efficiently.

Market Risks

• Volatility: The cryptocurrency market is highly volatile, and Toncoin is no exception. Significant price fluctuations can occur due to market sentiment, macroeconomic factors, or speculative trading, impacting Toncoin’s value and stability.
• Competition: Numerous projects are competing in the blockchain and cryptocurrency space. TON faces stiff competition from established players like Ethereum and newer platforms offering similar or improved functionalities. Competing successfully requires continuous innovation and user adoption.

Operational Risks

• Decentralization: Achieving true decentralization is challenging. If the network’s governance or validator nodes become overly centralized, it could undermine the platform’s trust and security.

Toncoin Summarized

Toncoin and The Open Network (TON Network) represent significant advancements in the blockchain space, offering a scalable platform for decentralized applications. 

TON has evolved into a robust ecosystem, showcasing resilience and innovation. Key developments include transitioning from proof-of-work to proof-of-stake, introducing deflationary mechanisms, and integrating with platforms like Telegram, highlighting its growth potential.

Toncoin’s diverse use cases—ranging from transaction fees and storage solutions to staking, DeFi applications, NFTs, and cross-border payments—underscore its utility within the TON ecosystem. The rapid expansion of dApps and services strengthens its market position, attracting developers and users.

Despite regulatory challenges and market volatility, Toncoin’s strong fundamentals and proactive measures by the TON Foundation indicate a promising future. With high-profile investments and innovative applications, Toncoin is set to play a crucial role in the broader adoption of blockchain technology.