Toncoin (TON): A Scalable & Shardable Layer 1 Blockchain

TON, or The Open Network, is a unique community-driven blockchain with a lot to offer. Founded by Telegram, TON was created to onboard billions of users and allow for quick, inexpensive and energy-efficient blockchain transactions. All of its features were developed with everyday users in mind.

In addition to offering ultra-fast transactions, tiny fees and easy-to-use apps, The Open Network is known for its flexible architecture and scalability. It is also environmentally friendly. Before you invest in Toncoin, the network’s native token, use this guide to learn more about the history of TON and its uses.

Key Takeaways:

• Toncoin is the token native to The Open Network (TON), a decentralized Layer 1 blockchain network.

• TON recently launched an on-chain governance platform known as TON VOTE, significantly increasing Toncoin's transaction volume by 98%.

• The integration of Toncoin into Ledger's hardware wallet has enhanced its security and market credibility.

• Looking to trade TON tokens? Bybit now offers the TON/USDT Spot trading pair and TONUSDT Perpetual contracts.

What Is Toncoin?

Toncoin (symbol: TON) is the token native to The Open Network (TON), a decentralized Layer 1 blockchain network. Previously known as Gram, Toncoin can be used to pay transaction fees, settle payments or validate transactions using the TON blockchain’s proof of stake (PoS) consensus model.

What Is Telegram?

Telegram Open Network is an abandoned blockchain developed by Telegram, a cloud-based instant messaging service. After the project was abandoned, it was transferred to the community and renamed The Open Network.

History of Toncoin

In 2018, Telegram released both a “lite paper” and a white paper for the Telegram Open Network. Originally called Gram, the project was in active development until 2020. During its time in development, TON raised money through private sales of Gram tokens. In April 2018, Gram broke records for the second-largest token sale of all time, raising $1.7 billion. Additional large billion-dollar sales were made to companies around the world after the token gained more publicity.

Gram started getting a lot of attention, which began to create several challenges for the network. There were several scams on Twitter prior to the token’s initial coin offering (ICO). Telegram founder and CEO Pavel Durov quickly made an announcement that the company would create an official method of participating in the ICO.

Gram initially attempted to conduct public sales under U.S. jurisdiction, so Telegram had to follow all SEC (Securities and Exchange Commission) regulations. The initial purchase agreement was to provide investors with tokens upon TON’s launch. The goal was to prevent the SEC from viewing Gram tokens as securities. Unfortunately, the SEC saw the initial investors as underwriters, and Telegram’s offering of Gram in exchange was considered an unregistered distribution of securities.

While Telegram fought the SEC, it ultimately lost in court. In May 2020, founder Pavel Durov ended Telegram’s participation in the blockchain’s development and started issuing refunds to the initial investors.

Building New TON Functionality

At this point, TON had a dedicated following and the worldwide decentralized community of crypto enthusiasts and developers saw the potential of the blockchain. Because TON was developed as an open-source project and the code was easily accessible on GitHub, community developers could pick up where Telegram left off and build new TON functionality.

Toncoin was initially developed as a Gram alternative, ostensibly not an actual investment in Telegram itself (though, according to Forbes, this assertion was challenged by at least some Gram investors). Speed was a major problem for blockchain technology. Slow speeds and high transaction fees made it difficult for everyday users to effectively pay with cryptocurrency as they would with Visa or Mastercard. TON was developed with the end user in mind to support millions of transactions per second (TPS).

What Does Toncoin Aim to Achieve?

While Bitcoin and Ethereum have become household names, they aren’t without their problems. High transaction fees, slow transaction speeds and a considerable learning curve make it difficult for people to use cryptocurrency for everyday purchases. For example, gas fees to use the Ethereum blockchain fluctuate frequently, and gas fees of over $100 aren’t unheard of, depending on the size of the transaction.

The TON ecosystem was developed to handle the needs of millions of users making everyday transactions. Unlike Bitcoin and Ethereum, which are primarily used by investors, TON focuses on catering to the typical consumer. It’s designed to be integrated into an easy-to-use app, allowing users to quickly buy, send and store coins.

One of TON’s biggest advantages is its flexible architecture. The Open Network was designed to be incredibly efficient and scalable, and boasts ultra-fast transactions due to its cross-shard interactions. By supporting dynamic sharding and workchains, TON can successfully validate and process millions of transactions per second. In other words, TON's flexible architecture lets it grow continuously without any loss of performance.

Blockchain technology has quickly evolved, making it easier to exchange sensitive information in a decentralized environment. TON strives for mainstream adaptation of Toncoin, made possible by its engaged Telegram user base, simple interfaces, incredibly fast speeds and overall scalability.

How Does Toncoin Work?

As the native token of its blockchain, Toncoin has a range of uses on theTON network, including as a form of payment in decentralized apps (DApps).

Unlike most other blockchain ecosystems, TON was designed to support billions of users simultaneously by using blockchain sharding, which involves using multiple subnetworks, or shards, on the same blockchain to quickly accomplish tasks. Each shard has its own purpose and works to prevent large backlogs of unverified blocks.

TON is a proof of stake (PoS) network. Every transaction is validated using Toncoin, which is also used to reward validators. The network also allows nominators to lend their tokens to validators to earn rewards. To lend tokens, a nominator needs to join a pool and stake their assets. Both nominators and validators are managed using smart contracts, adding an additional layer of security.

Specific Use Cases for Toncoin on TON

Users can buy or send Toncoin using the @wallet bot on the Telegram app. After setting up their wallets and adding My Wallet to their attachments, users can quickly access their Toncoin in any chat window. They can purchase Toncoin using the same bot, too, and don’t need to pay a transaction fee to send Toncoin using the Telegram app. This allows users to quickly and easily transfer decentralized funds to other users on their contact list.

While users intending to sell cryptocurrencies are subject to a 0.9% commission fee, buyers don’t need to pay any transaction fees. This makes the wallet practical for everyday use.

Several services and applications running on the TON blockchain also accept payment in Toncoin. The TON ecosystem supports the creation of new DApps, which makes it highly adaptable.

Toncoin can also be used to influence how the network develops in the future. The Open Network is a decentralized autonomous organization (DAO), so users who hold the blockchain’s native token can cast votes on any proposed changes to the blockchain or ecosystem. This helps promote a sense of community and encourages consistent growth and innovation. TON’s current governance program utilizes a simple voting system that ensures every user has a chance to make their voice heard.

Features of Toncoin

Toncoin is known for its practicality and heavily focuses on efficiency. The goal is to make using the token as easy as possible for the end user. TON’s development community has also worked hard to add many of the advanced features that set the token apart from other cryptocurrencies.

Proof of Stake Consensus Mechanism

Proof of stake consensus mechanisms are common on blockchain networks that require validators to complete transactions. This energy-efficient mechanism allows validators to be rewarded based on how large of a stake they hold. Instead of receiving a new block on the blockchain, they’re granted part of the transaction fees.

It’s important to note that TON can no longer be mined using a proof of work (PoW) consensus algorithm. In June 2022, the last Toncoin was mined, and the total supply can only increase by a small percentage each year. TON’s PoS consensus algorithm keeps the blockchain moving efficiently.

TON VOTE

TON VOTE, the on-chain governance platform of the TON blockchain, was launched in February 2023. This platform, developed with Layer 3 blockchain infrastructure by Orbs, represents a significant step forward for the TON ecosystem, as it enables tamperproof voting and allows Toncoin token holders to participate in decision-making for network projects. Following its launch, there was a notable surge in Toncoin's trading activity, reflecting the increased engagement and interest in the network. 

Toncoin is integral to the governance process, with holders using it to vote on various proposals affecting the network. The first major governance action, involving a proposal to freeze tokens in inactive genesis mining wallets, saw considerable support from the community. This initiative underscores TON's commitment to decentralized governance and community-driven development, marking a new chapter in its evolution.

TON Foundation Grant

The TON Foundation is actively expanding its ecosystem by funding development teams to build new DApps. ​​In August 2023, the TON Foundation announced its latest grant recipients, showcasing a range of innovative projects aimed at enriching the TON Community. These include Tali AI, which simplifies the onboarding process for developers through an AI-driven model, and a Ledger app that enhances TON asset management and security. 

Meanwhile, TonUP emerges as a permissionless launchpad to support the growth of ecosystem projects, while Optus DEX aggregator optimizes decentralized trading by pooling liquidity from multiple DEXs. Additionally, Gatto introduces a play-to-earn gaming experience on the VK Mini Apps platform. These initiatives collectively contribute to a more vibrant and functional TON ecosystem, encouraging participation and development within the community.

TON Storage

Storing information on a blockchain isn’t a new concept, but TON Storage takes it a step further. It works a lot like Dropbox but offers the benefits of private encryption, using the owner’s wallet’s private key. This adds an extra layer of security to both online private and public storage.

TON Proxy

Privacy is always a priority for blockchain users. TON Proxy enables users to access the TON blockchain using decentralized VPNs and TOR-like networks. This allows users to avoid censorship and easily access DApps.

Smart Contracts

Like many other blockchain ecosystems, TON relies on smart contracts to process on-chain transactions quickly. All smart contracts on the blockchain are executed using their own TVM, or TON Virtual Machine. TVM allows for very complex smart contract deployments.

TON DNS

TON DNS, or TON domain name service, attempts to make cryptocurrency wallets, accounts, smart contracts and other features more user-friendly by providing users with easy-to-remember names that aren’t just strings of numbers and letters.

TON DNS works a lot like a social media handle, and is incorporated into various domain names for easy access. Users can register their domain names and usernames on the blockchain. There are several easy-to-use apps that support TON DNS, including cryptocurrency wallets.

TON Apps & Services

The TON blockchain is home to more than 500 DApps and services that utilize smart contracts. TON Services enables developers to create new applications on the blockchain. Users can access these third-party apps with a user-friendly interface. TON also offers a searchable registry of all DApps and services located on the blockchain.

TON Wallets

There are several ways to store Toncoin and other digital assets from the TON blockchain, with over 743,000 unique TON wallets currently completing thousands of transactions per day.

TON offers custodial wallet services, and works with several third-party noncustodial wallets. Custodial wallets are a good choice for users who want simple solutions, while noncustodial wallets are preferable for users who want more control over their assets.

There are two different TON custodial wallets. Previously, if you wanted to complete transactions through Telegram, you needed to use the @wallet bot. Telegram users could also use @cryptobot to easily store, transfer or exchange Toncoin. However, In September 2023, Telegram officially integrated a TON-based self-custody crypto wallet, known as TON Space, into its app, a significant move following its earlier plans to develop a web3 ecosystem. 

This integration, showcased at the TOKEN2049 event in Singapore, made the wallet accessible to Telegram's vast global user base of 800 million. The wallet's introduction to Telegram coincided with a 7% increase in the price of Toncoin. TON Space was introduced in Telegram's settings for users outside the U.S. From November 2023, this feature became a default offering for all Telegram users internationally, except in the U.S. This integration into Telegram allows both existing and new users to access their wallets effortlessly within the app, streamlining the process of buying, selling, and trading cryptocurrency to be as straightforward as sending a message. 

The TON Foundation also announced that projects built on TON would receive priority for Telegram Ads. While initially planned in 2019, the integration was delayed due to a lawsuit by the U.S. Securities and Exchange Commission against Telegram's $1.7 billion ICO. This renewed collaboration between Telegram and TON aims to simplify crypto access for users and bolster the web3 infrastructure on the messaging platform.

Earning Passive Income With Toncoin

There are several ways to earn money using the TON blockchain. The simplest way to earn income on the TON network is to become a validator; however, this requires a large amount of Toncoin, a strong connection and advanced hardware. Most users who want to earn passive income using TON become nominators, lending their tokens to validators via a nominator pool.

TON Nominator Pools

Nominator pools allow individual users to come together and combine the assets they’re lending to a validator, enabling them to easily collect a reward. Once a reward is granted by the blockchain, it’s distributed evenly among the members of the pool.

TON uses an open-source decentralized staking pool system. Not only does this make cryptocurrency staking easier for the average user, but it also provides smart contract guarantees. The smart contracts ensure that any tokens borrowed by validators are used solely for validation and are accurately distributed.

There is currently over 27 million TON staked by nominators in pools. Finding a nominator pool is a simple process. To get started, visit TonValidators.org to see a list of current pools.

TON Validators

TON validators help to maintain the network by validating transactions. As they validate blocks, they receive Toncoin rewards using the blockchain’s PoS consensus algorithm.

In order to become a TON validator, you need to first obtain a large amount of Toncoin to stake, typically around 300,000 TON. In addition to this investment, you’ll also need a fast internet connection and a system that can easily run MyTonCtrl, the open-source tool used by validators. A detailed guide is available to help you learn more about the requirements, rewards and expectations of validators.

TON Society

The TON Society is a vibrant community within TON, uniting a diverse group of individuals who are passionate about TON’s future. It includes contributors, hub developers and ambassadors, all working together toward a shared vision. Members of the TON Society engage in various events such as contests, hackathons and others, with opportunities to earn rewards like soulbound (SBT) tokens. These awards are then showcased in their profiles, highlighting their professional expertise and contributions to the community. 

Among the top contributors are enthusiastic web3 developers and TON advocates, recognized for their numerous awards and active participation in community activities. The TON Society represents a collective of dreamers and innovators from around the globe, dedicated to using advanced technologies for open, decentralized exchanges of value, information and ideas, with a focus on protecting freedom, privacy and rights.

Toncoin Use Cases

The TON ecosystem is constantly expanding, making Toncoin more versatile. The most common use of the token is as a form of commission payment for processing transactions on the blockchain. Because of the TON network’s sharding feature, the token may also be used for cross-chain transaction fees or as payment for creating new work chains.

Some additional use cases include:

• Payment for decentralized data storage

• Payment for the use of TON Proxy

• Payment for TON DNS

• Payments within DApps on the blockchain

• Validator rewards for maintaining the blockchain

• Voting in TON’s on-chain governance program

Toncoin Road Map

The TON network offers a comprehensive ecosystem for users, including a self-custody wallet for managing Toncoin, a feature to buy Toncoin with a card or exchange, and options to stake and accept payments globally. Its ecosystem includes applications, domain services and a bridge for ERC-20 tokens. TON's concept focuses on a decentralized, self-governed blockchain with a detailed road map outlining its past developments and future goals. 

For developers, TON provides resources such as documentation, a developer community and a bug bounty program. Its platform supports various use cases, including mini-apps, GameFi and community collaboration. 

The TON Society encourages active participation with rewards, while the TON Foundation oversees the network’s growth. TON’s road map highlights the progression from its initial development by the Telegram team, its legal challenges with the SEC and its transformation into a stable and secure blockchain managed by the TON Foundation. Upcoming projects include further enhancements and new functionalities such as TON Teleport, TON Browser, and Wallet 5.0.

Key Milestones in 2023

As mentioned previously, TON blockchain launched its on-chain governance platform, TON VOTE, in February 2023, and officially integrated a TON-based self-custody crypto wallet into Telegram in September 2023 for existing users. It then extended accessibility to all existing and new users in November 2023.

On Oct 31, 2023, the TON blockchain achieved a significant milestone by setting a world record for speed and scalability during a public test, reaching an unprecedented 104,715 transactions per second. This remarkable performance, which was audited by CertiK, demonstrated TON's unique architecture, which allows for infinite scaling to handle millions of transactions from billions of users. 

The test utilized a "bomb" smart contract on a separate TON network, created using 256 servers rented from Alibaba Cloud, which exponentially increased the load on the network. This test confirmed TON's dynamic sharding capability, whereby the network can split into shardchains under heavy loads and merge back when the load decreases. The achievement not only sets TON apart in the blockchain space, but also shows its potential to handle significantly higher transaction volumes in the future.

On Nov 28, 2023, Animoca Brands became the largest validator of TON blockchain, marking a significant development in its commitment to the GameFi sector. This collaboration involves financial investment, analytics and research into the TON ecosystem, focusing particularly on the integration of blockchain-based gaming into Telegram's vast user base. Animoca's support extends to TON Play, a gaming infrastructure project on the TON blockchain, and explores porting games from its extensive web3 project portfolio to Telegram. This partnership is part of Animoca's broader strategy to foster the transition from Web 2.0 to web3 and to capitalize on the potential of gaming within the TON ecosystem.

On Dec 14, 2023, the TON blockchain announced on its blog and X (formerly Twitter) that Ledger hardware wallets have added support for Toncoin, integrating Toncoin into Ledger and enhancing security for Toncoin users. This development is significant in terms of market credibility and has resulted in a positive response from the market, as evidenced by an increase in Toncoin's price following the announcement​​.

Because the network is open-source, the developer community can make constant advancements. Active developers can connect via the TON Dev Chat on Telegram, or learn about the team’s latest projects on GitHub.

TON Tokenomics

While TON no longer uses a PoW algorithm for mining, new tokens can still be created. The supply of tokens in January 2024 was 5,100,064,799. According to TON’s official website, there’s a 0.6% annual inflation rate.

The use of TON is growing as more accounts open on the network. As of January 2024, there are 4,247,450 accounts — and new users are joining the network every day. The official website states this is a 147% increase in new accounts over the past six months.

In November 2021, there was a large spike in Toncoin’s price as it jumped from below $1 to an all-time high of $5.29. Throughout 2021 to 2023, the token’s price fluctuated between $1 and $2.70, with numerous peaks due to partnership announcements and ecosystem developments. Its current price as of this writing (Jan 5, 2024) is $2.14.

TON Price Prediction

Most TON price predictions tend to be fairly optimistic, expecting its price to grow over time as the network becomes more involved with NFTs and DApps. Experts at PricePrediction have an optimistic estimate, believing prices could reach $5.14 by 2025 and $34.71 by 2030. Analysts at DigitalCoinPrice expect slower growth, however, with TON prices approaching $5.76 in 2025 and $16.51 in 2030.

Where to Buy TON

If you’re interested in purchasing TON, you can do so on Bybit, a reliable and secure crypto exchange. Simply sign up for a Bybit account, fund your account with cryptocurrency and start trading the TON/USDT Spot trading pair or TONUSDT Perpetual Contracts.

Is Toncoin Safe?

Because of the hiccups during Toncoin’s ICO, some investors may see the token as a slightly riskier investment. While all cryptocurrencies have some risks associated with them, TON had unique challenges it needed to overcome.

In terms of practicality, Toncoin serves its purpose and is still evolving. There are millions of users engaging with the coin on a daily basis, active developers working toward improving the blockchain, and dedicated validators and nominators keeping the PoS blockchain working. Furthermore, its self-custody wallet’s integration with Telegram also enables Toncoin to be more widely adopted by the mass market, considering Telegram’s extensive user base of 800 million. 

It’s also important to note that TON values security. While TON offers several features to make the network and its features more accessible, such as TON DNS and TON Proxy, it actively works to promote the safety and integrity of each transaction. For example, TON offers a security bug bounty to anyone who finds vulnerabilities in the blockchain.

TON's Future

TON has a lot of support from its community and should continue to grow over the next few years. While blockchain technology is constantly evolving, Toncoin could become a practical way for people everywhere to transfer funds to one another. Previously, there were only 200,000 active TON wallets in January 2022, and this number quickly grew to over 700,000 by October 2022. Now, the number has hit close to 1.1 million, proving that more people are creating a wallet on the TON blockchain and that mass adoption of Toncoin could become a reality in the near future.

TON also continues to be ahead of other Layer 1 blockchains in terms of transaction speed and versatility. In addition to having a fast block validation time, the blockchain offers several advanced features that promote scalability, such as sharding support.

Of course, Toncoin hasn’t been in use as long as some of the other major Layer 1 blockchains. It’s still growing and evolving, and it will be exciting to see the innovations TON brings over the next few years.

The Bottom Line

Toncoin has several practical uses within the TON ecosystem, including as a form of decentralized payment. The token is easy to use, and the network boasts ultrafast transactions. As developers continue to expand features, the token will continue to become more useful and appealing to a mainstream audience.

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