TON: Next-Generation Web3 Traffic Gateway — Ecosystem Layout and Track Opportunities

Guest Author: Sherry, Researcher at Future3 Campus

Author Introduction: Sherry is the Research Lead at Future3 Campus, a web3 innovation incubation platform initiated by Wanxiang Blockchain Labs and HashKey Capital.

I. Background

From prominent figures bringing attention to the BTC ecosystem and the resurgence of Solana and the popularity of DePIN and Meme within its ecosystem, to the influx of TVL brought by Blast staking airdrops and EigenLayer restaking, public chain ecosystems have once again become the hot topic in the recent wave.

It’s evident that the competition between L1 and L2 is extremely fierce at present, especially with the emergence of new L2 solutions as one-click chain deployment tools gradually improve. Therefore, in this bull market's public chain competition, it’s crucial for each blockchain enterprise to establish its unique characteristics and competitive advantages. This article primarily analyzes the competitive advantages of TON.

II. TON: The Next Generation web3 Traffic Gateway

From the perspective of creating breakout applications and attracting Web 2.0 users, TON is a public chain ecosystem with tremendous potential in the most recent bull market (Q3 2023 through Q1 2024). In the current public chain competition, The Open Network (TON), as the official technical partner of Telegram, possesses unique competitive advantages and trump cards, and is poised to open channels connecting traditional markets and introducing new assets and traffic. The reasons are as follows:

Empowerment From Telegram's Traffic

Currently, Telegram boasts over 900 million monthly active users, primarily concentrated in Asia, Europe and the Middle East, with strong characteristics of retail investors. These users, who are highly suitable for web3, have yet to be fully tapped, presenting a high-potential user base. Leveraging Telegram's traffic can create a competitive edge distinct from major U.S. institutions.

Moreover, with user habits changing in the Web 2.0 world, traffic aggregation and monetization channels have gradually shifted to various social platforms such as instant messaging, short videos and live streaming. Social products exhibit strong user stickiness and high usage frequency, making it easier to acquire users directly through recommendations, forwards and information streams, resulting in more efficient traffic acquisition and lower costs.

Over the past year, Telegram has made significant progress in product feature development, expanding from simple instant messaging tools to include features such as Telegram Channels, Telegram Stories and live broadcasts, as well as to launch advertising platforms and lottery systems. These platforms can be utilized for promoting applications, channels and groups, making Telegram an advantageous platform for acquiring new traffic within the ecosystem.

Telegram Mini Apps Provide User-Friendly Application Entry and Experience

It’s widely known that acquiring and converting traffic follows a funnel model. While accessing a large number of potential users is fundamental, the more important question is how to convert these users into participants within ecosystems and applications. The most critical aspect of this conversion process is the entry point.

Currently, there exists a significant gap between web3 and Web 2.0 users, with one of the main reasons being poor entry product experiences that make it difficult for users to convert smoothly. However, this problem has been effectively addressed within the TON ecosystem.

For less advanced users, Telegram offers a more user-friendly experience than web3 products, serving as an information aggregator and user traffic entry point. This is evidenced by the popularity of Telegram bots in 2023, with data showing continuous growth in Telegram bot transaction volume. The total daily transaction volume of various bots approached $100 million at its peak, with leading bots such as Banana Gun and BONKBot surpassing $30 million in daily transaction volume, exceeding that of SushiSwap.

This demonstrates that users prefer applications with lower entry barriers, aggregated functions and mobile accessibility, rather than switching between various desktop websites, primarily targeting encrypted degen applications.

Data Source: Dune Dashboard @whale_hunter

Furthermore, Telegram has introduced Mini Apps based on bots, which are HTML framework-based mini-programs. Compared to bot commands, Mini Apps offer frontend interaction, providing a more friendly interface and user experience, similar to mini programs in WeChat. They seamlessly integrate with Telegram accounts, allowing Mini Aps to be launched within Telegram, making them the ultimate form of mobile applications. 

For users, there’s no need to leave Telegram throughout the process, enabling them to interact with web3 applications using Web 2.0–like experiences, with higher efficiency in user acquisition and retention.

Wallet and Ads Facilitate the Introduction of New Assets

Although TON has a significant advantage in acquiring potential traffic, it must be acknowledged that assets are the underlying foundation of web3, with finance being its core. Therefore, an important aspect of TON’s ecosystem development lies in how to convert potential users into on-chain TON users through assets and transactions.

In this process, TON boasts two killer applications.

First, the TON Wallet embedded within Telegram is expected to attract a large influx of new assets. On one hand, it enables the creation of recoverable noncustodial wallet accounts, with traditional account models such as accounts and email addresses reducing high-threshold behaviors (e.g., holding private keys), while also directly supporting credit card deposits, eliminating the need for new users to consider issues such as gas fees. 

On the other hand, the TON wallet is embedded within the Telegram interface, seamlessly integrated with Telegram accounts, allowing for a friendly interface within Telegram and supporting all payment and transfer actions within it, providing an overall user experience similar to using WeChat Pay.

The second application is the newly launched advertising revenue sharing system, which can significantly increase the circulation of Toncoin on TON. On February 28, 2024, TON announced that starting in March, the Telegram advertising platform will officially open to all advertisers in nearly a hundred new countries, with ads being paid in Toncoin. Channel owners can receive 50% of their channel's advertising revenue in Toncoin. 

This initiative creates a huge potential application market for the TON blockchain, acting as a de facto Toncoin airdrop reward and significantly increasing assets on TON, while also benefiting Telegram in building more high-quality channels.

III. How Developers Can Strategically Position Themselves in the TON Ecosystem

With its abundant potential user base and increasingly robust traffic infrastructure, TON’s ecosystem holds immense promise. It's highly worthwhile for both users and developers to enter and capitalize on early growth dividends and long-term explosive opportunities. So, which areas of focus on TON deserve more attention, and how can developers effectively occupy positions within the TON ecosystem?

Users and developers can choose from two perspectives.

Leveraging the Strengths of Telegram and TON

From the analysis above, we can discern that TON's main advantages lie in its traffic reserves and social attributes.

Accordingly, we see promising directions for development in two areas on TON:

1. Gaming

Gaming represents a typical high-interaction avenue. While the core areas of Web 2.0 games are traffic attraction and consumption, web3 games focus on facilitating transactions and interactions. Overall, TON's traffic advantage can be effectively leveraged in gaming projects.

In actual development, web3 games have long faced a dilemma: low game quality and short life cycles. This issue is inseparable from the market size and user attributes of web3 itself. The market size of web3 remains relatively small, which means users lack strong incentives to participate.

Therefore, the future development logic of web3 games may need to evolve toward Web 2.0, which emphasizes both transaction profitability and user consumption. This includes direct consumption or obtaining advertising revenue through traffic, giving web3 games stronger vitality and the chance to truly become breakout applications. Such applications need to simultaneously access Web 2.0 and web3 users, and to meet their needs in terms of gameplay and mechanism design.

In this regard, Telegram can attract a large amount of traffic, primarily from Web 2.0, while TON's wallet and other infrastructure can accommodate web3 users' participation and gradually introduce web3 concepts to Web 2.0 users. Game developers on TON don't need to resort to airdrops and price pumping, as they can acquire users through normal gameplay and monetize via their consumption and traffic.

Currently, projects that perform well in Telegram's tApp Center can earn the "Editor's Choice" label. Several representative web3 games, such as Tap Fantasy, Fanton and Egg Fight Club, have monthly average users exceeding 400,000, 570,000 and 1.5 million, respectively.

2. Social Traffic Tools

Telegram is currently a privacy-based platform, unable to access crucial user information. This makes it challenging for the official platform to have a highly efficient advertising platform, which presents a significant opportunity for developers in the ecosystem: leveraging Telegram's traffic-rich environment and combining it with the transparent data characteristic of blockchain to build new types of social traffic tools within the TON ecosystem that could serve as innovative advertising support systems.

A notable project in this field is Notcoin. Although categorized as a game in the tApp Center, its functionality is too basic, making it more suitable as an advertising or traffic diversion tool with some gaming elements.

Within just two months of its launch, Notcoin has garnered over 21 million users and 3–5 million DAUs. It allows users to earn Notcoin points simply by pressing buttons in the app. Users can also earn more points by inviting others through tasks, or by diverting them to other apps. Additionally, 95% of Notcoin users come from referrals, demonstrating the power of social networks.

Currently, Notcoin can generate substantial advertising revenue through its traffic diversion function, which, while simple and direct, doesn't hinder its impressive traffic data. Therefore, I have high expectations for more sophisticated and effective traffic tools to emerge within the TON ecosystem, combining social gaming elements to enhance Telegram's entire traffic and advertising system.

Seizing Early Advantages in the TON Ecosystem

It's undeniable that, despite being backed by Telegram's 900 million active users, TON’s ecosystem is still in its early stages in terms of on-chain interactions and applications. This is partly due to the difficulty of the blockchain language and the inadequacy of the infrastructure, as compared to other EVM-compatible chains. Additionally, its ecosystem's formal development time has been relatively short.

If developers can recognize the future development potential of the TON ecosystem, seizing key positions during its early stages could lead to exponential gains once the ecosystem fully matures.

I believe that the key areas worthy of early positioning in the TON ecosystem include the following.

1. DeFi Basic Applications

Currently, various DeFi applications and gameplay have matured significantly. It's rare to see new narratives emerge. However, almost every chain will have at least one or two leading projects, such as DEXs and lending platforms. These projects face significant competition, making it challenging to establish a dominant position, due partly to the liquidity barriers formed as assets and user numbers increase.

From the perspective of public chain ecosystem development, these DeFi infrastructures can retain users' assets through high returns. Users first need to have assets on your public chain before they’re willing to participate in interactions with other applications on the chain. After all, cross-chain activities are time-consuming and costly. Therefore, DeFi serves as the foundation for the development of almost all generic public chains.

TON is no exception. Although it boasts traffic advantages, total value locked (TVL) is directly related to commercialization and is an important channel for traffic monetization. Therefore, whether out of necessity for the TON ecosystem's development or the attention of the TON Foundation, DeFi remains one of the most critical tracks.

Due to the high barrier of TON's contract language, projects compatible with EVM can’t migrate quickly. Therefore, there haven’t yet been any significantly robust DeFi applications on TON, and the competitive landscape has yet to take shape.

2. Supporting Tools for Telegram

Another core ecosystem position is infrastructure. Within the TON ecosystem, the blockchain's infrastructure itself is relatively complex, so lightweight tools are recommended.

In the short term, Telegram's core functionalities, such as Groups and Channels, offer significant market opportunities for practical tools. These include group management tools, data analysis tools for groups and channels, and information aggregation tools. Tool projects have low entry barriers, but they also have strong market demand and user stickiness. Once a significant number of users are acquired, they can form a moat.

While these tools have grown organically within Telegram in the past, integrating them into TON can provide advantages, such as incentive and governance mechanisms based on data and user behavior, outperforming regular Web 2.0 tools. Additionally, they can gain better official support and quickly acquire customers, establishing their own moat.

In the long term, as Telegram evolves into an entry point connecting Web 2.0 and web3, exploring more diversified applications, such as finance and e-commerce, within its social functions will attract traditional entities and non-developers, with Mini Apps serving as essential carriers. These traditional entities boast significant market size, creating unprecedented market opportunities for services that cater to Mini Apps, such as SaaS tools and data analysis tools that offer both digital and on-chain services.

IV. Conclusion

TON stands out in the current landscape of blockchain competition, thanks to Telegram's 900 million monthly active users, with three major advantages:

• Wallet Integration with Telegram: Provides a native wallet experience, facilitating asset entry.

• Mini Apps: Offers a friendly app entry and experience, revolutionizing mobile DApps.

• Telegram Advertising Platform: Uses Toncoin for payments and ad rewards, significantly increasing on-chain assets and their use cases.

For developers aiming to enter the TON ecosystem, I recommend selecting from two perspectives: leveraging TON's ecosystem advantages, such as gaming and social traffic tools, and seizing early advantages in the ecosystem, such as DeFi and Telegram infrastructure tools.