Cryptocurrency paradox: why does TON’s success cause skepticism?

One interesting crypto project has recently attracted special attention from the general public. TON (The Open Network) is a decentralized blockchain that has gone from an idea to an independent ecosystem with record transaction speeds. Despite the contradictory opinions and attitudes towards TON and Toncoin due to its connection with Pavel Durov and Telegram, the project continues to actively develop and attract new users. But quantity does not always equal quality…

A little bit about TON and Toncoin

TON (The Open Network) is a decentralized blockchain of the first level (Layer 1, L1) developed in 2018.

The story began when brothers Pavel and Nikolai Durov published a technical document called Telegram Open Network (TON). The main idea of the project was to integrate the Telegram messenger with TON to create the most anonymous and secure application possible in the future, protected by its own proxy server.

To finance the development of the blockchain project, Telegram held a private offering of Gram coins (as Toncoin tokens were called at the time). The ICO took place in February-March 2018. In two rounds, the company managed to raise $1.7 billion from investors, selling 44% of the total token issue.

In 2020, after a trial, the Telegram team reached a settlement with the US Securities and Exchange Commission (SEC). But they had to stop working on The Open Network. To exit the project and give others the opportunity to continue exploring it, the Telegram team placed all Toncoin coins into smart contracts and made them available for mining. This was completely unplanned. In two years, all Toncoins have been mined and traditional mining was no longer available. After that, the TON blockchain switched to Proof-of-Stake (PoS), where the network is supported by nodes controlled by validators. This approach is called Initial Proof-of-Work (IPoW).

The project was developed by several independent teams, including the TON Foundation (until 2021 — NewTON), founded in May 2020 by developers Anatolii Makosov and Kyrylo Emelianenko. After the original developers left the Telegram Open Network, the initiative was picked up by the TON Foundation, which renamed the project The Open Network (TON).

In August 2021, Telegram transferred the ton.org domain and GitHub repository to Makosov and Emelianenko. During the same period, the Toncoin (TON) token was listed on the EXMO crypto exchange.

On September 14, 2023, Pavel Durov announced the integration of TON into Telegram. He said that the messenger’s team had collaborated with the TON community to add the TON Wallet cryptocurrency wallet to Telegram as a mini-app.

The main idea of the project was to integrate TON into a convenient application for purchases, transfers, and cryptocurrency storage. Users could pay transaction fees and use Toncoin to settle or confirm transactions on the network. The blockchain worked on the consensus Proof-of-Stake (PoS) model.

Features of Toncoin (TON)

• Transfers and payments: It is possible to send and receive Toncoin without intermediaries such as banks.
• Staking: Toncoin holders can participate in transaction validation and receive rewards.
• Participation in governance: Toncoin owners have the right to vote on various proposals related to the development of the platform.
• Access to services and applications: some decentralized applications may require payment in Toncoin.
• Investment and savings: Some people consider Toncoin as an investment asset.
• Support for the USDT stablecoin.

But the TON blockchain became most famous after set a world record in 2023, with more than 100,000 transactions per second. And in early 2024, the Notcoin mini-app with the NOT token launched a boom in crypto games on Telegram, the so-called «tapalok».

What’s in store for Toncoin and TON?

At the moment, apart from the native TON token and Notcoin (NOT), there are almost no serious coins in the TON ecosystem. Most of them are so-called «brush coins», which rapidly lose their value after launch.

In August 2024, Pavel Durov was arrested in France. The Toncoin rate dropped by 25%, and its capitalization decreased to $1.97 billion. But then there was an increase in online activity The number of «tapas» began to increase sharply, and the Toncoin token managed to rise above the $5 mark and is slowly creeping up to $6. The number of active addresses and transactions is growing.

Meanwhile, at the Polymarket Only 51% of users believe that Durov will leave France by the end of this year. However, before that, the vast majority voted twice that he would be released: by the end of August and by the beginning of October.

Analysts believe that Durov’s detention will affect the price of Toncoin and TON projects, but not significantly. For example, a similar situation is happening around the Binance crypto exchange. Despite the persecution of its founder Changpeng Zhao (CZ), Binance and the BNB token continue to grow. Moreover, some coins of BNB Chain projects are growing in value anticipating release of CZ on September 29.

But Binance is the world’s largest centralized crypto exchange, with a market capitalization of $87 billion for its native BNB token. And Durov is not CZ, which was estimated at $38.5 billion.