Authored by Kiwi Yao, researcher @OKX Ventures and repurposed by Kelvin Lam, CFA
This is the second part of the Ton Ecosystem and Industry Analysis Report.
First part of the report: A Deep Dive into the TON (The Open Network) Ecosystem
1. The dynamics between the current Telegram and TON ecosystem
Current status of Telegram ecosystem
The rising prominence of Unibot and its remarkable income-generating capabilities have sparked a surge of interest in low-risk, high-return Bot track. Creating and developing a Telegram Bot is a straightforward process, tightly integrated with the Telegram platform, and offers unparalleled convenience. Bots generate income through transaction volumes and associated fees. Even in bear markets, they exhibit robust profitability, with top-tier projects like $unibot and $MEVFree boasting monthly incomes exceeding $5 million. Meanwhile, second-tier projects, with market valuations under $10 million, still achieve monthly incomes in the hundreds of thousands. These compelling prospects have enticed an increasing number of teams to venture into the Bot domain.
Source: Dune analytics, https://dune.com/tk-research/telegram-bots
Currently, the Telegram Ecosystem primarily revolves around the "Bots+API+Wallet Hosting" framework. However, replicating the success of WeChat Mini Programs within the TON Bot Ecosystem presents challenges. While developing applications for the WeChat platform is relatively straightforward, small-scale TON projects encounter complexities during the application process, hindering the seamless integration of an optimized official wallet experience. Moreover, the high development difficulty, associated costs, and challenges in obtaining grant support create deployment hurdles for smaller projects. Consequently, mini-games opt for a pragmatic approach to "game main body on Ethereum layer2 + Telegram's API + off-chain computation" to facilitate rapid deployment and maximize efficiency.
Why does Telegram need the TON ecosystem?
While Bot data may appear promising, it is important to note that the Bot ecosystem lacks actual support from the TON public chain. The Bot ecosystem operates independently, without utilizing TON ecosystem components or token mapping.
On the other hand, TON represents a significant avenue for Telegram's commercialization efforts. Due to historical sensitivities and the limited profitability avenues available to Telegram, the platform must carefully select an appropriate path for commercialization. The founder of Telegram had envisioned the integration of blockchain technology from the early stages of its establishment. Through the diversion of Bots, TON has the potential to emerge as a distinctive application-based public chain. Therefore, TON stands as one of the most promising avenues for Telegram's future success.
Why do developers need to transition to the TON ecosystem?
In order to thrive in the digital landscape, developers have a compelling reason to transition to the TON ecosystem. The TON Foundation has devised key strategies to foster ecosystem growth, including Apps Center inflow, TON native payment integration, Telegram community promotion, Foundation Grants, and investments, and the lifting of API restrictions. Below are some comparative advantages that are likely to attract developers to the TON ecosystem in the future:
TON's Native Payment: The current @Wallet, although KYC compliant, offers limited functionality and scalability, merely facilitating payment calls. To expand product scale and functionality, developers must incorporate a native payment component based on the TON public chain. TON Space, a self-hosted wallet for web3 users, enables smart contract calls and aids project parties, enhancing product imagination and enabling seamless payments without wallet imports.
Telegram Community Promotion:
Platform: The TON ecosystem boasts an official website, a mobile promotion bot, and a dedicated promotion Telegram channel.
GitHub: Developers who complete bounty tasks gain recognition in the TON GitHub's Hall of Fame, with 106 projects covering code extensions, NFTs, and development tutorials.
Advertising: Telegram sponsorship information can be displayed on large public channels, providing broad-based exposure for projects. The TON Foundation has the authority to place project advertisements, including banners, category ads, and search ads.
Foundation Support: The TON Foundation has already granted over $1,200,000 to support more than 100 projects, averaging $10,000 per project. In 2023, funded projects range from TON wallet integration with KaiOS to lending protocol EVAA Protocol, application platforms, development components, prediction markets, launch platforms, and AI integration.
Lifting API Restrictions: Unlike Telegram's limitations on bot messaging capacity, TON provides unrestricted anonymous RPC access to the API, facilitating data indexing, and retrieval, and significantly enhancing development flexibility.
Stable Platform: While bots struggle with payment and cashing issues, TON ecosystem applications seamlessly connect to the corresponding infrastructure. Bots impose fees on DeFi transactions, whereas TON DeFi applications offer lower charges, providing a more cost-effective solution.
Enhanced User Experience: Bots often encounter limitations in response speed, interaction modes, and multitasking capabilities. In contrast, TON Apps offer a superior user experience, with stronger functionality, interactivity, and composability. Projects featured on the APP Center can all be connected via @Wallet, highlighting the substantial depth difference between TON and Telegram Bot projects.
By transitioning to the TON ecosystem, developers can unlock a range of opportunities such as embracing native payments, benefiting from community support, enjoying enhanced development flexibility, accessing a stable infrastructure, and providing an improved user experience. With TON's solid foundation and these notable advantages, developers have compelling reasons to consider moving to the TON ecosystem.
Source: TON Foundation, OKX
2. A closer look into the thriving TON ecosystem
The TON's official ecosystem showcases an impressive array of 551 applications, covering a diverse range of sectors. From pledge platforms to wallets, browsers, cross-chain bridges, public facilities, NFT marketplaces, social platforms, games, decentralized exchanges, and more, the ecosystem offers a comprehensive selection of projects.
Source: Coin98Analytics
Wallets: Most wallets in the TON ecosystem are embedded components, with only three of the top ten wallets having their own official websites. While these wallets offer convenience through integration with Telegram, concerns about the security of Telegram and excessive spam messages create uncertainty regarding users' willingness to trade.
DEX: The ecosystem currently features six native platform DEXs, all offering basic swap and liquidity pool functions. These DEXs have a total value locked (TVL) averaging between $US200-500M. Non-native DEX platforms like DODO, Uniswap, Pancake Swap, and Nomiswap also play a role. However, development in this sector is slow, with most products supporting only a few cryptocurrencies. The only DEX aggregator, OPTUS, is currently unable to aggregate. [Notes: The primary issue is the lack of a stablecoin. There are indications that Telegram may issue a stablecoin in Dubai, its own stablecoin or initially issuing USDT.]
Lending Platforms: Presently, there are only two usable pledge platforms (TonStake and Whales Pool) in the TON ecosystem. Other products like liquidity pledge hipo finance are in the testnet stage. The user interface is basic, offering only fundamental functionality similar to the early stages of the BTC ecosystem.
CEX: TON currently hosts 44 CEXs, including well-known exchanges like OKX, Huobi, Bit, CoinEX, Gate, BiTelegramet, and Moonpay. The remaining exchanges are smaller or local, such as Spain's Bit2me and Iran's اوکی اکسچنج.
Cross-Chain Bridges: The official bridge in the TON ecosystem currently supports asset interoperability between BSC, ETH, and TON networks, with assets transferred limited to TON. The third-party bridge, Orbit Bridge, announced support for the TON network starting on December 1, 2022. Orbit Bridge also supports Ethereum, BNB, Klaytn, Polygon, and other chains, enabling cross-chain transfers of assets between these networks and the TON blockchain.
Utilities: The TON ecosystem primarily offers utility tools in the form of bots, providing functions similar to widgets. These include faucets, notification bots, transaction tracking tools, community management tools, and quizzes with prizes.
NFT: The TON ecosystem features about 50 NFT series. Notable series include Annihilation (with a floor price of 198 TON and a volume of 177.2K TON), CALLIGRAFUTURISM (with a floor price of 650 TON and a volume of 21.6K TON), OCTOPUS BOYZ (with a floor price of 87 TON and a volume of 75.8K TON), and METAMORPHOSES (with a floor price of 99.5 TON and a volume of 38.9K TON). However, no well-known artists have entered the TON NFT space, and the overall trading volume remains average.
Games: The TON ecosystem offers over 30 games, with two popular gambling projects integrated platforms embedded in Telegram as bots. Other game projects may appear relatively unsophisticated, often functioning as small programs that start directly without official websites.
DEV Components: Currently, the ecosystem features seven development components, including the TON development plugin for the IntelliJ Platform (an open-source platform for developer tools), Tonana cross-chain bridge, contract-to-QR code conversion, and TON contract verification. However, aside from these components, there are no other notable useful components, and the overall ecosystem for developer components is average. Occasionally, the official website may be inaccessible.
3.The future of infrastructure and opportunities
Optimism surrounding officially supported infrastructure
TON Network: Telegram's MTProto protocol is easily embeddable into the RLDP protocol, opening up opportunities for transforming Telegram into a ton-service. This transformation not only benefits Telegram but also paves the way for similar messaging and social network services to leverage the advantages of the TON Network.
TON's original components/middleware: These include basic network components such as P2P and proxy, social components like DNS and storage, and payment components like wallets and TON Space. Looking ahead, these components could be combined and expanded to enhance infrastructure. Possibilities include the development of a one-stop network deployment infrastructure, a dynamic site search engine, and a market data dashboard. In the DeFi realm, there are opportunities for the creation of DEXs and aggregators. Additionally, considering the abundance of game projects on TON, the ERC-721-based NFT market holds significant potential for growth and development.
Exploring the potential of Mini-Program applications
The main thesis: When comparing the ecosystems of TON and Ethereum, it becomes evident that they prioritize different aspects. Ethereum places a strong emphasis on decentralized finance (DeFi) and embraces a robust crypto narrative. Conversely, TON values the diversity and breadth of mini-program applications, leaning towards the Web2.5 narrative. In TON, the focus lies on user experience and achieving mass adoption, with a language preference for existing web2 developers, particularly favoring the C language. TON's approach prioritizes inclusivity and user-friendly experiences, diverging from the crypto orthodoxy observed in Ethereum. These distinct emphases and developer communities contribute to the unique character and goals of each ecosystem.
Analysis: TON presents abundant opportunities on the application side, with a clear focus on supporting mini-programs. Breaking through the pure crypto application layer is challenging, making mini-programs the priority before venturing into the realm of DeFi. While technical innovation in the crypto space is not the primary focus, stability and security take precedence.
It's important to note that Telegram users' habits currently differ from those of WeChat. The ecosystem structure, user stickiness, and user psychological expectations align more closely with platforms like QQ, which offer a multitude of functional features. These factors shape the direction and development of the TON ecosystem, emphasizing the importance of catering to user preferences and providing a diverse range of functionalities.
The verdict: The integration of Ton Space and Telegram holds the promise of attracting substantial Web2 traffic to the TON ecosystem. This expansive ecosystem encompasses a range of crucial elements, including traffic sources, application scenarios, social relationships, payment gateways, and addressing user touch needs. In the early stages, developers can draw inspiration from the development form of WeChat mini-programs, particularly in a specific vertical field. By leveraging the strengths of Ton Space and Telegram, the TON ecosystem can create a compelling environment that caters to the diverse demands of users. This approach positions TON to become a thriving ecosystem, capable of attracting and satisfying Web2 traffic, while strategically targeting a specific vertical field.
List of vertical fields:
Traffic sources: The TON ecosystem can tap into a range of traffic sources. A DApp task distribution platform can attract developers and showcase their applications. While Telegram Ads currently has a wide-net approach, targeted business-oriented releases have the potential to gain popularity. Additionally, integrating other Web3 projects, such as Readon, can further diversify traffic sources and attract a broader user base.
Application scenarios: TON offers diverse application scenarios, including App Bot and Web App options. Furthermore, the ecosystem can incorporate Web 2 transplant content, such as collaborating with the official team of NetEase's card game Card Ahoy for innovative partnerships. Moreover, TON can facilitate the transition of e-commerce to Web 3, encompassing virtual, real-world, and even crypto e-commerce experiences.
Social relations: TON can leverage a social graph protocol based on TNS (TON Naming System) to enhance social interactions. Combining social and trading elements within gaming environments can create engaging social/trade markets. Additionally, providing a sharing and invitation platform can encourage user participation and network expansion.
Payment gateway: TON can offer a combination of credit cards and cryptocurrencies as a versatile payment gateway. Integration with real-world assets (RWA) can further enhance payment options. Introducing a stable mining platform akin to "Yu'ebao" can offer stability and incentivize active participation.
User reach: Leveraging the existing Telegram channel can help reach a substantial user base. Looking ahead, TON Space and @wallet can jointly expand user reach by attracting more Web 2 users to embrace the transition to Web 3, facilitating broader adoption and engagement.
Source: Telegram, OKX
A prudent outlook for DeFi, MEV, and ZK
DeFi: While DeFi applications may not require extensive crypto innovation, they do demand robust collateral, swapping, and trading functionalities. Security and usage stability are paramount, making them an opportunity for established exchanges and products with a solid track record in the crypto space. These entities can leverage their accumulated expertise to cater to the requirements of DeFi applications effectively.
MEV Issue: Currently, the prevalence of large transactions doesn't warrant an immediate solution to MEV-related challenges. Instead, the focus should be on expanding the availability of assets and stimulating trading demand. By prioritizing asset creation and fostering increased market activity, the ecosystem can lay a strong foundation for addressing MEV concerns at a later stage.
ZK and Bridge: Both ZK (Zero-Knowledge) technology and bridge solutions hold significance in the TON ecosystem. However, it is still premature to deploy them extensively, as further infrastructure development is necessary. It is essential to note that TON's growth doesn't solely rely on a bridge strategy, as bridges primarily attract liquidity from the Ethereum ecosystem. TON aims to tap into new traffic, with a particular emphasis on fiat stablecoins. In the short term, we maintain a cautious stance on Layer 2 and ZK directions, awaiting further advancements and market readiness.
Exploring alternative opportunities
Dev Tools/Community: While deploying and developing on TON may pose challenges, the theoretical advantage of higher TPS exists. However, official technical resources are limited, making it difficult for small teams to thrive. Therefore, focusing on building a robust developer ecosystem and enhancing the developer experience becomes crucial. This includes initiatives like TWA connecting to RPC, development toolkits, and no-code deployment platforms. It's worth noting that projects in this area require a high level of technical expertise and a strong background.
Social Payment and Parallel Payment Infrastructure: Exploring solutions for the creator economy, similar to platforms like OnlyFans, can address the interaction challenges between creators and users. Additionally, opportunities exist in private domain traffic monetization, targeting social media operators.
Integration of Games and Social Graphs: Platforms that facilitate social media traffic distribution and small-game integration, along with leveraging social graphs and the NFT market, hold potential. Porting traditional games, such as casual games like "Fun Run Everyday," "Landlords," and social games like "Happy Farm," can seamlessly incorporate token economic models.
New Value Creation and Circulation: Exploring connections with traditional social media platforms can unlock possibilities for new value creation and circulation. By leveraging the existing user base and engagement on social media, innovative approaches can be developed to drive value and foster ecosystem growth.
4. Conclusion
The TON ecosystem has experienced significant growth, with 551 applications already integrated and the number continuing to rise rapidly. This expansion highlights TON's efforts in building a diverse and robust ecosystem. Moving forward, by focusing on optimizing infrastructure, providing comprehensive deployment services, and enhancing various functional experiences, TON has the potential to attract more developers to participate.
Overall, TON exhibits a positive development trajectory. Its integration with Telegram's user base and strong technical framework offer substantial growth opportunities. The infrastructure and mini-program applications within TON are particularly noteworthy. However, it is important for both investors and developers to carefully evaluate their participation decisions based on a deep understanding of the TON ecosystem and related technologies.
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