TON and Toncoin Explained

What is TON?

TON (The Open Network) is a multi-layer system consisting of the TON blockchain, Toncoin, and other decentralized services. Developed by Telegram in 2018, TON now upgraded into sharding, Proof-of-Stake Catchain Consensus, and smart contracts. As a Layer 1 (L1), TON can host its own protocols or provide a field for the creation of distinct chains, similar to Ethereum Layer 2s.

Telegram users, including those new to crypto, can easily access Web3 applications and carry out onchain transactions directly from the messaging app. Toncoin is the token that powers the TON ecosystem both as a local medium of exchange and a tool for global interoperability.

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How Does TON Work?

TON is a comprehensive internet system that functions as a unified platform combining the TON Layer 1 (L1) blockchain with various supporting decentralized services:

• Blockchain Architecture: TON's L1 uses a dual-chain architecture with a masterchain for global network state and multiple basechains for specific tasks (similar to modular L2s).
• PoS Consensus: Toncoin validators stake to secure networks, validate transactions, and earn rewards. Validators need a minimum of 300,000 TON tokens to be considered.
• Sharding: A sharding technology divides the blockchain into smaller "shards" for horizontal scalability and increased transaction throughput.
• Interoperability: Cross-chain communication for token transfers and data sharing between different blockchain networks. Learn how to bridge to TON.
• Protocols: Smart contracts can be written in multiple programming languages, making it accessible for a wide range of developers to build decentralized applications.
• Extra DeFi Services: TON Storage for decentralized file storage, TON DNS for human-readable addresses, and TON Payments for fast, low-cost transactions.
• User Focus: Thanks to Telegram, TON provides a mobile-friendly user experience, driving mass adoption to millions of users who get access to crypto without leaving the messaging app.

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What is Toncoin?

Toncoin is the native cryptocurrency of the TON network, used for payments, transaction fees, staking rewards, network governance, and DeFi activities. Toncoin use cases include:

• Transaction Fees: Toncoin is used to pay for various transaction fees within the network, including storage, routing, and computation fees.
• Telegram Integration: The TON ecosystem is directly integrated on Telegram and anyone can get a feel of how crypto works with a few clicks inside the messaging app.
• Staking: Validators earn Toncoin by maintaining network security, with rewards distributed from transaction fees and newly minted tokens.
• Nominators: Token holders can lend their Toncoin to validators for staking and share in the rewards.
• Governance: Holders can participate in governance processes, influencing network decisions and developments through voting, although these votes are not binding.
• Decentralized Finance: Crypto "degens" can enjoy advanced DeFi strategies like lending, liquid staking and cross-chain bridging. Read how to bridge to TON network.

Added to that, Toncoin is available for purchase on all major crypto exchanges like Bybit and Kucoin, with its most recent major listing being Binance. As a final bonus, holders can choose to self-custody their TON tokens on classical crypto wallets like Coinbase Wallet, Ledger and Metamask, or use a specialized one like MyTonWallet.

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Toncoin Tokenomics

Toncoin ($TON) initially used a Proof-of-Work (PoW) mechanism, allowing decentralized mining until June 2022. It now operates on a Proof-of-Stake model, with validators staking tokens for blockchain security and rewards.

• Supply: The initial max supply of Toncoin was set at 5 billion tokens, with 98.55% pre-mined and the remaining 1.45% allocated to the development team. In August 2024, the max supply is 5.1 billion with 2.5 billion in circulation.
• Inflation Rate: Toncoin has a linear inflation rate of 0.6% annually.
• Burn Mechanism: A portion of transaction fees and slashed funds from misbehaving validators are burned, permanently removing them from the circulating supply.
• Frozen Supply: Approximately 1.081 billion $TON from pre-mined tokens are frozen for 48 months.
• TON Believers Fund: This fund locks Toncoin for five years, with a two-year cliff followed by a three-year linear release, effectively removing about 1.317 billion Toncoin from circulation.

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Why is Toncoin's Price Rising?

Toncoin's price has risen by 1495% in 2024 and 426% overall in the past 365 days, driven by a spike in onchain users and increased activity within the TON ecosystem. In more detail, the total value locked in TON has grown from $13.5 million to $635 million over the past year—a 47-fold increase!

The coin's adoption has snowballed, propelled by popular Telegram play-to-earn GameFi projects like Notcoin and Hamster Kombat, each attracting tens of millions of daily players.

Last but not least, strategic campaigns such as the developer grant program and support from Telegram's founder, Pavel Durov, have strengthened investor confidence, contributing to Toncoin's price reaching $6.6 and raising its market capitalization to $16.6 billion, placing it comfortably as the 9th largest cryptocurrency.

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TON Ecosystem

Beyond the TON Layer 1 and Toncoin, The Open Network is building other decentralized computer systems like:

• TON Apps: There are over 1070 applications on the network, including 53 wallets, Jettons (TON fungible tokens), 24 decentralized exchanges and 264 gaming projects.
• TON Storage: A decentralized file storage system that allows users to store and share files securely across the network, using peer-to-peer technology.
• Telegram Ads: Advertisers can pay with TON to access 950 million Telegram users generating a combined 1 trillion monthly views (yes, it comes with a revenue-sharing program).
• TON DNS: A decentralized domain name system that assigns human-readable names to blockchain addresses, smart contracts, and services.
• TON Payments: A micropayment platform designed for fast, low-cost transactions within the TON network, utilizing payment channel technology and zero-fee transactions.
• TON Sites: Web3 sites accessible via the TON network, featuring built-in encryption, wallet integration, and a decentralized domain system.
• TON Proxy: A tool that allows users and site owners to access and interact with the decentralized web through a proxy.

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Who is Behind TON?

TON was developed by the brothers Pavel and Nikolai Durov (Telegram founders) in 2018 to integrate blockchain with their messaging platform. Legal challenges, specifically an SEC lawsuit over an unregistered securities offering in 2020 forced Telegram to step back, leading the open-source community and the TON Foundation to take over the project.

The foundation now manages the network's development and governance, with support from a community of over 12 million global members and 369 independent validators with a combined 581 million in staked Toncoin. Pavel Durov still supports TON, gives speeches to the most attended Web3 events, and fully endorses many of the recent protocols launched under the project's framework.

TON is also backed by the biggest crypto housshold names like Bybit, OKX, Tether and Pantera Capital.

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Bottom Line

Some crypto projects talk about driving mass adoption while TON and Toncoin actually do it. Through its natural integration inside Telegram, TON rewards its community of loyal, active users by giving them the most mobile-friendly field to progress in their individual Web3 journey.

Not only does this unique setup host some of the most popular crypto games (with more like DOGS coming soon), but it also supports a comprehensive DeFi ecosystem, offering features such as staking, lending, and bridging to other blockchains.

As a community-owned platform available on all major crypto exchanges, Toncoin facilitates high trading volumes, while enabling in-app purchases on Telegram. Thus, this approach renders Toncoin particularly accessible to newcomers, providing a user-friendly entry point into the space.