Toncoin (TON Blockchain) Review – An Open-Source Project Continuing Telegram’s Ambitious Blockchain Vision

In January of 2018, private messaging app Telegram first unveiled their plans to launch a blockchain platform called the Telegram Open Network. The project had ambitions to create a highly scalable blockchain that would support integrations with the Telegram chatting app and tap into its massive userbase. 

A few months later, Telegram started conducting private sales for the Gram token, which was supposed to be the native asset of Telegram Open Network. In an attempt to stay compliant with regulations and avoid having the tokens classified as securities, Grams were only offered to accredited investors. The private sale attracted massive amounts of interest and by April 2018, Telegram had raised $1.7 billion in total. This made it one of the largest token sales of all time, second only to the initial coin offering for EOS. 

Despite Telegram’s efforts, the U.S. Securities and Exchange Commission (SEC) had serious concerns about the Gram token sale. After more than 18 months of communication, Telegram and the SEC failed to reach common ground. In October of 2019, the SEC filed an emergency action to prevent Telegram from distributing Grams to investors who purchased rights to the tokens. At the time, the SEC said it took the action to prevent Gram tokens, which it viewed as securities that were sold without the proper registration, from being sold on open markets in the United States.

The SEC’s involvement against the Telegram Open Network appeared to be a death blow for the highly anticipated project. Indeed, Telegram founder and CEO Pavel Durov announced in May of 2020 that Telegram would stop being actively involved with Telegram Open Network. 

TON (The Open Network) project emerges to continue Telegram’s blockchain vision

However, there were developers that saw the potential in the technology that Telegram had developed for its would-be blockchain platform. Shortly after Telegram officially abandoned the project, developers Anatoliy Makosov and EmelyanenkoK launched Newton, a community that would continue the project through open-source principles. Their plan was to continue developing the project to meet the vision described in the whitepaper initially released by Telegram. In May of 2021, Newton was renamed to TON Foundation (TON now stands for The Open Network). The blockchain’s native cryptocurrency was renamed to Toncoin. 

Interestingly enough, Telegram CEO Pavel Durov said in a message posted in December 2021 that he wished success for Toncoin and that he was happy to see that other developers are continuing the work that Telegram started. Despite Durov apparently being a fan of the project, we should clarify that Toncoin is being developed independently from Telegram. 

The project got a big boost in January 2022, when Andrey Rogozov joined the TON Foundation. Rogozov previously served as the CEO of Russian social media giant VK (which was originally founded by Durov). Rogozov is still with VK, although he plans to move into an advisor role at the company as he begins his work with the TON Foundation. 

How does TON Blockchain work?

Now that we know the most important facts about the project’s history, let’s take a look at what Toncoin actually offers and what its developer community is working on. 

The TON Blockchain is a Proof-of-Stake blockchain platform that implements several scaling technologies to be able to support mass adoption. The native asset of the TON Blockchain is called Toncoin. 

To meet its scalability goals, the TON Blockchain actually functions as a collection of blockchains. There is a masterchain that contains the most vital information required for the network to function – this includes key protocol parameters, the active set of validators, the active set of workchains, as well as the hashes of the blocks recently produced by workchains and shardchains.  

Smart contracts and crypto asset transfers in the TON Blockchain network are handled by workchains. Workchains can be customized for specific use cases, as long as they meet baseline criteria required to interoperate with other workchains that make up the TON Blockchain. Theoretically, the architecture of the TON Blockchain allows it to support over 4 billion workchains. TON Blockchain also implements sharding, as workchains can be divided into shardchains. Workchains have not been implemented into the TON Blockchain yet, although their development is underway. 

The Proof-of-Stake consensus in TON Blockchain is conducted by validator nodes. While becoming a validator is accessible to anyone, it does require a large amount of Toncoin. Toncoin holders can serve as nominators and delegate their coins to a validator to help them reach the required amount. Nominators are of course entitled to a portion of the rewards collected by the validator they are supporting, so this represents a way for nominators to passively grow their Toncoin holdings. Toncoin holders can also delegate their coins to operators of oracle nodes that oversee the bridging of Toncoins to other blockchains. 

The TON Blockchain ecosystem

The TON Foundation is working on a suite of services that will simultaneously leverage the TON Blockchain and add to its functionality.

TON Payments

TON Payments is a payments platform inspired by the Lightning Network. The main idea behind TON Payments is to provide transactions that are efficient enough to make micropayments viable. To reduce costs and the load on the TON Blockchain, payments are made off-chain but the final balances of the participants are ultimately enforced on the blockchain. 

TON DNS

Everyone who’s ever used a blockchain is familiar with the long strings of seemingly random characters that make up cryptocurrency wallet addresses. Remembering these addresses is practically impossible, and the system doesn’t exactly seem very human-friendly. TON DNS (Domain Name Service) tackles this issue by associating accounts, smart contracts and other services on the TON blockchain with human-readable names. This will make the TON Blockchain much mure user-friendly, as we’ve already seen with similar systems on other blockchains like the ENS on Ethereum. 

TON Storage

TON Storage is a distributed file storage service where files are stored off-chain while keeping a hash of the file on the blockchain. Smart contracts are used to enforce the availability of the file in the storage network. The architecture of TON Storage is inspired by torrents, and is designed to provide a secure and permanent place for storing files. 

TON Proxy

TON Proxy is meant to provide online privacy to users of the TON Blockchain. It enables decentralized VPNs and TOR-like networks to enhance the privacy of users on the TON Blockchain. In combination with TON DNS and the TON Blockchain, TON Proxy can be used to deploy censorship-resistant decentralized applications. 

TON Services

TON Services allows developers to launch applications and smart contracts that use the TON Blockchain. These services are complete with user-friendly interfaces for interacting with DApps and smart contracts, with the intent of giving TON Blockchain users a similar experience to browsing the web. 

Toncoin

As the native asset of the TON Blockchain, Toncoin plays a key role in incentivizing validators to maintain the network and not act against its best interests. Toncoin is also used as a measure of voting power when it comes to proposed changes to the TON Blockchain protocol. Toncoin is also the main economic unit in the TON Blockchain ecosystem, as it’s used as a means of payment for the services outlined above like TON Storage and TON Proxy. 

Even though the Toncoin blockchain itself reaches consensus through Proof-of-Stake, the TON Foundation is utilizing a Proof-of-Work mechanism to distribute the initial supply of 5 billion Toncoins as fairly as possible. These Toncoins are held by smart contracts called Givers, and are distributed to miners. 98.55% of the Toncoin supply was transferred to the Giver contracts.

Toncoin is already listed on some of the leading cryptocurrency exchanges, including the likes of FTX, OKX and Gate.io. Toncoins can also be wrapped and sent to the Ethereum and Binance Smart Chain blockchains through a decentralized bridge. These transfers occur at a 1:1 rate, although users have to be aware that bridging comes with an associated gas fee on the target network. 

The bottom line

Telegram’s initial vision for a hyper-scalable blockchain platform attracted a huge number of investments, while blockchain enthusiasts were eagerly waiting to see if the ambitious project could realize its goals. Even though Telegram itself was forced to abandon its role within the project, TON is now led by an open-source community that’s essentially looking to finish the work that Telegram started. As TON Blockchain development continues to progress, it will be exciting to see whether the blockchain’s unique design will be able to offer the scalability and user experience necessary for mainstream adoption.