A deep dive into the TON (The Open Network) ecosystem

Introduction

In 2018, Telegram introduced TON (The Open Network), emerging as one of the prominent Layer-1 solutions in the cryptocurrency space. With its native token $TON currently holding a significant position in market capitalization, driven by user engagement and a thriving ecosystem, TON has garnered substantial attention. OKX Ventures has conducted extensive research on the TON network, delving into its intricacies and identifying key areas for future growth within the ecosystem.
In this two-article report series, it aims to provide a comprehensive exploration of TON's potential. The first article will delve deep into the TON ecosystem, unraveling the unique characteristics of its blockchain technology and diverse applications. It will examine the underlying infrastructure and shed light on the innovative solutions that TON brings to the table.In the second article, the focus will be shifted to analyzing the current landscape of the TON ecosystem and uncovering exciting opportunities within the TON stack. By evaluating market trends and emerging developments, the article will pinpoint areas primed for growth and explore the potential they hold.

1. The basics of TON

The development of TON has been a winding journey. TON was initially created by Telegram in 2018 and successfully launched an ICO in 2019, setting a record in the process. However, in 2020, the project faced legal challenges as it became the subject of a lawsuit by the SEC, leading to a halt in its progress. Two years later, the TON Foundation rebuilt the ecosystem, shaping it into its current state.

2. About users and developers

Users

Telegram's user base is experiencing rapid growth, making it the fastest-growing app in 2022 and currently the fourth largest instant messaging app globally. With over 800 million monthly active users, Telegram surpasses other prominent platforms such as X (556 million) and DouYin (715 million). Remarkably, the platform attracts more than 2.5 million new users daily (based on data as of January 2023).
Telegram serves as a versatile platform for various blockchain use cases, attracting a significant number of developers. Additionally, it functions as an e-commerce platform, with Chinese foreign trade companies being among the major beneficiaries, having sold $1.2 million worth of exported goods through the Telegram platform by 2020.
Telegram enjoys a substantial user base, particularly outside of China and America, with Russia, India, and Brazil being the top 3 countries of the user base. In 2022, Telegram recorded 34.91 million downloads in Russia, surpassing second-place AliExpress (29.29 million downloads). India has the highest number of Telegram users, with 86.6 million registrations, followed by Brazil (15.8 million) and the United States (10.89 million).
In terms of market share (%), Telegram dominates the markets of Russia, Indonesia, and Malaysia. Data for Q3 2022 reveals that these countries have a Telegram market share of over 60% among all internet users. Market share in Brazil, Saudi Arabia, India, Nigeria, Egypt, Türkiye, and Cambodia also surpassed 50%.

The user growth trajectory for TON is optimistic, according to the official data provided by TON:

1. TON's user growth has demonstrated stability, with a reported count of over 3.5 million accounts on the chain. Over the past six months, TON has experienced a growth rate of 176%. The daily active user count on the chain has reached 810,000, marking a 154% increase over the same six-month period. Moving forward, it is anticipated that TON will continue to attract an average of 1.5k new users per day, indicating a consistent growth pattern. The goal is for TON to encompass about 30% of Telegram users by January 2022 and target 500 million users by 2028.
2. The number of Validators currently supporting TON stands at 349, distributed across 25 countries. The total number of pledges made by Validators is nearly 500 million TON, which accounts for 10% of the total token supply and approximately 14% of the tokens currently in circulation. These figures highlight the substantial participation of Validators and the considerable amount of pledged tokens, reflecting the level of support and confidence in the TON network.

3. Ton's framework and technology

Adaptive infinite sharded multi-chain architecture

TON's sharding mechanism follows a bottom-up approach, where account chains are initially grouped into shard chains, enabling interactions within these shard chains. This distinguishes TON from other blockchain sharding schemes, as it allows for parallel transaction processing across multiple chains, creating a "blockchain of blockchains" structure.
The architecture of TON consists of three crucial components: the Masterchain, the Workchain, and the Shardchain. The Masterchain serves as the central coordinating hub and contains important protocol parameters, the set of validators with their corresponding shares, as well as the currently active workchains and subordinate Shardchains. To ensure the latest state can be determined, subordinate chains submit their most recent block hashes to the Masterchain.

1. Masterchain: There is only one Masterchain, which holds the protocol parameters, the validator set, and their shares, the currently active Workchains, and the subordinate Shardchains. By submitting their latest block hashes to the Masterchain, subordinate chains enable themselves to determine the latest status when they need to read messages across the chains. This mechanism ensures the most up-to-date information can be obtained when reading messages across different chains.
2. Workchain: The Workchain is a virtual concept and acts as a collection of Shardchains. TON can accommodate up to 2^32 Workchains, with each Workchain having flexible customization options such as address formats, transaction types, native tokens, smart contract virtual machines (VMs), and other rules, as long as they adhere to interoperability standards.
3. Shardchain: To enhance processing efficiency, each Workchain is further divided into Shardchains, with each Shardchain capable of accommodating up to 2^60 (automatically splitting into two when load increases and merging back into one when load decreases). Shardchains conform to the rules set by their corresponding Workchains, and the workload is distributed among all the Shardchains. Each Shardchain serves only a subset of the overall set of accounts, allowing for optimized processing and scalability.

4. TON native components

TON's P2P network

Introduction: TON is a P2P network transport protocol similar to IPFS, which allows you to access the TON blockchain, send transactions, and receive client account or smart contract information.
Network structure: TON utilizes the Kademlia Distributed Hash Table (DHT) to locate other nodes in the network, and the Abstract Datagram Network Layer (ADNL) to communicate between nodes; TON also creates specific Overlay sub-networks for each Shardchain to ensure efficient communication. TON also creates specific Overlay sub-networks for each Shardchain to ensure effective communication.

1. DHT: Locate other nodes in the network. When a client needs to submit a transaction to the Validator of a Shardchain, it can look up the Validator in the DHT through the Key and get the location of the Validator. 2;
2. ADNL: ADNL abstracts the network layer in the traditional TCP/IP layered architecture. In order to facilitate identification, instead of considering IP addresses, nodes communicate with each other using an Abstract Network Address (ANA). The address is a 256-bit integer based on a hash of the ECC public key and other parameters, which provides the basis for segmentation between different Shardchains;
3. Overlay: Different Shardchains do not need and are not capable of processing transactions on other Shardchains, so it is necessary to construct and Overlay sub-network for each Shardchain inside the TON Network, and the communication inside the Overlay network is carried out through the ADNL-based gossip protocol.

5. Conclusion

Since its inception in 2018, TON has overcome numerous challenges and undergone transformative phases, including its initial ICO, subsequent restart, and ecosystem reconstruction. With the active support of the foundation, TON has experienced significant market value growth and an expanding user base. Its adoption of flexible infinite sharding technology and an efficient consensus mechanism has positioned it as a scalable and highly secure blockchain network.
Looking ahead, TON is poised to further expand its market share and achieve broader user coverage with the backing of Telegram. The combination of TON's inherent strengths and the integration of Telegram's payment system provides ample room for development within the social media ecosystem. However, it is essential to acknowledge that TON's complex development language and asynchronous design present substantial challenges for developers. These challenges may potentially impede the rapid progress of the ecosystem.
Despite the hurdles, TON remains as a blockchain network with significant potential. As it continues to refine its technology, address developer challenges, and leverage its partnership with Telegram, TON has the opportunity to leave a lasting impact on the blockchain landscape, offering scalability, security, and innovation to users and enterprises alike.