In 2018, the messaging platform Telegram released a white paper for a layer-1 blockchain it called the Telegram Open Network. 

The project’s currency, called ‘Gram’, was designed to pay transaction fees, settle payments and validate transactions on the network. 

Telegram Gets a Crypto Wallet—3 Years After SEC Pumped the Brakes

The Open Network Foundation (TON Foundation) announced Wednesday that messaging app Telegram will add a self-custodial crypto wallet for the chat platform’s users, taking The Open Network (TON) closer to its spiritual roots. The TON Foundation said that a self-custodial digital wallet, TON Space, has launched on Telegram and is now available to the chat platform’s approximately 800 million users. In addition, the Foundation said that projects built on TON will get priority access to the messagin...

The launch hit the headlines. It broke records in 2018 after raising an eye-watering $1.7 billion in a token sale. It was the second largest ICO in history, behind EOS, which raised $4 billion. But two years later, Telegram abandoned the project. What happened? 

Regulatory Trouble 

The project, conceived by brothers Nikolai and Pavel Durov, is a proof of stake protocol that uses sharding to help it solve some of the scaling issues found on projects like Bitcoin. 

What is Sharding?

Ethereum has a scale problem. Thanks to its popularity, the network is finding it more difficult to process the volume of transactions flowing through it. That has lead to an increase in transaction costs and waiting times for transactions to be approved. Vitalik Buterin, the network’s co-founder has proposed a solution called Sharding. Ethereum’s current limitations The Ethereum network, like many blockchain networks works by having several nodes working to help verify transactions. It does thi...

Like its contemporaries, TON was attempting to build a suite of decentralized services. including decentralized storage, a domain name system, a privacy network, instant payments, and fast transaction processing. 

The Durov brothers, and Telegram’s engineering team had brought the project to the verge of completion, but then the Securities and Exchange Commission (SEC) got involved. 

While Telegram had worked with American regulators on its token release, the SEC saw investors in the project as underwriters, and Telegram’s offering of Gram was considered an unregistered distribution of securities.

What is Proof of Stake? How it Differs From Proof of Work

Mining cryptocurrency such as Bitcoin is an energy-intensive business. But it doesn’t have to be. Bitcoin, and other cryptocurrencies such as Dogecoin and Litecoin, secure their networks using the proof-of-work (PoW) consensus mechanism. An alternative consensus mechanism used by cryptocurrencies such as Ethereum is called proof-of-stake (PoS), which radically reduces the blockchain’s carbon footprint. In this article we’ll explore what consensus mechanisms are, and how proof-of-stake differs fr...

Telegram did try to fight the ruling, but in 2020, Pavel Durov announced that Telegram’s participation in the development of the project would cease, and began issuing refunds to investors. That’s when the community stepped in. 

TON’s code was open source, and accessible on GitHub, allowing anyone to contribute to its development. A group of community developers decided to pick up where Telegram left off and build new TON functionality. The current network was launched and developed by Anatoliy Makosov, a software developer and Kirill Emelianenko, a programmer and Ph.D. in Physics and Mathematics.

The TON Foundation, a non-commercial group of supporters, renamed the project to The Open Network, allowing it to retain the TON moniker now runs Toncoin. 

How does it work? 

Toncoin is the native cryptocurrency of the TON network. It is used for network operations, transactions, games or collectibles built on TON. 

TON also features a wallet that provides commission-free crypto transfers to any other Telegram user, and is the primary way users interact with Telegram Mini apps, Telegram’s JavaScript based interface ecosystem that allows businesses to create in-app experiences. 

There are also other services on TON, including TON Storage, TON Proxy (a decentralized VPN service), and the TON naming system. Toncoin is the primary way these services are paid for by users. It has its own app store, with more than 500 apps deployed a the time of writing, that also use the currency. 

TON uses a sharded, proof of stake consensus mechanism, meaning it can process transactions in parallel, improving transaction speed. In 2021, it hit a then record of being able to process 55,000 transactions per second. The company claims the network can process millions of transctions. 

Tokenomics 

Toncoin has a maximum supply of 5 billion TON, and at the time of writing, 3.4 billion TON are in circulation. Validators receive rewards in TON for maintaining the network, and the Foundation has created an inbuilt annual inflation rate of 0.6%. 

What is Tokenomics? How Blockchain Economics Works

In traditional finance, government-controlled monetary policy issues currency, sets interest rates, and controls currency supply. Cryptocurrency has changed this. Individuals can create their own micro-economies. Tokenomics essentially takes what central banks use as monetary policy and apply it in blockchain networks. Here’s how. What is tokenomics? Tokenomics is the science of the token economy. It covers all aspects involving a coin’s creation, management, and sometimes removal from a network...

While Toncoin is the currency for Telegram’s services, Toncoin is also be used to influence how the network develops in the future. The Open Network is a decentralized autonomous organization (DAO), so users who hold the blockchain’s native token can cast votes on any proposed changes to the blockchain or ecosystem.

Roadmap 

According to the TON Developer Report for Q2 2023, the network has experienced increases in developer activity, as other projects have plateaued during the recent crypto winter.  

TON network’s development activity is up 102% year-on-year. By the end of June, the developer count reached 9,134, marking a 6.56% increase from April’s figure of 8,572. TON’s strategy has been to leverage the Telegram community to attract projects to build, and ultimately use Toncoin. 

Tap Fantasy, an MMORPG blockchain game made the switch to TON from Binance Chain in August 2023 to take advantage of the project's integrations with the messaging platform’s 700 million monthly active users. 

Errata, September 18, 2023 : A previous version of this article stated that Toncoin was minted using a proof-of-work consensus algorithm, but transitioned to proof of stake in June 2022. In fact, TON has always been a proof of stake protocol. Mining took place using smart contracts that mimicked a PoW protocol.

This article also previously stated that Telegram conceived of Toncoin. This is inaccurate. While Telegram played a role in initially building the infrastructure of TON, they were never involved in the creation of Toncoin. Telegram made Gram, not Toncoin.