Pantera Partner: Why did we invest in TON?

Pantera Capital

24-05-06 16:59

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Original title: Investing in TON Network

Original author: Paul Veradittakit, Partner at Pantera Capital

Pantera Capital recently announced its latest investment in TON. TON is a layer 1 blockchain network originally designed by Telegram and continues to be developed by the open source community. We believe TON has the ability to introduce cryptocurrency to the masses because it is widely used on the Telegram network. Telegram's future-proof, fast and secure messaging platform has more than 900 million monthly active users, and the platform is used for personal and team communications, large-scale community building, content sharing, and more.

By leveraging Telegram's large user base and seamless user experience and the vitality of the emerging TON ecosystem, we believe TON has the potential to become one of the largest crypto networks.

Combining the Web3 Spirit with Massive Distribution

Among the world’s leading messengers, Telegram stands out because its platform not only embodies much of the spirit of cryptocurrency, but also has significant distribution. Telegram’s monthly downloads regularly exceed its closest alternative, Signal, by 10x, with over 36.7 million downloads in January 2024.

What about other messengers? Telegram is the only major platform that is not facing regulatory barriers to incorporate Web3 into open blockchain networks. While Facebook’s Messenger has attempted to combine crypto payments with Libra, they ultimately faced regulatory hurdles from the United States, leading to a complete shutdown. WeChat has tried to integrate CBDC payments for the digital yuan, but the system was limited in scope and developers did not have the ability to create permissionless applications.

We believe Telegram is well-positioned to bring cryptocurrency to the mainstream world due to its shared Web3 ethos and wide distribution with the crypto world.

A Scalable Platform Built for Hundreds of Millions of People

TON is a blockchain initiative developed by Telegram that aims to leverage the messaging app's broad user base to create a decentralized network capable of supporting a wide range of applications. TON features a multi-component ecosystem that includes the TON Blockchain, TON Storage, TON DNS, and TON Services, all integrated to operate seamlessly.

The system’s backbone, the TON blockchain, is built for high performance and scalability, processing transactions quickly thanks to its dynamic sharding mechanism. This architecture ensures that the network can handle millions of transactions per second and scales efficiently as the number of users grows, making it ideal for developers aiming to launch applications for hundreds of millions of users without compromising speed or security.

TON’s dynamic sharding provides a scalable network for millions of users

Easy entry into the crypto world

Getting users on board with crypto applications is often difficult. New users need to write down their 24-word secret key and store it in a safe place. But what if they forget their password? How do you send or receive money from other users? Copying and pasting your public key may not be the best experience.

Telegram has simplified many of these complexities with the Top.co wallet in Telegram, enabling users to connect to mini-apps seamlessly. Users can easily buy, sell or manage tokens and NFTs in one interface, accessible directly from Telegram settings and personal chats.

The wallet in Telegram features both escrow and self-escrow management based on TON, allowing all users to enjoy an easy onboarding experience while giving experienced users the option to fully control their own keys. With TON’s self-escrow wallet, users don’t need to remember mnemonics; instead, they can simply use Telegram and email as backup.

Top.co’s Telegram Wallet Has 15 Million Users and Counting

The Era of Crypto Mini Programs

TON’s thriving ecosystem leverages Telegram’s innovative design and massive user base. More than 360 million users a month use what Telegram calls “mini programs,” which include chatbots and mini-games. With TON, we expect that the integration of crypto technology into these "mini-apps" will significantly enhance the user experience for hundreds of millions of users. There are more than 300 projects on TON, most of which have built mini-apps on Telegram, accessible through the Telegram App Center.

Earlier this year, we observed how memecoin trading tools like BonkBot were generating tens of millions of dollars in revenue through Telegram’s user interface. TON-based applications such as StormTrade now allow users to trade perpetual contracts, cryptocurrencies, stocks, and shares using the same interface. StormTrade is trading over $10 million per day, and we believe similar TON-native Telegram bots will become the preferred user experience for many traders.

Telegram is the foundation for viral social and gaming applications. Early experimental Telegram games like Pixels and Fanzee Battles attracted millions of users in a matter of days, demonstrating the platform’s huge potential for user engagement. Catizen, a cat-themed mini-game platform built on TON, currently has over 4 million users, with over 700,000 playing daily. Notcoin, a social application built on TON where users compete to mine digital currencies, has quickly attracted over 30 million users, one of the fastest cryptocurrency adoption events ever.

The TON Foundation recently announced their incentive program, which will reward the development of successful TON applications. We believe this will foster the creation of exciting new crypto-apps that have the potential to appeal to the masses.

Unlocking New Ways to Make Money

TON is providing the Telegram community with multiple ways to monetize, share, and grow their businesses. As a decentralized marketplace on the TON network, Fragment provides a platform where users can trade collectibles such as virtual phone numbers and custom Telegram usernames. Fragment has already facilitated over $350 million in sales of custom usernames and virtual phone numbers. And this is just the beginning. In the near future, the 730 billion Telegram stickers that have been sent may be converted into NFTs. These NFTs will then be available for purchase and sale through the TON blockchain.

Telegram has taken a major step forward by integrating revenue sharing with content creators and channel owners through its Fragment platform built on the TON blockchain. The move marks a shift from the traditional social media model by directly allowing these creators to earn income from advertising revenue on their channels. This approach not only rewards content creators, but also fosters a closer relationship between the platform and its users, promoting a fairer distribution of economic benefits within the digital ecosystem.

Native Stablecoin Payments

On April 19, 2024, Tether announced the deployment of its stablecoin USDt on the TON blockchain and Telegram wallet. This development represents a major advancement in the crypto industry as it allows hundreds of millions of users to seamlessly send and receive stablecoins through the Telegram platform, making payments as simple as using Venmo or Apple Cash.

The scalability of the TON network allows for a fixed fee of approximately $0.10 for transactions between two users, which is 66% cheaper than other crypto payment platforms. In addition, built-in deposit and withdrawal channels are provided, including bank transfers and exchanges, to further facilitate access and use.

Stablecoin Payments on TON

We believe that stablecoin payments on the Telegram wallet will be particularly important for individuals in developing countries who often lack access to banking services and are forced to use complex crypto user interfaces to store and transfer funds. With stablecoins deployed on the TON network, cryptocurrency is taking a major leap towards the vision of programmable peer-to-peer money and a globally accessible decentralized financial system.

Conclusion

We believe that the TON network is still in its early stages and we are excited to witness the adoption of its ecosystem and new features by the Telegram user base.

At its core, Telegram embodies the spirit of cryptocurrency: an open, free network accessible to all. With TON, Telegram has achieved a symbiotic relationship where scalable smart contract functionality and a powerful payment network enable groundbreaking capabilities that are not possible in a Web2 environment.

Given its large user base, scalable infrastructure, thriving mini-app ecosystem, and native stablecoin trading, TON has fully tapped the potential of a network with 900 million active users.