Original title: TON, Our Largest Investment Ever

Original author: Dan Morehead (founder of Pantera Capital), Ryan Barney (partner of Pantera Capital)

Original translation: Azuma, Odaily Planet Daily

Editor's note: This article is from the 100th article of Pantera Capital's market commentary column Blockchain Letter, which mainly excerpts the analysis of TON. The statement about "the number one heavy position" comes from Pantera Capital founder Dan Morehead. Dan mentioned that he had recently had lunch with Telegram founder Pavel Durov, and Pantera recently made the largest investment in Telegram's TON blockchain project in the history of the fund. Apart from this, most of the rest of the article was written by Pantera Capital partner Ryan Barney.

Why did Pantera choose TON? (Dan Morehead)

Throughout my career, I have been searching for great investments.

I am passionate about Bitcoin and blockchain because I believe it has the potential to change the world and have a huge positive impact on billions of people. I have met so many amazing people in this community who share the same mission and goals. It is so inspiring.

I recently had lunch with Pavel Durov, the founder of Telegram, and the purity of his convictions was amazing.

Telegram was founded by Pavel in 2013, and the first principle of the platform is "freedom". Telegram is a neutral social platform that is impartial and does not take sides.

At the age of 21, Pavel and his brother Nikolai founded VK, which is known as the "Russian version of Facebook". The platform is also excellent and is not controlled by the Russian media. The Russian opposition has widely used this application to organize large-scale protests in Russia. For this reason, the government has tried to force Pavel to censor and ban some opposition communities, but Pavel refused.

Pavel said at the time: "Neither I nor my team will participate in political censorship. We will not block Navalny's anti-corruption community or the hundreds of other communities that have been ordered to be blocked. Freedom of information is an inalienable right of post-industrial society, without which VK's existence has no meaning."

In 2013, Pavel left Russia for good. He founded Telegram again with Nikolai, whose principles are "freedom", "openness" and "expression".

Pavel said: "All my actions in life are for freedom. My mission in life is to make other people free, as far as possible. This is the mission of Telegram."

Pavel and his team ultimately chose to flee their homeland rather than abandon their principles, and we are honored to work with people who firmly believe in such a belief - Pantera recently made the largest investment in the history of the fund in TON. Below, my colleague Ryan Barney breaks down the investment in detail.

In short, when you build a portfolio, it’s best to find something that stands out.

99.999% of blockchain projects try to build a community from scratch based on a technical concept. According to CoinMarketCap, there are more than 23,000 cryptocurrencies on the market, and starting from scratch is a difficult path for most projects, but TON is integrating blockchain technology into its existing community, which is undoubtedly easier to achieve.

Today, Telegram has begun to roll out wallet services to their 930 million users.

TON Overview (The following content is written by Ryan Barney)

TON is a Layer 1 network originally designed by Telegram and continued to be developed by the open source community. Due to the widespread adoption of TON in the Telegram system, we believe it will promote the further promotion and popularization of cryptocurrency. Telegram is a future-oriented, fast and secure messaging platform with more than 900 million active users, through which users can communicate individually and in groups, build large-scale communities, share content, and more.

Based on Telegram's large user base and seamless user experience, coupled with the vitality of the TON ecosystem itself, we believe TON has the potential to become one of the largest crypto networks.

We believe in TON not only because of its strong potential for adoption, but also because of Telegram’s values. Pavel specifically discussed these values in his keynote during Token 2049 this year.

Telegram does not sell user data, and its virality is based entirely on its commitment to privacy. It is a neutral platform that is free from government interference and has been a center for protests organized by communities around the world.

Telegram is also one of the fastest growing and largest social platforms in the world. They spend zero on marketing, but are able to grow by almost 2.5 million users a day. They currently have a total of 930 million active users, and Pavel is still the only product manager at the company, which has only 30 people.

Telegram has almost 10 times more monthly downloads than its closest competitor, Signal, with 36.7 million downloads in January alone.

The Spirit of Web3

Telegram stands out not only because of the platform’s significant distribution capabilities, but also because it inherently embodies the spirit of cryptocurrency.

At the Token 2049 conference, Pavel presented why TON and Telegram are a perfect match. “What I like about blockchain is that it’s a technology that’s freeing — it gives power back to the average person,” Pavel said. “No other social app has the same positioning.”

Telegram is currently the only major platform that has integrated blockchain without regulatory barriers to incorporate the vision of Web3. While the messenger tried to incorporate crypto payments through Libra, it ultimately faced regulatory hurdles in the United States, shutting down the plan entirely. WeChat has tried to integrate CBDC payments with central bank digital currencies, but the system's scope of application is still limited.

We believe that Telegram has great potential to promote cryptocurrency globally, combined with the sharing spirit of Web3.

Scalable network for hundreds of millions of users

The Open Network (TON) is a blockchain initiative developed by Telegram to leverage its broad user base to create a decentralized network capable of supporting a variety of applications. TON has built a rich multi-component ecosystem, including the TON Blockchain, TON Storage, TON DNS, and TON Services - all of which can be integrated and run seamlessly.

The TON blockchain is the backbone of this ecosystem. TON is positioned as a high-performance, scalable Layer 1 network that can process transactions quickly using a dynamic sharding mechanism. TON's architecture ensures that the network can handle millions of transactions per second and can scale effectively as the number of users increases, making it an ideal choice for developers to launch applications for hundreds of millions of users without compromising speed or security.

Simple Onboarding

Usually, getting users to start using crypto applications is quite difficult. New users need to write down a bunch of keys and keep them safe, but what if you forget your private key? How can you send or receive money to other users? Copying and pasting public keys is not a good experience in itself.

Telegram simplifies many of these complexities with Top.co’s Telegram wallet, which allows users to seamlessly connect to a variety of mini-apps, which users can access directly from Telegram settings and personal chats, and easily buy, sell or manage tokens and NFTs in one interface.

The Telegram wallet supports both custodial and self-custodial options, allowing newcomers to have a simple onboarding experience and experienced veterans to choose to have full control of their own keys. With TON’s self-custodial wallet, users do not need to write down mnemonics, but can simply use Telegram and email as backups.

The magic of mini-apps

TON’s growing ecosystem benefits from Telegram’s innovative design and large user base. More than 360 million users interact with so-called “mini-apps” on Telegram every month, such as chatbots, mini-games, and more. For TON, we envision that its crypto features can also be integrated into these "mini programs", significantly improving the operating experience for hundreds of millions of users. There are currently more than 300 projects on TON, most of which have built mini programs on Telegram and can be directly accessed through the Telegram App Center.

Earlier this year, we witnessed meme token trading tools such as BonkBot generating tens of millions of dollars in revenue through Telegram's user interface. TON-based applications such as StormTrade now also support users to trade perpetual contracts, cryptocurrencies, stocks and equities using the same interface. StormTrade can handle more than $10 million in trading volume per day, and we believe that similar TON-native Telegram bots will become the first choice for many traders.

Telegram also provides a basic platform for viral social and gaming. Early experimental Telegram games like Pixels and Fanzee Battles attracted millions of users in a few days, demonstrating the platform's huge potential for user participation; Catizen is a TON-based mini-game platform that currently has more than 4 million users and more than 700,000 daily active users; Notcoin is a TON-based social application where users can mine, which has attracted more than 30 million users, one of the fastest growth rates ever recorded in the cryptocurrency field.

The TON Foundation also recently announced their incentive program, which aims to incentivize successful TON applications. We believe this will lead to the creation of more new and exciting mini-programs, which in turn will attract more users to join.

New Revenue Model

TON has also opened up many new ways for the Telegram community to make money, share, and expand their business. As a decentralized market based on TON, Fragment provides users with a trading platform where they can trade collectibles such as virtual phone numbers and custom Telegram usernames. Fragment has now facilitated more than $350 million in total transactions, and this is just the beginning.

The Fragment platform also supports revenue sharing between content creators and channel owners, which is also an important innovation and marks a shift from the traditional social media profit model, which directly allows creators to earn revenue through advertising revenue from channels. This approach not only incentivizes content creation, but also strengthens the connection between the platform and users, and promotes a fairer distribution of economic benefits within the digital ecosystem.

Payment Revolution

On April 19, 2024, Tether announced the deployment of its stablecoin USDT on the TON blockchain and Telegram wallet. This move represents a major advancement in the crypto industry in the payment field, as it will allow 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.

Supported by the strong scalability of the TON network, users' transaction fees are reduced to about $0.1, which is 66% cheaper than other mainstream cryptocurrency payment platforms. In addition, Telegram also provides built-in deposit and withdrawal channels (for banks or exchanges) to further facilitate user use.

We believe that stablecoin payments on Telegram wallets are particularly important for individuals in developing countries, where people generally do not have access to well-established banking services. With the deployment of stablecoins on the TON network, cryptocurrency is moving one step closer to realizing the vision of "programmable peer-to-peer currency" and "a globally accessible decentralized financial system."

Conclusion: Still in its early stages, with unlimited potential

In summary, we believe that the TON network is still in its early stages, and we are very much looking forward to seeing the Telegram user community adopt its ecosystem and experience more new features that will be launched in the future.

In essence, Telegram itself embodies the spirit of cryptocurrency - open, free, and permissionless. The TON network has achieved a clever symbiotic relationship with Telegram, in which scalable smart contract capabilities and a powerful payment network make some groundbreaking features that cannot be achieved in the Web2 environment possible. Given Telegram’s large user base, scalable infrastructure, thriving mini-app ecosystem, and native stablecoin payment functionality, TON has the potential to unlock even more value from this treasure trove of 900 million active users. For Pantera Capital, we are excited about this investment and eager to continue supporting future builders in the TON ecosystem. If you are building on TON and would like to share with us, please don’t hesitate to contact us.

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