TON Partners Report, January & February 2024

As we begin another year, the TON Ecosystem has witnessed remarkable milestones that underscore the platform's evolution and position at the forefront of Web3 innovation.

With the market-wide anticipation of a new bull run, we're working hard to ensure that the TON infrastructure and the entire ecosystem are prepared for the onboarding of millions of new users, who are expected to flow in as the market reaches new ATHs.

This update highlights all the achievements and commitment of the TON community, developers, and partners in pushing the boundaries of what's possible within the blockchain space, setting the stage for an even more promising future.

Key Highlights:

• Telegram will sell ads and share revenue with channel owners in Toncoin via Telegram Ad Platform (which will be open to all advertisers in 100+ countries starting in March) Channel owners in these countries will start receiving 50% of any revenue that Telegram makes from displaying ads in their channels.
• HK TON Investor Day hosted by Kenetic Capital and Kingsway will be on April 5 at Eaton House (Luma invite will be out soon)
• HashKey TON Bootcamp welcomes 12 projects to its first cohort culminating in a showcase during HK Web3 Festival (April 8)
• TON Foundation will be a title sponsor of HK Web3 Festival and host an entire TON Day on April 8 TON Day will take place on the Main Stage of the conference, which is the first time a blockchain project has acquired the rights to present on the Main Stage.
• TON Foundation will be part of Token 2049 Dubai for an exciting announcement to propel further use cases
• BitGo integrated Toncoin, enabling its more than 1,500 institutional clients and Toncoin owners to securely manage their Toncoin with an enterprise-grade, qualified custodial service
• Major community incentive program with a focus on DeFi ecosystem activation is coming which may include liquidity provider yield farming boosts, KPI based open competitions for protocols, project airdrops, Toncoin rebates, and more.
• Soft launch of TON dashboard in Token Terminal – more metrics updates are coming soon.
• Binance Futures will launch USD-M TON perpetual contract with up to 50x leverag
• Toncoin has been nominated as the Crypto of the Year by CoinMarketCap - go and cast your vote by April 4th.
• Please don’t forget to take a look at TON Partners Research: Native USDT and Beyond (page 9).

Lightning Analysis

Telegram announcement of advertising monetization via use of Toncoin is an exciting development in the TON ecosystem. Similar to the launch and the success of Fragment which is serviced on TON rails via Toncoin payments, Telegram Ad Platform activation also further strengthens TON’s utility in the ecosystem of TON and Telegram.

Here is a quick recap on Telegram channels and ads statistics (based on 3rd party data):

Based on the statista findings, the top three types of channels in terms of popularity are news, entertainment, and educational. For CPM (cost per every thousand impressions) of Telegram ads (in Russia) the top three types of ads in terms of price are cryptocurrency, investment and finance, and education. Not surprisingly there is a correlation between the priciest CPM topics and the most popular types of channels (e.g., investment and finance in news channels or cryptocurrency in educational channels).

The above calculations contain three major assumptions:

• % monetization – what percentage of channel views are activated for monetization (i.e., sponsored messages)?
• Number of regular posts per sponsored post – how many posts are pegular channel posts versus sponsored posts?
• CPM – average cost-per-mille (mix of all different types)?

Note: The above analysis does not factor in Telegram Premium subscribers not being shown ads.

We believe Telegram has such levers (and more) to pull in order to roll out its Telegram Ad Platform to the next 100 countries. This would increase the token velocity of Toncoin and create demand for advertisers to lock in ad prices at a fixed price (or even via a robust options market) for the duration of campaigns. Channel owners would also be incentivized to reinvest their Toncoin rev share in order to boost their channels and create a greater base of subscribers.

While it remains to be seen the exact mechanics of Telegram Ad Platform and which levers (and by how much) are pulled by the Telegram team, it is nonetheless an exciting development in TON and Telegram.

Telegram Wallet Updates

• Telegram Wallet opt-out rollout is expanding to South Africa, Colombia, and Nigeria and is slated for major push in March 2024 across target high crypto usage countries
• Monthly Active Users of Telegram Wallet now exceeds 1M
• Monthly Financially Active Users of Telegram Wallet now exceeds 320K

TON Ecosystem By The Numbers

Key Metrics

• Total accounts: 6.4M (+17% MoM, +60% QoQ)
• Total active on-chain wallets: 1.43M (+17% MoM, +58% QoQ)
• TVL: $118M

Txs

• Dec ’23: 96M (inscriptions on TON)
• Jan ’24: 24M (jetton/memecoin, growth of TON GameFi)
• Feb ’24: 50M (jetton/memecoin, gram mining, etc.)

DEXs on TON

Ston.Fi

• MAU (with on-chain interactions): 35.5K (+47% MoM)
• DAU (with on-chain interactions): 7.5K

DeDust.io

• MAU (with on-chain interactions): 25K (+44% MoM)
• DAU (with on-chain interactions): 2.5K

GameFi on TON

PlayDeckGame

• 1.4M MA
• Launched 9 new games, 4 integrated with TON
• 5M gaming sessions and 2M total player
• Launched partnership case with Papa Johns, resulting in 100K new users

TapFantasy

• 400KMAU

Fanton

• 577K MAU
• Over 1.1M total users with 79K connected TON wallets

Notcoin

• 25M+ total users, with 95% from referral
• 3-5M DAU
• 20% of all Telegram Premium users (1M) playing Notcoin in January 2024

EggFightClub

• Over 1.5M users with more than 680K connected wallet
• 340K DAU
• Over 8.3M eggs minted
• cNFT format introduced resulting in reduction in minting cost (99% reduction in gas fees)

TON Society In the Wild

Highlights:

• CIS Hub Meetup (St. Petersburg)
• Europe Hub (TON Wrap Up, Builders Weekend, IdeaTON, In TACT with Tact)
• Korea Hub (Big TON GameFi, TON Dev Workshop)
• London (TON Society Meetup)
• Turkey (Ankara Meetup)
• TON Syndicates (Helsinki, Kazakhstan, Kiev, Nigeria, Serbia, Taiwan, Tallinn)

For our upcoming events please see the new TON Society calendar.

TON Foundation New Hires

• Aleksei Soloviev – Events & Community Manager
• Yasemin Turkoglu – Events & Community Manager
• Tatiana Kozlova – QA Engineer
• Maxim Perstenok – Moderator Manager
• Vladimir Alefman – DevRel Manager
• Kenny Cheng – BD & Account manager (APAC)
• Jessie Yeh – Events & SM Manager (APAC)
• Rani Elias – Operations Lead
• Hagan Dietz-Rosales – Growth Marketing Lead
• Miron Puzanov – Ecosystem Manager
• Daniela Prokofieva – Campaign Manager

Developer Updates

• AI suppot for TON app development was launched: @tonsuppo_aibot
• GameFi Infra Update
  • Asset SDK
  • Phaser SDK
• TON Infra Update
  • Liteservers & Validator Update
  • Toncenter API v3
• Documentation Update
  • Translations into Mandarin
• DevRel
  • TON Hackerhouse 2024 Taipei

TON Partners Research: Native USDT and Beyond

In this research, we will explore the adoption of native USDT in Tron and how TON can emulate and succeed beyond the current adoption of stablecoins via Telegram rails.

TRC-20 USDT Gas Fee (Energy) Mechanics

There are three types of resources in the TRON network: Bandwidth, CPU, and Storage. To maintain relative fairness in transactions, the TRON network has introduced two types of resources: Bandwidth Points and Energy. Bandwidth consumption corresponds to Bandwidth Points, while CPU consumption corresponds to Energy.

Regular transactions consume only Bandwidth Points, while smart contract transactions consume both Bandwidth Points and Energy. Here, regular transactions refer to the transfer of $TRX and TRC-10 tokens as well as system contract transactions, not the transfer of USDT(TRC-20) and smart contract transactions. TRC-10 tokens are the token standards built into the TRON public chain and are system-level token types, TRC10, and system contracts do not use the TRON virtual machine. USDT(TRC-20) is a smart contract on java-tron, a token issued based on the TRON smart contract technology standard.

Bandwidth Points

Transactions are transmitted and stored in the network in the form of byte arrays. The Bandwidth Points consumed by a transaction = transaction byte size * Bandwidth Points rate. The current Bandwidth Points rate = 1. For example, if the byte array length of a transaction is 200, then this transaction needs to consume 200 Bandwidth Points.

Please note that since the total frozen funds in the network and the frozen funds of an account can change at any time, the Bandwidth Points owned by an account are not a fixed value.

Sources of Bandwidth Points

The first is to obtain Bandwidth Points by freezing TRX. The quota = TRX frozen to obtain Bandwidth Points / total TRX frozen in the entire network to obtain Bandwidth Points * 43_200_000_000. That is, all users share a fixed quota of Bandwidth Points based on the amount of TRX they freeze. The second is that each account has a fixed daily free bandwidth quota of 600.

Consumption of Bandwidth Points

Apart from query operations, any transaction requires the consumption of Bandwidth Points. When a user's bandwidth points are insufficient, the transaction initiator will consume the $TRX.

Energy

The creation and operation of smart contracts require the consumption of CPU resources, which is used to determine the system time consumed during the execution of the smart contract in the virtual machine, measured in Energy.

Sources of Energy

Energy can be obtained by freezing TRX, and the quota of Energy obtained = TRX frozen to obtain Energy / total TRX frozen in the entire network to obtain Energy * 50,000,000,000. That is, all users share a fixed quota of Energy based on the amount of TRX they freeze.

For example, suppose the current total amount of TRX frozen in the network for Energy is 1,000,000,000 TRX, and an account freezes 1000 TRX, which accounts for one-millionth of the total frozen amount, which is 32,400 Energy. If a contract execution requires 324 Energy, then the user can trigger the contract 100 times.

Since the total frozen amount in the network and the frozen amount of an account can change at any time, the CPU resources owned by an account are not a fixed value.

Frozen funds cannot simultaneously obtain Bandwidth Points and Energy; that is, if TRX is specified to be frozen to obtain Bandwidth, Energy will not change. Users can also rent Energy on the JustLend platform by paying $TRX.

Consumption of Energy

Both the creation and execution of smart contracts require the consumption of Energy, while the execution of ordinary contracts does not consume Energy. The consumed Energy, according to the percentage defined in the smart contract, is provided jointly by the owner of the smart contract and the caller; if the Energy of the smart contract owner is insufficient, the remaining is provided by the caller.

How TRC20-USDT Gas Fee (Energy) Mechanics Accrue Value Back to $TRON

Consumption

When a user initiates a transaction, if the user's Bandwidth Points or Energy are insufficient, the user's $TRX account will be burned to exchange for Bandwidth Points or Energy. The smallest unit on Tron is sun, 1trx = 1,000,000 sun.

The TRX burned for paying Bandwidth Points = Number of Bandwidth Points * Bandwidth unit price. Currently, the bandwidth unit price is 1000 sun.

The TRX burned for paying Energy = Number of Energy * Energy unit price. Currently, the Energy unit price is 420 sun.

The Tron Foundation will regularly burn $TRX, reducing the inflation rate and market supply of $TRX, while Tron is the most commonly used transfer network for users, and there is a stable demand for $TRX in the market.

Protocol Revenue shows the daily protocol revenue trend of TRON, including the $TRX burned by users to obtain Bandwidth Points or Energy, with an average of $1M+ per day in 2023.

Protocol Revenue

Excluding the TRX issued daily by the blockchain network, based on the average price and average network $TRX net deflation volume, the Tron network has burned $TRX worth over $220 million within the past year. TRX Generated / Burned shows the $TRX destroyed by TRON every day.

Staking (Freezing)

Users can obtain Bandwidth points or Energy daily by staking $TRX. Currently, only self-staking is supported, but the resources obtained through staking can be delegated to others at any time. After unstaking, you need to wait for 14 days to withdraw.

The staking volume of the Tron network has maintained around 50% in the past year. The TRON network launched Stake 2.0 in April 2023, and Stake 1.0 is no longer used. Over time, the proportion of Stake 2.0 is gradually increasing.

TRX Staked

In the choice of resources that can be obtained by staking, the proportion choosing to Stake for Bandwidth points exceeds 85%. The Bandwidth points users get for free (daily free quota and staking gains) and consume account for more than 70% of the total daily consumption.

Bandwidth Consumption

Since November 2022, the proportion of Energy that users obtain and consume through staking in the total daily Energy consumption has gradually increased from about 20%, reaching over 60% in May 2023, and has remained at this level.

Renting Energy

This method is much cheaper than directly burning $TRX, but it is not friendly to users with a small frequency of funds. Renting interactions require spending several dollars worth of $TRX. Renting too little or for a short time requires additional transactions to extend the rental time or rent more Energy, while renting too much or for a long time requires paying more rent.

The method of renting Energy has been released for 9 months, and the usage rate of this method to pay for network Energy is very low. However, according to estimates, this method accounts for 2-5% of Tron network's Energy consumption. Therefore, currently, the method of renting Energy is not practical for the Tron network

How to increase the usage scenarios of TON-USDT?

1. Increase the advantages of Telegram's own community and encrypted chat, and add functions such as group collection, group payment, and use of group management tools. For example, encrypted information and pictures that are viewable only behind a paywall. Everyday social uses and the role of value transfer in facilitating such social use cases will bid well for Ton-USDT as it will encourage people to store their assets in the Telegram Wallet.

2. Telegram Wallet should serve more as a bot function that automates transactions after some level of approval of LLM insert into a group chat. Other variants of the bot can include airdrop bots after a completion of certain tasks inside Telegram (such as joining various communities). Subscription payments for such bots can be made in Ton-USDT and at $1 or $2 service charge for a monthly subscription to a handful of useful bots, Telegram chats can get supercharged with functionalities that improve communications.

3. Tighter connectivity between Telegram Wallet and various Telegram functionalities would serve the users well to create a TON on-chain identity stack. Toncoin as a form of payment has been the most successful use case so far with Fragment being the prime example (for Telegram username and anon numbers). With Telegram ads now being rolled out as a form of monetization for channel owners, other previous low discoverability services such as sticker packs have a chance to also help artists monetize their work. Projects that effectively become the de-facto social aid (e.g., social gating) have a potential to create a cult-like following of their service.

4. With the introduction of Telegram Ad Platform rev-share with channel owners combined with that of native stablecoin on TON, the possibility of a burgeoning e-commerce activity is in the near future. With the right go-to-market in many Asian countries where live streaming of popular products by KOLs and influencers dominate the e-commerce experience, Telegram can better support creation of such channels. The pieces are already in place: Telegram stories, suggested channels, and channel owner rev-share. As soon as the Telegram Wallet can create a seamless payments experience (via Wallet Pay), channel owners will be able to bring over their business from popular services like Ozon (CIS) or Douyin (China).

5. Introduce yield opportunities for TON-USDT holders by educating them on key apps which power the TON financial system (i.e., DeFi but abstracting away all such complicated terminologies):

   • Aave or equivalent (Lending) >> “Banking” >> Evaa
   • Curve or equivalent (Stableswaps) >> “Banking” >> Ston.Fi RFG
   • GMX or equivalent (Perps) >> “Trading” >>StormTrade
   • Stargate or equivalent (cross-chain interoperability) >> “Bank Transfers” >> Ston.Fi RFQ/TON Bridge
   • Uniswap or equivalent (DEX) >> “Trading” >> Ston.Fi
   • sDAI or sFRAX equivalent (yield-bearing stable) >> “Interest” >> Not yet available

A major incentive program which boosts yield farming for TON-USDT-related opportunities will further increase the demand for TON-USDT.

6. In most other blockchains, the final fee payment depends on the network load and the price of the gas (i.e., native coin of the blockchain). In TON, this could be optimized so that the cost is independent of network load (and the transfer amount) and reduce the commissions if the Toncoin price fluctuates. Given the current fee incurred in sending jettons, it remains to be seen whether further optimizations specific to USDT can reduce the gas from 0.05 Toncoin to 0.02. With the right incentives and subsidies in place such as on and off-ramp fee rebates, campaigns with centralized exchange partners, and Toncoin rebates for on-chain transfers of USDT for a period of time, we will see accelerated adoption of TON-USDT.

Research author: Vivi

Disclaimer

• TON Partners Update, where applicable, strictly reflects authors’ own views, ideas, and opinions. It is not a production of TON Foundation or affiliated with any broker/dealer or registered investment advisor).
• Conduct your own due diligence or consult a licensed financial advisor or broker before making any and all investment decisions. Any investments, trades, speculations, or decisions made on the basis of any information found in this report, expressed or implied herein, are committed at your own risk, financial or otherwise.