Exploring FreeTON, TON Crystal, and Wrapped TON

From its inception by the Telegram team to its evolution into a decentralized network governed by the community, TON represents a fascinating intersection of blockchain technology and decentralized finance. Join us as we uncover the pros and cons of investing in Toncoin and examine the opportunities and challenges presented by this dynamic ecosystem. Whether you're a seasoned investor or a newcomer to the world of cryptocurrencies, this guide will provide valuable insights into the TON ecosystem and its implications for the future of decentralized finance.

TON, short for "The Open Network," initially led by Telegram, aimed at fast transactions and decentralized apps (dApps). However, Telegram halted the project in 2020 amid regulatory challenges. Yet, the TON blockchain was revived by its community as a decentralized autonomous organization (DAO). Notably, FreeTon emerged as a leading project, facilitating diverse dApps and smart contracts. Moreover, it bridged with Ethereum, enabling its native token, TON Crystal (TON), to operate within Ethereum's DeFi ecosystem as wrapped TON (wTON). This bridge enhances TON's utility across multiple platforms, fostering interoperability and adoption.

History

In 2017–2018, the Telegram Messenger team embarked on exploring blockchain solutions. Unable to find an existing Layer 1 blockchain suitable for Telegram's massive userbase, they opted to develop their own, initially named Telegram Open Network (TON).

To fund the development of TON, Telegram launched a token sale in Q1 2018, initially called Gram token and later renamed TONcoin. Durov, Telegram's founder, considered venture capital financing but ultimately decided against it.

Documents related to the U.S. Securities and Exchange Commission (SEC) v. Telegram lawsuit (2020) revealed that the self-funded startup required funds for servers and services by 2017. The funds raised during the Telegram ICO were intended for TON's development, ecosystem growth, and ongoing operational expenses, with over 80 percent allocated to infrastructure and the remainder to various operational costs such as salaries and legal services.

In 2020, Telegram refunded TON investors $770 million and converted $443 million into a one-year debt with 10% interest, increasing total liabilities to $625.7 million. By March 10, 2021, the company issued $1 billion in 5-year bonds to settle debts due by April 30, 2021.

At the heart of The Open Network (TON) lies a scalable multi-blockchain platform designed for decentralized applications (dApps) and smart contracts. Utilizing proof-of-stake consensus, it can theoretically support up to 2^92 accompanying blockchains. TON employs sharding for scalability, allowing blockchains to dynamically split and merge to handle varying loads efficiently. Hypercube routing ensures effective data exchange between blockchains, scaling to millions of chains while maintaining processing speed. TON's advanced proof-of-stake mechanism and its masterchain with up to 2^32 workchains offer a robust framework for decentralized operations.

In TON, governance is decentralized, with network modifications requiring majority validator approval via the proof-of-stake consensus mechanism. Security is bolstered through collaborations with Security Assurance Providers (SAPs) like Certik and Quantstamp, ensuring robust testing and quality assurance for the ecosystem's software. Other notable SAPs include softstack (formerly Chainsulting), SlowMist, Hexens, Vidma, and Scalebit.

What is FreeTON

TON Labs, a venture-backed firm, propels FreeTON, a community-centered endeavor that collaborated with Telegram on its initial TON blockchain testnet.

FreeTON, driven by TON Labs, upholds the TON blockchain's principles. Utilizing a Proof-of-Stake consensus, it aims for transaction speeds of millions per second via sharding. The network supports application development in several traditional computer languages such as C and C++, as well as the Web3 language Solidity popularized by Ethereum developers. As an independent entity, FreeTON pursues its goal of a decentralized network accessible to all. Recent initiatives include TON Swap, a rapid DEX, and collaborations within the FreeTON DeFi Alliance, emphasizing innovation and community-driven growth.

What is TON Crystal

TON Crystal, the native token of the FreeTON crypto network, plays multiple crucial roles within the ecosystem. Participants utilize TON Crystal (TON) to cover transaction fees and can stake their tokens to contribute to network security and earn rewards. Moreover, TON serves as a governance token, empowering holders to propose and vote on network governance decisions.

Initially confined to FreeTON's native environment, TON gained cross-chain functionality with the launch of the TON-Ethereum bridge in April 2021. This bridge enables seamless and low-cost transfer of assets between FreeTON and Ethereum networks. By locking their TON tokens in a dedicated smart contract, users can mint an equivalent amount of wrapped TON (wTON) on the Ethereum network. Similar to other wrapped tokens, wTON can be utilized across the Ethereum ecosystem for various purposes.

The introduction of wTON serves two primary objectives:

1. Enhancing Liquidity: By making wTON available on Ethereum, FreeTON gains access to the extensive liquidity pools offered by leading DEXs and DeFi lending platforms like Uniswap.

2. Fostering Growth: wTON facilitates FreeTON's integration into the burgeoning DeFi landscape, expanding its reach beyond token swaps and liquidity provision. Embracing a multi-chain approach, the FreeTON community aims to solidify its presence in the broader blockchain ecosystem and attract developers to build innovative dApps on the network.

What is Wrapped Ton (wTON)

TON Crystal (TON) serves multiple functions within the network. Users utilize TON to pay transaction fees and stake tokens to secure the network and earn rewards. Moreover, TON operates as a governance token, enabling holders to propose and vote on initiatives shaping the project's direction. In April 2021, FreeTON introduced a TON-Ethereum bridge, facilitating seamless cross-network asset trading with minimal fees. Through this bridge, TON holders can convert their tokens into Wrapped TON (wTON) on the Ethereum network, unlocking access to liquidity on prominent DeFi platforms like Uniswap. This integration aims to broaden FreeTON's reach in the DeFi ecosystem, fostering growth and innovation.

Toncoin (formerly: Gram)

Toncoin serves as the primary cryptocurrency of the TON blockchain, facilitating transaction fees, blockchain security through staking, governance decisions, gas payments for smart-contract processing, and settlements.

TON wallet

The TON wallet serves as a centralized hub for managing, storing, and transacting Toncoin within the TON blockchain. With various forms available, it offers users a secure and streamlined method to engage with the network's functionalities, emphasizing autonomy and security.

TON Proxy

Similar to the Invisible Internet Project (I2P), TON Proxy is a network layer for TON nodes, enabling decentralized VPN services and blockchain-based Tor alternatives. It enhances online privacy and combats censorship, fostering the development of censorship-resistant decentralized applications (dApps).

TON DNS

Introduced by the TON Foundation, TON DNS operates like domain names in other cryptocurrencies, utilizing ".ton" as its domain zone. It assigns human-readable names to accounts, smart contracts, services, and network nodes, simplifying access to dApps with short, simple domain names.

TON Storage

Launched as a decentralized file storage system, TON Storage utilizes smart contracts and the TON P2P Network, akin to torrent technology. It provides a platform for storing and exchanging large data volumes using the TON blockchain, aiming to decentralize web servers.

TON Payments

Launched for instant off-chain value transfers, TON Payments ensures security akin to on-chain transactions, facilitating swift transfers between users, bots, and services.

TON mobile

TON Mobile is a service offering electronic SIM cards for purchase. With TON mobile you can obtain your eSIM from anywhere and activate it instantly, use your eSIM alongside any regular SIM card from a cellular service provider, make payments using any bank card and stay connected in over 70 countries and regions worldwide.

Notcoin positions itself as the leading Web3 gaming platform, seamlessly integrated into Telegram. As a play-to-earn game, users can mine its digital currency, Notcoin, by interacting with an animated coin in the chat interface.

Developed by Open Builders, the game operates within the Telegram messaging app and is poised to introduce a token on The Open Network (TON) in the near future. The founder views it as an innovative method to equitably distribute tokens among community members.

In April 2024, the introduction of USDt on TON heralds a new era for 900 million monthly active Telegram users, enabling seamless peer-to-peer payments on a global scale within a Web3 framework. TON Foundation sees this as a pivotal step towards mainstream adoption of digital currencies, aligning with TON's vision of an open, decentralized internet and borderless financial ecosystem.

Paolo Ardoino, CEO of Tether, emphasizes the significance of this integration, envisioning it as a catalyst for frictionless global transactions and reinforcing TON's mission to embed cryptocurrency use into everyday life. The launch comes with substantial incentives, including 11 million Toncoins allocated for various initiatives, aimed at driving early adoption and liquidity in the TON ecosystem.

It's important to note that regulatory considerations restrict the availability of USDt on TON in certain regions, underlining the need for compliance and responsible usage within the blockchain domain.

According to PitchBook senior analyst Robert Le, Telegram's venture into crypto payments is promising but still in its early stages, facing hurdles in user perception outside of Asia, where messaging apps are primarily viewed as communication tools. Ram Gopal, a professor at Warwick Business School, highlights the regulatory, technical, and security challenges associated with such integrations.

Pros and Cons of using Toncoin

Pros:
1. Rich ecosystem with diverse applications and functionalities.
2. Scalability of the blockchain, capable of handling high transaction volumes.
3. Originally developed by the Telegram team, now decentralized, ensuring community-driven governance.
4. Positioned philosophically between Bitcoin and Ethereum, offering unique features.

Cons:
1. Complex ecosystem may be challenging for some investors to understand.
2. Development handed over to the community while ecosystem maturity is still evolving.
3. Limited availability on some major platforms may restrict accessibility and adoption.

In conclusion, the TON blockchain, its native token Toncoin (TON), and associated initiatives represent a multifaceted ecosystem with significant potential and notable challenges. Initially conceived by the Telegram team, TON has transitioned into a decentralized network, fostering a rich ecosystem of decentralized applications (dApps) and smart contracts. With features like scalability, community-driven governance, and a unique position between Bitcoin and Ethereum philosophically, TON offers promising opportunities for innovation and growth.

However, navigating the complexities of the TON ecosystem, including understanding its diverse functionalities and decentralized development model, can pose challenges for investors. Additionally, limited availability on major platforms may hinder accessibility and widespread adoption. Despite these hurdles, recent advancements such as the integration of USDt on TON and the launch of Toncoin mobile demonstrate strides toward mainstream acceptance and usability.

Overall, TON presents a compelling case for investors seeking exposure to a dynamic blockchain ecosystem, but careful consideration of its intricacies and ongoing developments is essential for informed decision-making.

Is Toncoin widely accepted?

Yes, Toncoin is accepted in various platforms and can be used for transactions, staking, and governance within the TON ecosystem.

What is the main advantage of TON Wallet?

The TON Wallet provides a secure and streamlined way for users to manage, store, and transact TONcoin within the TON blockchain ecosystem.

Can I use TON Proxy for online privacy?

Yes, TON Proxy functions as an anonymizer layer, enhancing online privacy and offering protection against censorship, similar to decentralized VPN services and blockchain-based Tor alternatives.

How does the TON-Ethereum bridge work?

The TON-Ethereum bridge allows for the seamless transfer of TON tokens between the TON and Ethereum networks, enabling users to convert TON into wrapped TON (wTON) for use in the Ethereum DeFi ecosystem.

What are the incentives for using USDt on TON?

Early adopters of USDt on TON can benefit from incentives such as Toncoin rewards for deposits, liquidity boosts in decentralized exchanges, and free withdrawals from select centralized exchange partners.