By Sergey Vartanov Khachaturyan
TON has seen rapid growth in recent months in a push to capture user mindshare and generate user engagement. Anchored by Telegram’s vast and growing user base, TON leverages the social app’s existing audience and taps into Telegram’s distribution to connect directly with users.
This case presents a fascinating case study of how crypto ecosystems can establish seamless user experience while hiding away the complexities of crypto.
Telegram and TON have found themselves under the limelight with the recent arrest of their founder Pavel Durov. In this piece I delve into the history of TON, the dApps driving user engagement, its potential shortcomings as well as how it may continue to evolve.
TON, short for ‘The Open Network’, came about in a somewhat dramatic manner. Initially a brainchild of Telegram, similar to Facebook’s Libra project, the project was formed internally at Telegram which then stepped away from the project due to regulatory pressure. The project promised a decentralized world within the familiar interface of a globally popular messaging app. After stepping back from the project and returning investor funds, a community-led Free TON network was launched and has since been integrated into the Telegram app.
This transition marked the beginning of an ecosystem poised to leverage Telegram’s massive user base, looking to foster an organic, community-driven expansion, or so it appeared.
Currently, TON's ecosystem is thriving and characterised by a unique blend of social interaction and DeFi. This symbiosis serves as the bedrock of its stably growing user base, active market presence and growing narrative.
The direct integration of TON with Telegram allows users to use the crypto network without having to leave the messaging app, creating a far more seamless user experience, altogether blurring the lines between the user's social interaction and financialisation aspects that crypto brings to the equation, all while having them integrated into an already familiar user interface.
Currently, TON is experiencing immense demand on the gaming side of the platform, with deeply captive and fun play-to-earn apps that create incentives for users and have a high level of user retention.
TON’s approach to capturing user attention through unique interactions and incentives can be compared to the early days of other networks and their initial user capture through ‘killer apps’ such as the relationship between Base and Friend Tech.
Friend Tech a Social Fi app on Base launched as one of the chain's cornerstone projects showcasing the unique features Base could offer to applications with its integration with the rest of the Coinbase ecosystem. The app launch was a massive success driving over 50% of all Base transactions being Friend.Tech-related.
To put the success into perspective, in the first 24 hours that the platform was live it generated more fees than Bitcoin, Uniswap, and Binance Smart Chain. As Friend Tech is on Base, the L2 was able to heavily capitalise on the success of the social app. This in turn led to Base becoming the largest L2 ecosystem in crypto today.
Similarly, TON's ecosystem has the potential to benefit significantly from dApps that offer attractive incentives, drawing parallels to how FriendTech's offering propelled Base, despite FriendTech's subsequent decline in appeal and usage numbers.
The allure of high rewards and incentives can drive substantial user engagement and rapid growth within a platform. For instance, play-to-earn games on TON, such as HMSTR, TONCrush and TONWar, provide users with significant rewards in the form of tokens. These games have already captured user interest and driven considerable traffic to the ecosystem. Similarly, TONSwap and TONLend have previously offered lucrative DeFi opportunities attracting users looking for high yield.
This growth strategy can create a virtuous cycle of growth, where the initial influx of users drawn by attractive incentives boosts the platform's visibility and user base. Even if the incentives prove to be unsustainable in the long run, the initial surge in activity can establish a solid foundation for the ecosystem. As seen with Base, the popularity of Friend.Tech led to a massive spike in activity, helping Base secure its position as a major L2 ecosystem despite the subsequent decline in Friend Tech’s usage.
Simultaneously Friend.Tech’s relationship with Base was able to show why Base is unique and allure builders to the L2 versus existing incumbents and alternative L2s with established developer community and user mindshare.
While Friend.Tech did not end up having a success story, it positioned itself as an app attempting to innovate and test new approaches targeting consumers with a fresh take on user experience and leveraging Coinbase’s distribution.
We can argue that this is what Telegram needs as of now, an app that showcases Telegram’s unique nature with differentiation from other ecosystems. This cannot be achieved purely through lower quality apps with incentives as growth backbone.