Every blockchain network tries to win over users by providing unique or more sophisticated services. At the moment with the focus is on the speed of transactions and commission costs. Users seek the most beneficial offers to accomplish their goals.
The TON project is a modern chain with practically unlimited potential for scaling. It offers a wide range of services, from micropayments to creating websites and decentralized applications.
This article will expand on the project and its key features. To learn more about other similar projects, their native tokens, the positions they hold in cryptocurrency rankings, and the factors that contribute to their promotion in these lists, you can read the article List of cryptocurrencies.
What is sharding?
The first blockchains that are still retaining their popularity in the cryptocurrency market eventually encounter the same problems. As the number of users and the transactions they conduct increase, the speed of processing such a volume of transactions gets slower.
This issue arises because many blockchain networks suffer from a lack of scalability, i.e., the potential to process a greater number of transactions. This problem stems from the fact that the verification of transactions in chains is carried out sequentially by all nodes, with more nodes leading to longer verification times.
Modern blockchains employ various methods to address these issues, one of which is the use of sharding. The essence of sharding lies in splitting the blockchain into smaller parts, each called a shard, and simultaneously processing operations and smart contracts in several chains.
This approach leads to the horizontal division of the total flow of operations into groups, each of which is verified by a certain number of nodes. Horizontal division helps solve the three main problems of blockchains: increasing scalability while maintaining decentralization and security.
Scalability is achieved because, when data is divided into shards, it becomes smaller in volume and easier and faster to verify. As a result, the overall speed of the entire chain's operation increases. Additionally, horizontal division supports the principle of decentralization.
This, in turn, allows for an increased speed of processing operations and the ability to serve more users of the chain. The costs of processing and storing data are reduced, as each node does not need to store information about all transactions, which enhances performance and reduces transaction costs.
TON project in essence
The full name of the TON project is The Open Network, although it was initially named Telegram Open Network. This name was chosen because it was developed by the creators of the well-known messaging app Telegram. However, we will discuss the history of this chain in more detail later.
What are this blockchain and its native token, TON cryptocurrency, all about? This chain has a structure that includes three layers, which allow for high-speed transaction processing and the potential for expansion.
- Masterchain is the main network that oversees the operation of the entire system. It contains general information about the protocol: the total number of validators, token issuance, active workchains, etc.
- Workchains are working networks, each of which is a separate chain but is linked to the masterchain. Smart contracts are executed in the workchains. They also have their own virtual machines and include a certain number of shards.
- Shardchains are chains that are responsible for the scalability of the network. The TON blockchain implements the concept of "infinite sharding," which provides unlimited scaling opportunities.
Thanks to such a complex structure, the network has already achieved a throughput of 100,000 transactions per second. However, developers claim that this is not the limit, and the chain will be able to process over a million transactions per second.
The operation of the TON chain uses a hybrid consensus mechanism that includes PoS (Proof-of-Stake) and BFT (Byzantine Fault Tolerance). Owners of the utility currency can participate in staking or become validators of the chain, for which they are rewarded.
History of TON project
As previously mentioned, the TON platform was invented by the development team of the messaging app Telegram. Brothers Pavel and Nikolai Durov were responsible for the project. They had been already known for their other ventures, particularly the social network VKontakte.
The main goal of this project was to create a multifunctional platform that would be accessible to a wide range of users, user-friendly, scalable, and capable of processing transactions at high speed. The developers set an ambitious goal – to process over a million transactions per second.
The project idea was presented in 2017. A year later, it had already attracted significant attention from the community. That same year, the first private ICO was held, raising $1.7 billion, a record amount for a cryptocurrency project.
The platform indeed offered interesting solutions, particularly a unique network structure with the concept of "infinite sharding". To implement the project, the project's own currency – the GRAM token – was issued, and some technological solutions were applied.
However, in 2019, the US Securities and Exchange Commission initiated legal proceedings against Telegram. The regulator's statement indicated that the TON project's ICO was conducted without proper registration, which was a violation of the law. As a result of the legal proceedings, the team had to suspend the development of TON.
A year later, the closure of the project was announced due to legal issues. Most of the funds raised during the ICO were returned to investors, and the creators' team also paid a significant fine.
Subsequently, the creators left the chain's source code open-source and called on the community to continue working on it. A new team formed around the project (TON Community), which took over the work. A decision was made to rename the GRAM token to Toncoin to avoid associations with Telegram.
How TON operates
As we've already seen, the project has gone through quite a rocky path, but the ambitions of its creators have indeed found their realization. This has allowed the platform and its own currency – TON cryptocurrency - to take high ranks in cryptocurrency lists.
Some technical innovations were applied in the project, which we will discuss in this section. All these solutions were aimed at developing a high-performance blockchain that offers various services to its users. Let's take a closer look at them in this section.
The first is the multi-level structure of the chain. As mentioned before, this chain consists of several networks located on multiple levels: the main network and over 290 subordinate chains of the second (workchain) and third (shardchain) levels. This allows for more efficient distribution of the network load to increase the speed of operations.
Second is the concept of "infinite sharding," which allows for automatically splitting incoming data into new shards (sub-chains) as network load increases, thereby redistributing the load.
To ensure effective communication between different blockchains in the TON chain, instant hypercube routing technology is used. This allows for the instantaneous transmission of messages and transactions between shards, improving efficiency and reducing delays.
TON offers a powerful system of smart contracts, supported by TON Virtual Machine (TVM). This virtual machine is designed for executing smart contracts and is optimized for high performance and reliability.
TON features advanced data management and storage technologies, which include storage (TON Storage), a decentralized DNS service (TON DNS), and a platform for secure data exchange (TON Proxy). We will discuss these and other technologies in more detail in the next section.
Components of TON ecosystem
TON is not just a blockchain platform but an entire ecosystem that encompasses various services and applications. Let's delve into the main components of this system and their functions more closely in this section.
- TON Apps is a platform for creating and publishing decentralized applications. Within the platform, there is a marketplace, exchanges, wallets, social networks, and much more.
- TON Payments is a system for fast, cheap, and anonymous payments. Transfers between users are instant and commission-free, making this environment especially suitable for micropayments and other small transactions.
- TON Sites is a platform designed for the development of websites and web applications. Hosting for such websites is not done on centrally managed servers but on the TON node network, achieving high availability and censorship resistance.
- TON DNS is a service that allows assigning human-readable domain names to sites created on this chain. The key feature of these domain names is that they are fully owned by the owner.
- TON Storage is a data storage service that works similarly to torrents. Data is divided into parts, which are stored encrypted in different chain nodes. This storage achieves high data reliability and availability.
- TON Proxy is a network of proxy servers that allows hiding the real IP address of the user and accessing sites through intermediate nodes. This service is decentralized.
- TON Services are tools for developing new services and integrating them with the TON chain. This category includes ready-made smart contracts, testing tools, and much more for developing dApps, tokens, and other applications.
- TON Diamonds is a platform for creating and trading NFTs. This marketplace allows creative individuals to earn real money for their creations. This platform is fast, user-friendly, and has low commission costs.
TON cryptocurrency
As mentioned before, the original currency of the TON chain was the GRAM coin. However, after the conflict between the platform creators and the US Securities and Exchange Commission, the project was suspended. A new group of developers decided to move away from the GRAM name to disassociate the project from Telegram and came up with a new name – Toncoin, or TON for short. This currency powers the entire system and performs several important functions:
- Covering commission costs for transactions and executing smart contracts;
- Payment method in applications and services of the platform, as discussed in the previous section;
- Staking to improve the chain's reliability;
- Payment for operations conducted between TON and other chains;
- The right of holders to participate in platform governance through voting;
- Used for purchasing TON DNS domain names.
As of the current moment, this currency has firmly established itself in the top-15 cryptocurrencies. The total token issuance is 5.1 billion units, but not all are in circulation. Roughly 3.4 billion tokens are available.
In chains that apply the PoS consensus mechanism, currency is not mined. Initial distribution of coins is done by the developers. The tokens are divided among investors, funds, and users. However, this somewhat contradicts the principles of decentralization.
Despite the use of the PoS mechanism in this chain, which does not imply cryptocurrency mining, the initial extraction and distribution of coins were indeed done through mining. As a result, up to mid-2022, anyone interested could participate in the coin distribution.
At the time of writing, the price of one coin is around $4.35. Toncoin has displayed significant growth since its market debut in 2021 when its price was only $0.39.
How to earn on TON
Cryptocurrencies are not only seen as a means for transactions but also as an opportunity for generating additional income. What are the ways to earn income on the utility token of the network in question – TON cryptocurrency?
Here are several primary methods of earning on this coin:
- Trading. Like any other digital currency, Toncoin is prone to sharp fluctuations, which can be used to earn a small but daily profit. For traders, it doesn’t matter whether the asset's value is rising or falling; what matters is that it is in motion.
- Investments imply long-term holding, betting on the asset's appreciation over time. In the case of TON coin, this seems like a good idea since its price has shown stable growth since it hit the market.
3. Staking is akin to a bank deposit. Coin holders can stake their coins and earn rewards. Tokens are used to support the entire project's ecosystem. The highest yield rate available for TON is 12%.
4. Lending. Tokens on the platform can be loaned to other users. For example, to become a validator in the network, a significant amount of collateral is required. Not all users have the necessary sum, but they can borrow a portion of the tokens from other coin holders.
Regardless of the earnings method chosen by the user, it’s crucial to make sensible decisions. That is, to assess not only the potential profit but also all possible risks associated with sudden price fluctuations of digital currencies.
Advantages and disadvantages
Like any other blockchain platform, the TON project and its utility currency TON have their strengths and weaknesses. Let’s discuss them more closely in this section.
The advantages of the platform include:
- Continuous development. The project team is constantly working on its development, offering new opportunities and features.
- Developed ecosystem. The project offers a wide range of services: website creation, applications, a marketplace for creating and implementing NFTs, and much more.
- Wide use of the native token. The project's own currency is used for various tasks, increasing its demand.
- Scalability potential. The chain can already process over 100,000 transactions per second, but its creators do not rest on their laurels and aim to reach and even exceed 1,000,000.
- Decentralization. As mentioned, by dividing the entire data set into shards, real decentralization is achieved, as nodes process and store their data volumes separately from each other.
- Strong community. The project is managed by a community of users interested in its development. Moreover, TON token holders can participate in platform governance through voting.
Among the main drawbacks of the project, the following can be noted:
- Reputation stain. The project's reputation is not entirely clean due to legal disputes between the original project developers and the Securities and Exchange Commission. Although efforts have been made by the new project team to remove any associations with the previous team, everyone knows and remembers this story.
- High requirements for obtaining validator status. To become a validator of this chain, a user needs to have 350,000 TON tokens in their account. However, these do not necessarily have to be their own funds; they can borrow them from other users.
Prospects
Despite the new team's efforts to dissociate the project from the Telegram messenger and its previous developers, even changing the name of its own currency from GRAM to TON cryptocurrency, many users still associate the project with the Durov brothers.
Nevertheless, this association even benefits the considered chain, as it stimulates user interest in it. Additionally, Telegram recently announced its intention to implement blockchain technologies and the integration of the TON Wallet, which can be used for storing and transferring digital currencies.
With such an option, the platform gains millions of users who actively use Telegram – a "ready" audience that not every cryptocurrency project can boast of at the start. The integration of the wallet with the messenger opens even greater opportunities for users.
Moreover, the technology of "infinite sharding" offers vast potential for network expansion. The development team announces the potential to process a million or more transactions per second, an option unachievable by other similar chains yet.
As for the project's own currency, it has shown significant growth recently. In just one month of this year, the value of the TON token has almost doubled. Experts predict further growth in the currency's value due to user interest in it and this project.
This currency is used to perform various functions within the project's ecosystem. The number of platform users is growing exponentially. And the more users utilize the services of this platform, the greater the demand for its utility currency.
Conclusion
In this article, we've familiarized ourselves with the TON project and its native currency, TON cryptocurrency. This platform stands out among others with virtually unlimited possibilities for scaling, a developed user community, and a connection with the popular Telegram messenger.
Initially, the project was developed by the Telegram creators' team, but after a scandal with the US regulator, they had to suspend the work. Subsequently, another team continued its development, but the connection with the original creators still exists.
The TON project aims to solve the main problems of blockchain networks, such as scalability, decentralization, and security, while offering a range of unique technological solutions. One of these is the concept of "infinite sharding," allowing for the processing of more than 100,000 transactions per second and having the potential to handle a million or more deals.
TON represents an entire system, including a large number of different services. On this platform, users can create websites and applications, develop and trade NFTs, make payments, and much more.
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