Pantera Partners: Why We Invested in the TON Network

Original Title: “Investing in TON Network”

Author: Paul Veradittakit, Partner at Pantera Capital

Compiled by: PANews

Pantera Capital recently announced its latest investment in TON. TON is a layer 1 blockchain network initially designed by Telegram and continued to be developed by the open-source community. We believe that TON has the potential to introduce cryptocurrency to the masses, as it is widely used within the Telegram network. The forward-looking, fast, and secure messaging platform has over 900 million monthly active users and is used for personal and team communication, large-scale community building, content sharing, and more.

By leveraging Telegram's vast user base and seamless user experience, along with the vibrancy of the emerging TON ecosystem, we believe that TON has the potential to become one of the largest crypto networks.

Combining the Spirit of Web3 with Mass Distribution

Among the world's leading communication tools, Telegram stands out because its platform embodies much of the spirit of cryptocurrency and has significant distribution. Telegram's monthly downloads often exceed those of its closest alternative, Signal, by 10 times, with over 36.7 million downloads in January 2024.

What about other messaging apps? Telegram is the only major platform that is free from regulatory barriers and can integrate Web3 into an open blockchain network. While Facebook's Messenger attempted to combine crypto payments with Libra, they ultimately faced regulatory hurdles from the U.S., leading to a complete shutdown. WeChat tried to integrate CBDC payments with digital yuan, but the system's scope was limited, and developers lacked the ability to create permissionless applications.

We believe that Telegram is well-positioned to bring cryptocurrency into the mainstream due to its Web3 spirit shared with the crypto world and its extensive distribution.

A Scalable Platform for Hundreds of Millions

TON is a blockchain initiative developed by Telegram, aimed at leveraging the extensive user base of the messaging application to create a decentralized network capable of supporting various applications. TON features a multi-component ecosystem, including the TON blockchain, TON Storage, TON DNS, and TON Services, all integrated to run seamlessly.

The backbone of the system, the TON blockchain, is built for high performance and scalability, capable of processing transactions quickly with its dynamic sharding mechanism. This architecture ensures that the network can handle millions of transactions per second and effectively scale with the growth of users, making it an ideal choice for developers aiming to launch applications for hundreds of millions of users without compromising speed or security. TON's dynamic sharding provides a scalable network for millions of users

Easy Access to the Crypto World

Getting users to use crypto applications can often be challenging. New users need to write down a 24-word key and store it securely. But what if they forget their password? How do they send or receive money to other users? Copying and pasting public keys may not be the best experience.

Telegram simplifies much of this complexity through the Top.co wallet within Telegram, allowing users to connect seamlessly to mini-programs. Users can easily buy, sell, or manage tokens and NFTs in one interface, accessible directly through Telegram's settings and personal chats.

The wallet in Telegram features both custodial and self-custodial management options based on TON, providing all users with an easy onboarding experience while allowing experienced users to choose full control over their keys. With TON's self-custodial wallet, users do not need to remember a seed phrase; instead, they can simply use Telegram and email as backups.

The Top.co Telegram wallet has 15 million users and is continuously growing

The Era of Crypto Mini-Programs

The thriving ecosystem of TON leverages Telegram's innovative design and vast user base. Over 360 million users monthly utilize what Telegram calls "mini-programs," which include chatbots and mini-games. Through TON, we expect the integration of crypto technology into these "mini-programs" to significantly enhance the user experience for hundreds of millions. There are over 300 projects on TON, most of which have built mini-programs accessible through the Telegram app center.

Earlier this year, we observed how meme coin trading tools like BonkBot generated tens of millions of dollars in revenue through Telegram's user interface. TON-based applications (such as StormTrade) now allow users to trade perpetual contracts, cryptocurrencies, stocks, and shares using the same interface. StormTrade sees daily trading volumes exceeding $10 million, and we believe similar TON-native Telegram bots will become the preferred user experience for many traders.

Telegram serves as the foundation for viral social and gaming applications. Early experimental Telegram games like Pixels and Fanzee Battles attracted millions of users within days, showcasing the platform's immense potential for user engagement. Catizen, a cat-themed mini-game platform built on TON, currently has over 4 million users, with more than 700,000 users playing daily. Notcoin, a social application built on TON where users compete to mine digital currency, has rapidly attracted over 30 million users, marking one of the fastest cryptocurrency adoption events ever.

The TON Foundation recently announced their incentive program, which will reward the successful development of TON applications. We believe this will foster the creation of exciting new crypto mini-programs that have the potential to attract the masses.

Unlocking New Ways to Monetize

TON is providing the Telegram community with various ways to monetize, share, and grow businesses. As a decentralized marketplace on the TON network, Fragment offers a platform where users can trade collectibles such as virtual phone numbers and custom Telegram usernames. Fragment has facilitated over $350 million in sales of custom usernames and virtual phone numbers. This is just the beginning. In the near future, the 73 billion Telegram stickers sent may be converted into NFTs. These NFTs will then be available for purchase and sale via the TON blockchain.

Telegram has taken a significant step forward by integrating revenue sharing with content creators and channel owners through its Fragment platform based on the TON blockchain. This move marks a shift in traditional social media models, directly allowing these creators to earn income from advertising revenue on their channels. This approach not only rewards content creators but also fosters a closer relationship between the platform and its users, promoting a fairer distribution of economic benefits within the digital ecosystem.

Native Stablecoin Payments

On April 19, 2024, Tether announced the deployment of its stablecoin USDt on the TON blockchain and Telegram wallet. This development represents a significant advancement for the crypto industry, as it allows 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.

The scalability of the TON network allows for transactions between two users to incur a fixed fee of about $0.10, which is 66% cheaper than other crypto payment platforms. Additionally, built-in deposit and withdrawal channels, including bank transfers and exchanges, further facilitate access and usage. Stablecoin payments on TON

We believe that stablecoin payments on the Telegram wallet are particularly important for individuals in developing countries, who often lack access to banking services and are forced to use complex crypto user interfaces to store and transfer funds. With the deployment of stablecoins on the TON network, cryptocurrency is making significant strides toward realizing the vision of programmable peer-to-peer currency and a globally accessible decentralized financial system.

Conclusion

We believe that the TON network is still in its early stages, and we are excited to witness the adoption of its ecosystem and new features by the Telegram user base.

The core of Telegram embodies the spirit of cryptocurrency: an open, free network accessible to everyone. With TON, Telegram has achieved a symbiotic relationship where scalable smart contract capabilities and a robust payment network enable breakthrough functionalities that are unattainable in a Web2 environment.

Given its vast user base, scalable infrastructure, thriving mini-program ecosystem, and native stablecoin transactions, TON fully taps into the potential of a network with 900 million active users.