Research: These limitations of TON may make it difficult for it to become the next SOL or ETH

Author: Blockworks Research

Compiled by: Felix, PANews

Recently, the narrative around TON and Telegram has gained significant traction, with many believing that TON will be the next SOL or ETH. Blockworks Research published an article interpreting this, suggesting that TON's subsequent growth may be lackluster and could disappoint expectations.

Low User Stickiness of Telegram

Telegram has a global influence, and its considerable daily active users (DAU) can direct users to TON. By this standard, Telegram is one of the most widely used applications in the world.

According to data provided by Telegram, it is one of the most popular applications globally, with a total user base of 900 million, ranking 8th among global applications.

However, when measured by DAU, Telegram's user stickiness is overestimated.

The DAU/MAU ratio of various social applications shown in the chart below indicates that although Telegram has a high MAU (monthly active users), its DAU is relatively low (around 55 million to 200 million, which is very low compared to competing applications), with a DAU/MAU ratio of only 15%.

In contrast, Facebook's ratio is 69%, WeChat is about 67%, Instagram is 60%, TikTok (counting only the U.S. market) is 49%, and Twitter (X) is 45%. This suggests that Telegram's market penetration is low, and its profitable user base is lower than market expectations.

Note: The DAU/MAU ratio can measure the stickiness of a network or application.

Incompatibility with EVM and Limited Use of Programming Languages

The TON ecosystem team will face challenges due to the lack of EVM compatibility and the use of FunC (the native programming language of the blockchain).

The Ton Virtual Machine (TVM) is not compatible with the Ethereum Virtual Machine (EVM) because TON employs a completely different architecture (TON is asynchronous, while Ethereum is synchronous). Therefore, the TON ecosystem does not support development in Ethereum's Solidity programming language.

According to a 2023 developer survey report (with over 90,000 developers participating), Rust is the most favored language, with over 80% of developers wanting to use it again next year. 46.4% of developers expect to use Solidity.

The three programming languages available on TON are Fift, FunC, and Tact. Currently, the most used language among the three is FunC. Although FunC resembles the C language, it is generally not well-known or highly regarded.

Limited Coverage in the Terminal Market

A significant part of the growth narrative for TON is the belief that Telegram will become the next WeChat. However, WeChat is blocked outside the U.S. market and only serves the Chinese market.

In stark contrast, today's application market is dominated by tech giants with substantial financial resources and established network effects, while Telegram's largest market is in the fragmented Asia-Pacific region (excluding China and Eastern Europe), adding a layer of complexity for startups leveraging Telegram for distribution.

The following is the distribution of Telegram's total downloads in 2022:

• India: 104 million downloads.
• Russia: 34 million downloads.
• Indonesia: 27 million downloads.
• United States: 26 million downloads.
• Brazil: 21.94 million downloads.
• Egypt: 14.85 million downloads.
• Vietnam: 11.84 million downloads.
• Mexico: 11.61 million downloads.
• Ukraine: 10.76 million downloads.
• Turkey: 9.79 million downloads.

Overvaluation of FDV

Despite these realities, TON still has significant growth potential, with little safety margin for new investors.

The chart below shows that among all public chains, TON's FDV is 8.6 times its network's annual DEX trading volume, ranking first and at the highest level.

Additionally, the FDV is 927 times its network's annual fees, ranking high among all public chains.