Deep Dive | Web2 and Web3 developers flock to the TON ecosystem in search of new growth, how to capture Telegram's 900 million users?

Author: Grapefruit, ChainCatcher

Editor: Marco, ChainCatcher

"The number of participants for the event exceeded 500, and the venue, which can accommodate around 200 people, was packed. The corridors were filled with attendees, and many users even organized sub-venues on the grass outside, as well as in nearby Starbucks and KFC. The users' FOMO enthusiasm for the TON ecosystem seemed to take people back to the ICO boom on Ethereum in 2017," described a crypto OG who returned from the TON developer event in Shenzhen on June 22 to ChainCatcher.

Not only are users paying attention to the development of the TON ecosystem, but several top crypto investment institutions have publicly expressed their optimism and have already positioned themselves in TON tokens. Following Pantera Capital's announcement to raise a new fund to invest more in TON tokens, on June 30, Kingsway Capital's founder disclosed that the largest token held by his institution is TON.

Ryan Barney, a partner at Pantera Capital, explained the investment in TON by stating that 99.9% of blockchain projects are trying to create community technology from scratch, which is a difficult path. In contrast, Telegram has 900 million daily active users, which is beneficial for TON to acquire users.

Driven by popular mini-games like Notcoin and Catizen, the "TG + TON ecosystem" has become a new mainstream narrative in the crypto market, with a large influx of Web2 and Web3 developers entering the TON ecosystem in search of new opportunities.

Vivi, head of Research at the TON Foundation, revealed in an interview with ChainCatcher that the number of projects scheduled in the TON mini-program store has exceeded 2000+.

TON is the Best Path for Telegram's Commercialization

TON is essentially Telegram's commercialization, and Telegram is completing its commercial deployment through TON.

Jerry, who has researched traditional internet commercialization models, explained that Telegram has always faced immense survival pressure. Although Pavel Durov founded Telegram with the intention of providing users with a private and free instant messaging tool, viewing it as a public product, the exponential growth in users has led to increasingly high operational costs for servers and bandwidth, necessitating a sustainable revenue source to maintain normal operations.

Since 2017, Telegram has been exploring its business model, whether through payment services, advertising, or the ICO financing that was paused by the SEC, but the results have not been ideal.

Last year, Pavel Durov revealed that the annual cost to maintain Telegram's normal operation is about $630 million.

According to a report by The Wall Street Journal, by April 2021, Telegram had accumulated $700 million in debt. Therefore, starting in 2021, Telegram has repeatedly issued over $100 million in excess bonds, and in March of this year, it raised $330 million through bond sales.

Telegram is often seen as the Web3 version of WeChat. From the perspective of active users, there is not much difference between Telegram and WeChat, with WeChat having about 1.2 billion active users and Telegram having 900 million and still growing. However, their monetization methods differ significantly.

Payments are the main commercialization path for WeChat, and similarly, Telegram would choose payments. However, due to Telegram not being regulated and lacking mainstream financial regulatory licenses, it only has the Web3 payment route, and founder Pavel Durov entered the crypto industry early on.

Therefore, from both a business perspective and the background of the founding team, TON is the best choice for Telegram's commercialization.

Steve Yun, chairman of the TON Foundation, stated that there is a collaborative commercial agreement between the TON Foundation and Telegram, similar to how Google is the default search engine for Apple devices.

"TON has unlocked various ways for the Telegram community to achieve profitability, sharing, and development. For example, the virtual digital product trading market Fragment, developed based on TON, supports users in trading NFT products such as virtual phone numbers and TG usernames, which has facilitated over $350 million in sales," Pantera Capital wrote in its reasons for investing in TON.

Regarding the relationship between TON and Telegram, Vivi, head of Research at the TON Foundation, told ChainCatcher that although TON and Telegram are two independent legal entities in organizational form, their relationship is becoming increasingly close, and at times, TON can even be seen as Telegram's blockchain department.

Since last year, TG founder Pavel Durov has repeatedly expressed his support for TON and its ecosystem in public. The Telegram platform provides several empowering measures for TON tokens, including TG advertising, creator economy, and Stars virtual points, all of which can be paid for using TON tokens.

In Pavel Durov's recent personal TG channel, he has frequently posted about TON ecosystem click games like Notcoin, Hamster Kombat, and the DEX platform TapSwap, expressing optimism about them.

In March, Pavel Durov wrote in his channel that the Telegram advertising platform is open to all advertisers, and all TG channel owners will receive 50% of the advertising revenue generated in their channels, with income paid through TON tokens.

Web2.5 Product Form under the "TG + TON" Combination

"The 900 million daily active users of TG + TON's Web3 technology" creates a Web2.5 product form that inherits the traffic advantages of Web2 while integrating the technological characteristics of Web3.

In Vivi's view, TON is no longer just a Web3 product; backed by TG, its ecosystem products can penetrate various Web2 businesses.

Compared to traditional Layer1, TON resembles a feature-enhanced Layer1 platform and can be seen as a Web3 product matrix based on specific Web2 applications.

In the past, Web3 practitioners primarily focused on projects centered around the DeFi trifecta (DEX, Lending, Yield Farming), but with the increase in events hosted by TON, more and more Web2 users are beginning to build and develop various applications and projects on the TON platform, covering multiple fields such as foreign trade, payments, e-commerce, mini-games, and AI tools.

With the help of TG's Mini Dapp (mini-program) feature, products and business forms that have mature operational models in the Web2 world can also be realized on the TON platform. Currently, several applications based on e-commerce, flight booking, and hotel reservations have already appeared on the TON platform.

Vivian, founder of the Web3 accelerator Starbase, which has hosted several offline TON events, stated that the recent participant demographics show that TON has successfully generated a breakout effect. Previously, most participants in Web3 offline events were Web3 practitioners, but at TON offline events, you will see many Web2 developers from major internet companies and traditional gaming companies.

Chris, founder of the oracle and lending protocol TonArk, revealed to ChainCatcher that the well-known Web2 gaming company 37 Interactive Entertainment has participated in the development of several mini-games on TG.

Andrew, founder of the TONxFans community with a background in Web2 internet giants, added that previous Web3 products were often designed to be overly complex, lacking real user scenarios, and providing a poor user experience, making it very difficult to use crypto DApps. For example, with wallets, users need to remember a password composed of a random combination of letters and numbers; forgetting the password means losing assets, and most crypto applications operate on PC.

The integration of TON and TG brings Web3 into the mobile internet era, allowing all Web3 operations to be completed through just the TG app and personal chat page, from easily buying, selling, or managing tokens and NFTs.

The relationship between project parties and users will also be more proactive. In previous Web3 applications, the connection between the two was one-way, with developers waiting for users to come to Discord or the community. However, applications built on TON allow developers to create their own Telegram groups and channels when building products, proactively pushing messages to users and performing some awakening actions, creating a more proactive two-way relationship.

Benchmarking WeChat Mini Programs

The explosive popularity of click games like Notcoin and Catizen has ignited a wave of entrepreneurship in TG + TON mini-programs, attracting a large number of Web2 and Web3 developers in search of new opportunities.

Andrew analyzed that both Web2 and Web3 are currently facing growth bottlenecks, trying to find new breakthrough points for growth. The 900 million daily active user base of TG provides a foundation for it to become an incremental market.

For Web2 products, TG's global market layout allows it to find new growth points in different regions; for Web3 projects, the massive user traffic pool behind TG creates demand for users to go on-chain.

Kevin, co-founder of the sliding casual game Yescoin, stated that when announcing the launch of Mini DApp, it meant that TG has transformed from a pure chat communication product into a super app.

In Chris's view, the product integration of TG + TON is essentially a second WeChat ecosystem. The success of the WeChat ecosystem has set a benchmark, and the TG + TON ecosystem is just getting started, which means there are huge Alpha opportunities hidden within this ecosystem, and early products or projects can reap significant benefits.

Moreover, the user base of TG is already comparable to that of WeChat, but since TG is aimed at a global audience, its potential opportunities may even exceed those of WeChat.

Vivian shares this sentiment, noting that the social form of TG products behind TON is now aligning with WeChat mini-programs, benchmarking the ecosystem of WeChat mini-programs. Web2 project parties with previous successful experiences in WeChat mini-programs, whether in gaming or any traffic-related products and tools, are suitable for being transplanted into the TG ecosystem for redevelopment.

TG mini-programs support developers in conducting a series of Web2 businesses. With TON payments, even without issuing tokens, listing on exchanges, or financing, project parties can still achieve their business models and monetization paths. For example, providing cross-border services, in-game purchases, and in-app advertising, products like the pet-raising game Catizen and the social product UXLINX have accumulated a large number of users on TG in their early stages.

Vivi revealed that the development cost for deploying mini-programs on TON is relatively low, and a series of technical development documents and templates are provided, allowing developers to complete deployment without having to write code from scratch. Feedback indicates that project parties with a Web2 background can complete the deployment of a mini-program within two to three days.

Additionally, both Andrew and Vivi mentioned that the launch of TG mini-programs adopts a post-review mechanism, while Tencent's WeChat mini-programs require pre-review. This means that developing mini-programs on WeChat requires submitting a series of documents such as company licenses and developer information for record-keeping, and applications can only be published after passing the review. However, developing mini-programs on TG does not require prior review, and developers do not need to submit any documents, only subject to post-review.

Loop, founder of the Dapp development studio Builder House, has a deep understanding of this. The mini-programs on TON support some data to go on-chain, which greatly saves costs for developers, and even if problems arise, they can quickly find solutions in the TON developer community.

Moreover, the TON Foundation will also support outstanding project parties. For example, The Open League event will provide substantial economic incentives and resource support to selected project parties. The Yescoin project, selected as a winner in the fourth season of The Open League, can receive a $500,000 prize along with its team members.

Web3 Mini Programs Become a Blue Ocean for Entrepreneurship

Vivi revealed in this interview that the number of queued projects in the Mini Dapp (mini-program store) has now exceeded 2000.

How can developers seize the traffic advantage when participating in the "TG + TON" ecosystem?

Vivi, Chris, and Kevin all remind developers that while mini-programs on TON are often compared to WeChat mini-programs, there are significant differences in their ecological models.

Vivi stated that WeChat focuses on a single domestic market, while Telegram primarily targets overseas markets, and user preferences in different regions of Telegram also vary significantly. For example, the product models familiar to users in Russia and India, their willingness to pay, and the depth of platform participation have clear distinctions.

Kevin, co-founder of the sliding casual game Yescoin, has a deep understanding of this. Yescoin game users are mainly distributed in regions like North America and Europe, and their needs differ completely from domestic users. He cited an example of a player from Northern Europe who plays the game primarily for its social features, allowing him to chat with other players on TG while playing.

Chris, Andrew, Loop, and Vivi all remind developers that the TON public chain differs from familiar EVM Layer1 public chains. Firstly, the development languages used are FUNC and TACT, which require certain technical capabilities from developers.

Developers entering the TON ecosystem need to understand whether they are creating a Web2 product, a Web3 product, or a Web2.5 product, as there are differences among them, and the integration with TON will also differ.

Chris and Vivi both emphasized that developers need to distinguish between the concepts of TG and TON; they are separate entities. Developers need to understand whether they want to build products based on TG or TON. Many developers are actually attracted by the customer acquisition potential of TG products, and only a certain proportion of developers will choose to integrate with TON. If they want to develop based on TON, such as integrating TON's payment features or leveraging Web3 token economic incentives, project parties will need to overcome the challenges of TON's development languages.

For entrepreneurs looking to build projects on TG + TON, Kenetic Capital, a deep participant in the TON ecosystem, stated that in addition to the already popular TAP-style mini-games and socialFi games, various protocol-level and infrastructure-level projects will gradually receive more attention and have good growth potential, such as the NFT fragmentation protocol TRC404 project and the TON EVM Layer2 project Atlas.

Chris agreed, noting that most entrepreneurial teams on TON are currently focused on application layer projects, but the application layer is already very competitive. Developers need to consider whether they have enough resources to carve out a niche, such as mini-games needing to think about how to stand out from star projects like Notcoin and Catizen.

Currently, the DeFi and infrastructure products of the TON ecosystem are still in the early development stage, especially since DeFi applications can accommodate more capital volume. However, due to the insufficient infrastructure functionality of TON in DeFi, the development of related products is challenging and slow.

Kenetic Capital indicated that, at present, SocialFi, e-commerce, and DeFi projects are the types that the TON Foundation is focusing on.

Vivi believes that as the number of projects in the TON ecosystem increases, the main task of the TON Foundation is to identify which projects are long-term oriented. The foundation's support strategy is to decide which resources to provide only after the projects go live. However, based on her experience in frontline interactions with developers, she believes that developers can follow the principle of "what others have, I have; what others excel in, I excel in; what others do cheaply, I do cheaply; what others do well, I do better."

In terms of track selection, Kenetic Capital advises developers to consider two approaches: one is to quickly follow similar popular projects, and the other is to anticipate future needs and choose which track to pursue based on their team's capabilities.

From a technical perspective, it is advisable to prioritize using technologies supported and recommended by TON. In terms of operations and promotion, developers should fully leverage the viral effects of Telegram ecosystem users and can also participate in TON's official hackathon competitions to gain more support and assistance from the TON Foundation.

ViVian is optimistic about projects that can directly generate cash flow, such as viral tools and infrastructure. She cited examples of game projects with asset items that can directly form positive ROI.

However, she also reminded entrepreneurs that when entering the TON ecosystem to develop products, they must first consider whether they have the ability to acquire customers independently and solve the problem of sourcing the first batch of seed traffic and users.