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The Open Network (TONCOIN)

Overview

The Open Network (TON), also known as TON Blockchain, is a decentralized layer-1 created by the encrypted messaging platform, Telegram in 2018. The multi-blockchain architecture of The Open Network provides a platform for (dApps) and . It consists of a master chain, multiple working , and sharding protocols. [1][2]

History

Since 2017 the team at Telegram had been developing a new blockchain platform called the TON Blockchain and a native called Gram. [3]

Telegram Open Network (TON Network) is a blockchain project created by brothers and to build a platform that disrupts the space by leveraging Telegram’s wide user base. The platform promised the speed and scalability important for the mass adoption of . Through TON, Telegram users were supposed to be able to buy, transfer, and store value in ID-verifiable wallets facilitated by the GRAM coin. [3]

Telegram and its affiliates had not made any promises or commitments to develop any applications or features for the TON Blockchain or otherwise contribute in any way to the TON Blockchain platform after its launch. Rather, the Telegram team hoped that the decentralized community of third-party developers would contribute to the TON ecosystem through the development of applications and . In January 2018, the team released a white paper[4] and a detailed technical paper which gave an insight into the features and design of the project. TON was described as a platform for and services with the ability to scale and support millions of transactions per second. [3]

Gram

Gram is a based on the TON blockchain platform. In February and March 2018, investors bought the first Gram tokens at a price of $0.37 and $1.33, respectively. The company raised $1.7 Billion during the course of bidding.

On the 2nd of October 2019, Telegram sent letters to investors with links to the TON key generator, which provided access to Gram tokens. This was in accordance with the obligation to send the first batch of digital money to depositors by October 31, 2019. However, the release of the project was delayed following the decision of the US Securities and Exchange Commission (SEC). [3]

Telegram vs SEC

On October 11, 2019, SEC intervened asking Telegram to temporarily restrict the distribution of Gram tokens. The agency argued that the initial purchasers of Gram would be acting as underwriters, and the resale of Gram, once distributed, would be an unregistered distribution of securities. [5]

After deeming Telegram’s (ICO) illegal on account of the fact that the Token Offering wasn’t properly registered in the USA, the SEC also filed a temporary restraining order. After an exchange of filings, the hearing on the case was postponed until Feb. 18–19, 2020. The judge hearing the case, P. Kevin Castel, ruled that Telegram should not distribute its tokens before that date, and not until the court made its decision on the case. Hence, the official launch of the project was postponed until the end of April 2020. [3]

On March 24, 2020, Telegram lost its first court appeal when SDNY Judge Castel ruled in favor of the SEC's motion for a preliminary injunction on Telegram Group Inc.'s sale of Grams, determining that it was in breach of the Securities Act[7].

On May 12, 2020, after a long court fight, announced the end of Telegram's active participation with the TON blockchain. Durov referenced third-party efforts to launch independent versions of the TON blockchain but said no Telegram employee is involved with these projects. [3][6]

"While networks based on the technology we built for TON may appear, we won't have any affiliation with them and are unlikely to ever support them in any way. So be careful, and don't let anyone mislead you," Durov wrote. [8]


On the 11th of June 2020, Telegram settled with SEC and agreed to return $1.22 billion as "termination amounts" in Gram purchase agreements, and pay an $18.5 million penalty to SEC. The company also agreed to notify the SEC of any plans to issue digital assets over the next three years. The judge approved the settlement on June 26, 2020.

"New and innovative businesses are welcome to participate in our capital markets, but they cannot do so in violation of the registration requirements of the federal securities laws," Kristina Littman, chief of the SEC Enforcement Division’s Cyber Unit, in a statement. [9]

Telegram repaid TON investors $770 million and converted $443 million into a one-year debt at 10% interest, raising its total liabilities to $625.7 million in 2020. On the 10th of March 2021, the company made the placement of 5-year bonds worth $1 billion to cover the debts it had to return by 30th of April 2021. [10]

TONCOIN

TON coin is the principal  of The Open Network (TON) , and in particular of its masterchain and basic workchain. It is used for transaction fees, securing the through , deciding how the network develops, gas payments (i.e., smart-contract message processing fees), and settling payments. [11][4]

Background

In November 2019, Telegram Open Network testnet2 launched and 5 billion coins were minted, with a small fraction (1.45%) distributed to developers and testers. In May 2020, after the SEC prohibited Telegram from issuing Grams to investors, Telegram ceased its work on the TON ecosystem and testnet2 tokens were placed into 20 Giver . Finally in May 2021, by a majority vote of network participants, testnet2 was promoted to . Coins continued to be distributed by Giver contracts. [11]

Tokenomics

The total supply of TON coins is originally limited to 5 Gigatons (i.e., 5 billion TON coins). This supply will slowly increase, as rewards to validators for mining new masterchain and shardchain blocks accumulate. Expected inflation rate of 2% per year, will double the total supply of TON coins (to 10 Gigatons) in 35 years. This inflation represents a payment made by all members of the community to the validators for keeping the system up and running. [4]

Utility

The TON coin can be used as a processing fee for transactions, cross-chain transaction fees, lending capital to validators to earn interest, and payment for blockchain-based domain names (DNS). It can also act as validators’ stakes required to maintain the , and payments services provided by apps built on the platform, and it is integral to TON's on-chain governance program. [11]

Technology

The Open Network utilizes the (PoS) consensus mechanism to validate transactions. TON consists of a three-layer network; the first is the masterchain which is the main chain of the TON network and is currently in operation. Every time an operation is performed in TON, it is performed on the masterchain. [5]

In the second level is the workchains, which are secondary chains that connect to the masterchain and that can contain up to XNUMX^XNUMX different connected chains. Each of these secondary chains can have their own set of consensus rules, including different formats of account addresses and transactions, virtual machines for and basic , etc. All this while remaining compatible with the masterchain, being able to interact with it and with each other seamlessly. [5]

In the third level are the shardchains. Shardchains are part of the workchains and their role is to provide a scalability boost, splitting the work and parallelizing it. This way, TON’s scalability soars to high levels. This is possible due to a bottom-up approach that TON uses for its shardchains, giving rise to the Infinite Sharding Paradigm. [5]

Key Components

TON Blockchain

The backbone of The Open Network is a scalable multi-blockchain designed to process millions of transactions within seconds. It uses the consensus and can contain up to 2⁹² accompanying blockchains. [12]

TON Payments

It is a platform for micropayments and a micropayment channel network. It can be used for instant off-chain value transfers between users, bots, and other services. Safeguards built into the system ensure that these transfers are as secure as on-chain transactions. [12]

TON Proxy

This is a network proxy/anonymizer layer for TON nodes. Similar to I2P, it allows the building of decentralized VPN services and blockchain-based TOR alternatives to achieve anonymity and protect online privacy. Combined with the TON P2P Network and TON DNS, TON Proxy gives decentralized apps immunity to censorship. [12]

Launch

The TON Proxy compatible with HTTP Proxy launched on September 30, 2022. A host of TON wallets said they would implement TON Proxy directly in their wallet applications and extensions, meaning that the TON network would be accessed by all TON wallet owners without downloading additional applications. [22]

TON DNS

TON DNS makes mainstream by assigning human-readable names to accounts, , services, and network nodes. With TON DNS browsing blockchain becomes similar to surfing the World Wide Web. [12]

Launch

The TON Foundation on June 30, 2022 announced the launch of TON DNS. Similar to other popular crypto-related domain names like “.eth” or “.crypto” the domain zone for TON DNS is “.ton” and will enable users to access decentralized applications in a simple way. With TON DNS, users will be able to use simple and short domain names instead of typing in a long string of letters and numbers. A domain name will also be able to unlock a wallet address. [19]

TON Storage

TON Storage is a distributed file-storage technology accessible through the TON P2P Network. This torrent-like technology relies on for availability and has a strong potential with regard to storing and exchanging large amounts of data. [12]

Launch

The TON Storage was launched on January 5, 2023, taking on similar projects like Filecoin and Storj. TON Storage works similarly to internet-based peer-to-peer file sharing that uses torrents. But instead, it relies on the TON blockchain network to transfer data files of any size, which are backed-up and encrypted without needing centralized web servers. With the launch of TON Storage, TON-secured sites can be hosted on the network, a move that TON Foundation founding member Anatoly Makosov said marks:

“the next step in realizing our vision of a decentralized, open internet.” [13][14]

TON Services

TON Services provides a versatile platform for third-party services. It enables smartphone-like friendly interfaces for and , as well as a World Wide Web-like decentralized browsing experience. [12]

TON Workchains

TON consists of the masterchain and up to 2³² workchains with different rulesets, i.e. different formats of account addresses and transactions, virtual machines for and basic , etc. Yet, workchains can still interact using consistent basic rules. [12]

TON Foundation

After Telegram quit the project in May 2020, the open-source developer community led by Kirill EmelyanenkoK[23] and Anatoliy Makosov[24] initiated Newton open-source community aimed at further development and support of TON on the open source principles. More developers who never worked for Telegram, members of the open developer community, validators, winners of public TON Blockchain Contests, and crypto enthusiasts from all over the world joined them. In May 2021, the Newton team was renamed as TON Foundation — a not-for-profit community focused on the support and development of the network. [12]

Telegram CEO on December 23, 2021, published a post[25] on his official Telegram channel that gave backing to the project.

“When Telegram said goodbye to TON last year, I expressed the hope that future generations of developers would one day carry on with our vision of a mass-market blockchain platform, So I was inspired to see the champions of Telegram’s coding contests continue developing the open TON project, which they rebranded to Toncoin.” - he wrote. [26]

Governance

By design, network modifications within TON are only possible if approved by the majority of validators via the  consensus. It is not possible to change network software, configuration, or state by bypassing the vote. [12]

Telegram Marketplace

On October 26, 2022, Telegram announced the official launch of its new marketplace built on the Telegram Open Network (TON) blockchain. The marketplace will serve as an auction platform on which rare Telegram handles would be sold. Telegram gave users the ability to buy usernames for its app via a blockchain-based platform called Fragment[18]. The platform lets interested parties buy available usernames and secure ownership on TON.

By November 30, 2022, Durov announced that Fragment[18] sales had surpassed $50 million. Some individual Telegram usernames have brought in large sums of money on Fragment. For example, the username @news was auctioned for 994,000 TON, about $1.7 million, per data from the official website. [15][16][17]

TON x Donate

TON on December 23, 2021, announced a partnership with Donate, saying that users would soon be able to make donations and pay for their subscriptions in Toncoin. At the same time, channel administrators will be able to collect their income in . [20][21]

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