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Rise of Telegram-Friendly Chain Spurs Crypto Super App Debate
One of the best performing projects in the cryptocurrency industry this year is a project related to Telegram Messenger LLP, a WhatsApp competitor whose blockchain plans have already drawn the ire of U.S. regulators. The Open Network (TON) blockchain has caught the attention of cryptocurrencies, even as a broader recovery in the sector has seen Bitcoin hit new highs before a recent sell-off.
With access to Telegram’s 900 million monthly active users through a partnership, the value of assets locked on TON has increased by 1,400% this year, briefly surpassing $1 billion. The blockchain token has entered the top 10 of market capitalization after having almost tripled since January, according to data monitored by DeFiLlama AND CoinGecko.
TON’s performance has rekindled hopes that Telegram, long the cryptocurrency industry’s favorite messaging app, could evolve into a “super-app” that spans social interactions, games and financial tools in the style of Chinese giants like WeChat.
“Telegram is the only major platform that is free from regulatory hurdles to incorporate Web3 for an open blockchain network,” he said. Panther Capital Management LP, in a May statement announcing the company’s largest investment ever: a purchase of TON tokens. Pantera did not disclose the scope of the deal.
Russian Roots
Telegram was founded in 2013 by Russian brothers Pavel and Nikolai Durov, who after gaining popularity raised $1.7 billion in 2018 in one of the largest initial coin offerings ever to launch what was then called the “Telegram Open Network.” The project quickly found itself in the crosshairs of the U.S. Securities and Exchange Commission. By 2020, Telegram had reached a settlement with the regulator, agreeing to return the proceeds from the ICO along with an $18.5 million penalty. The TON Foundation, which a spokesperson described as a “fork” of the Telegram Open Network, emerged a year later, but is “completely separate” from both the Telegram Open Network and Telegram, they added. Some are skeptical. While the two entities may be nominally independent, “TON is almost entirely dependent on Telegram at this point, and so in practice it seems very unlikely that network operators would make decisions that go against Telegram’s interests,” cryptocurrency researcher Molly White said in an email response to Bloomberg News.
Telegram said in February this year that it would “exclusively use the TON blockchain” for payments related to a new advertising revenue sharing program.
Soon after, key blockchain metrics took a dramatic turn upward. The number of daily active users on TON recently surpassed 350,000, according to TonStat data.
As the world becomes increasingly global and digital, “these kinds of instant, borderless payment solutions in terms of slowing things down just seem like a killer app,” said Richard Galvin, co-founder and CEO of cryptocurrency investment firm DACM, which purchased TON tokens in a private round in early 2023.
Customer checks
An increasingly serious obstacle to the growth of crypto apps is Know Your Customer and Anti-Money Laundering controls.
Cryptocurrency exchange giant Binance’s failure to adequately screen customers has been a focus of scrutiny from U.S. authorities, who last year leveled far-reaching charges against the company, a dispute that ended with a historic $4.3 billion settlement and a prison sentence for former CEO Changpeng Zhao.
TON has imposed new KYC and AML checks since June 3, requiring users to share their name, date of birth, and phone number to continue accessing the wallet’s core features. Before then, users had to provide a national ID for transactions above an unspecified threshold, according to a spokesperson.
The new tiered KYC system, with basic, extended and advanced tiers, gradually asks for more information from users based on the amount of their transactions.
Since its launch, the service has also been limited in the United States and other jurisdictions, said Halil Mirakhmedov, CSO of The Open Platform and Wallet.
Payout Games
Much of the recent surge in assets on the blockchain comes from mini-apps, including play-to-earn games like Hamster Kombat, in which players earn points by tapping on an image of a hamster, and Notcoin, another tap-to-earn game. These have seen a sudden spike to reach a total of 200 million and 40 million users, respectively, according to data published by their developers.
But there are signs that payments will soon come to the fore. After an April partnership with Tether, the $113 billion stablecoin issuer, USDT usage on TON has soared to more than $550 million, according to data from DeFiLlama.
While initial interest in blockchain was more focused on gaming and decentralized finance, “in the future we will see more use cases around payments and remittances,” said Cosmo Jiang, portfolio manager at Pantera.
DACM’s Galvin sees consumer-facing platforms backed by blockchain software as the key growth area in cryptocurrency over the next three years. TON, which Mirakhmedov says aims to capture a full third of Telegram’s user base by 2028, could be the right fit.
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