TON (The Open Network)

Main concepts

Similar to Ethereum and other smart contract blockchains, TON is designed as a distributed supercomputer, enabling a wide range of use cases.

Smart contracts

Smart contracts are digital agreements that automatically enforce the rules when certain conditions are met. In the real world, if two people make a deal, they might need lawyers, paperwork, and a lot of time and money to make sure the deal is followed. With smart contracts, all of this can be done automatically. The code ensures that everyone sticks to the agreement, and if the conditions aren’t met, the contract doesn’t go through.

Smart contracts are simply computer programs that once deployed, the code of a smart contract cannot change. Unlike with traditional software, the only way to modify a smart contract is to deploy a new instance. The outcome of the execution of a smart contract is the same for everyone who runs it, given the context of the transaction that initiated its execution and the state of the TON blockchain at the moment of execution. Since the rules are written in code on the blockchain, everyone involved can see exactly what the contract says, and no one can change it without everyone knowing. This makes smart contracts much cheaper, faster, and more secure than traditional legal contracts.

Smart contracts don’t operate on their own or run in the background; they stay inactive until a transaction activates them.

Decentralized Apps (DApps)

A DApp, or decentralized application, operates primarily or entirely on a decentralized network. Its business logic is governed by smart contracts, making its backend fully distributed and managed on a blockchain platform. To simplify, we can think of a smart contract as replacing the server-side (or “backend”) component in a regular application. Unlike traditional applications hosted on centralized servers, DApps have no downtime and remain available as long as the underlying blockchain is operational.

The on-chain nature of a DApp allows anyone to inspect its code, ensuring transparency and trust in its functionality. All interactions with the DApp are permanently recorded on the blockchain. As long as users have access to an Ethereum node (which they can run themselves if necessary), they can interact with a DApp without any interference from centralized entities. Once deployed, the smart contract code is immutable, meaning neither service providers nor the contract owner can alter it.

TON’s high-throughput smart contract platform enables the development of dApps across various sectors, including gaming, social media, and supply chain management. TON envisions its technology as being useful in supply chain management and logistics by allowing real-time tracking of goods and preventing fraud.

Multi-blockchain architecture

The TON blockchain uses a unique multi-blockchain architecture, consisting of a masterchain and multiple workchains, each consist of multiple shard chains. TON’s architecture also includes a feature called “dynamic sharding,” which breaks the blockchain into smaller parts so each set of the nodes only handles a portion of the data, making TON a network of interconnected blockchains.

TON’s smart design features asynchronous message delivery, which allows messages to be sent and received across the network and processed independently and concurrently. Additionally, TON uses a specialized routing system called hypercube routing to send messages between different shard chains along the shortest route, reducing delays and enabling the network to handle more traffic smoothly.

Masterchain

At the top of this structure is the masterchain, which splits into workchains, and then further into shardchains. The masterchain is the main blockchain that oversees the entire network. It handles critical functions like protocol updates, validator elections, and the coordination of workchains. Think of it as the central authority, a single source of truth that keeps all the pieces in the ecosystem in sync.

Workchains

The Masterchain splits into individual chains called Workchains. Workchains are customized blockchains tailored to certain transactions or use cases, running parallel within the TON network. Each workchain operates independently, processing its own transactions and can be customized for specific applications. This allows different use cases to run simultaneously without interfering with each other, contributing to the network’s scalability. All workchains must agree on fundamental interoperability standards to support inter-workchain interactions.

Shardchains

Shardchains are smaller divisions within a larger workchain in the TON network. Each shardchain is identified by a unique code, which is a 60-bit number. This code helps the network quickly figure out which shardchain should handle a particular transaction based on the account address. Since there are many possible 60-bit codes, TON can have multiple shardchains within one workchain, which makes the system highly scalable.

To balance the workload across the network, shardchains can be split into two or merged with another shardchain to keep things running smoothly.

TON Virtual Machine (TVM)

Virtual machines (VMs) are software systems that mimic a computer, allowing you to run an operating system and applications. The TON Virtual Machine (TVM) is a special system that runs TON smart contracts. Think of it as a powerful engine that processes all transactions on the TON blockchain: It reads incoming messages, handles data storage, and creates new messages as needed.

Built with scalability in mind, supporting TON’s dynamic sharding model, where the blockchain state is split into smaller pieces (shards). This allows the TON network to process a higher number of transactions per second. TVM also aims to make smart contract code as compact as possible, saving storage space on the blockchain. It has built-in mechanisms for backward compatibility, allowing it to evolve without disrupting existing smart contracts.

Compared to the widely-adopted EVM, TVM is more specialized, focusing on scalability, flexibility, and efficiency within the TON blockchain.

Gas

Gas is a unit that measures the amount of computational work required to execute transactions or run smart contracts on the TON blockchain. The amount of gas needed for a transaction is fixed, but the cost of each gas unit can change based on the network’s settings. The purpose of the gas fee is to deter malicious actors from overloading the network.

Unlike some other blockchains, in TON, you can’t choose your gas price, and there isn’t a market where you can bid for lower fees. Instead, the cost of gas is set by the validators, the people who run the network, and it can only be changed if they agree to it.

Gas fees on TON are generally affordable, but a bit tricky to predict because they depend on several factors, such as the size and content of the transaction, the status of the account, and the current network settings.

Proof-of-Stake

TON initially employed an Initial Proof-of-Work (IPoW) mechanism, after which it transitioned to a Proof-of-Stake (PoS). Validators are responsible for verifying transactions and creating new blocks, and are chosen based on the amount of TON they hold and are willing to stake. Validators go through an election process where they submit their TON stake and some other details. The more TON they stake, the better their chances of being selected. Once chosen, they validate transactions for a set period of time. This method supports a high transaction throughput while being energy-efficient.

Validators earn rewards from fees paid by users for transactions on the network. Half of these fees go to the validators, while the other half is burned (destroyed). Validators also earn additional rewards for creating new blocks on the blockchain.

To become a validator, a user needs to lock up a certain amount of TON tokens as a “stake.” Validators are required to stake a minimum of 300,000 TON to participate in the consensus process. This stake acts like a security deposit that ensures the validator behaves honestly. If they try to cheat, they risk losing their stake. Validators with malicious actions will get some of their stake destroyed, a process known as “slashing” to disincentivize validators from dishonest behaviors. Users can also engage in staking, providing their tokens to validators to secure additional rewards, thereby contributing to the network’s overall robustness​.

How are transactions processed?

A transaction begins when a user’s wallet or application initiates a request, which may involve sending TON tokens, interacting with a smart contract, or performing other actions. This request is then broadcast to the TON network, reaching multiple nodes (computers). Validators, selected through the network’s election process, review the transaction to ensure it adheres to all rules, confirming the sender has sufficient funds, the format is correct, and there are no signs of fraud. Valid transactions are compiled into a block, which is added to the blockchain through the Proof of Stake (PoS) consensus mechanism. Once a block is successfully added, the transactions it contains are considered confirmed, permanently recorded, and immutable.

Tokenomics

Toncoin (TON) is the native token of the TON network, used for various network operations and transactions. Toncoin plays a crucial role in staking, where it is used to validate transactions, thereby enhancing the blockchain’s security and supporting the network’s services. Additionally, Toncoin facilitates decentralized payments for services like TON DNS and TON Proxy, which are essential for the network’s diverse range of decentralized functions. Toncoin also supports governance through Ton.vote, a platform that lets the community participate in decision-making, enableing token holders to shape the development and policy changes within the TON ecosystem.

Supply and distribution

Toncoin has a total maximum supply of 5 billion tokens. Half of TON transaction fees and most of the money taken from validators who break the rules is destroyed. This process helps to reduce the amount of TON in circulation, making TON network deflationary. Under the PoS system, new TON is minted as rewards for validators in return for securing the network.

Staking

Similar to Ethereum, staking is an important aspect of TON’s tokenomics. Validators must lock up their TON, which reduces the amount of TON in circulation. This decrease in supply can put upward pressure on the token’s price if demand remains constant or increases. The minimum amount required to stake is 300,000 TON, and staking turns TON into a yield-bearing asset.

Governance

Governance plays a role in shaping the long-term economic incentives of the network, allowing decisions to be made within the TON community. The TON blockchain is governed by a Decentralized Autonomous Organization (DAO), which operates through the on-chain governance platform Ton.vote. This system reduces corruption and inefficiency by removing intermediaries. In TON, decisions are made through a voting process where the influence of each token holder is proportional to their number of tokens. Any stakeholder can propose changes, which are then voted on by the community. If a proposal is approved, smart contracts automatically implement the change, ensuring transparency and efficiency. Token holders, developers, and validators all play key roles: token holders propose and vote on changes, developers implement them, and validators maintain network security. Users influence governance through their feedback and participation, although they do not vote directly. Compared to Ethereum’s mixed on-chain and off-chain governance, TON’s DAO model offers more direct influence from token holders.

Telegram integration

Telegram has integrated Toncoin into its platform in various ways: users can buy domain names and anonymous numbers on Fragment, make crypto transactions via Telegram’s wallet, and content creators can earn Toncoin from advertising revenue. TON’s integration with Telegram’s extensive global user base of over 1.5 billion is a strategic advantage that leverages the messaging platform’s broad reach to boost the adoption of TON’s services. Telegram also recently launched Telegram’s browser and Mini App Store, which support decentralized websites hosted on TON — in all mobile and native desktop apps.This integration allows users to access TON’s blockchain features directly through Telegram, potentially bringing millions of new users into the TON ecosystem.

Additionally, If Telegram goes public, it could boost Toncoin’s adoption and provide capital for Telegram’s growth and potentially enhance Toncoin’s use and value within the Telegram ecosystem. This development is attracting investor interest, as a successful IPO could strengthen Toncoin’s market position and increase its value and utility.

TON’s Components

Here are the key elements of The Open Network ecosystem:

– TON DNS functions similarly to the traditional Domain Name System on the internet, allowing human-readable names for accounts, smart contracts, and dApps within the TON ecosystem. This makes navigation easier than using complex cryptographic addresses.

– TON Storage provides decentralized file storage similar to Dropbox but on the blockchain. Users pay with Toncoin to store their files across multiple nodes, ensuring that files are always accessible and resistant to censorship or data loss– TON Proxy offers privacy and security by masking IP addresses and providing private connectivity, similar to VPN services. It is essential for protecting user identities and securing network interactions, especially in regions with strict internet censorship.

– TON Payments is the internal payment system of TON, using Toncoin for various transactions such as wallet transfers, micro-payments in dApps, and payments for services like TON DNS and TON Proxy.

– TON Space integrates with Telegram, offering a self-custody wallet directly within the Telegram interface. It allows users to manage digital assets easily, making blockchain interactions as simple as sending a message.

Wallets

Hot wallets like TON Wallet (Official wallet), Tonkeeper, Tonhub and OpenMask are popular choices among TON users.

Popular hardware wallets compatible with TON include Ledger, Trezor, Tangem and SafePal.

Multisignature functionality on the TON blockchain isn’t as commonly implemented or widely known compared to other blockchains like Ethereum. TON Multisig smart contract can be used to create custom multisig solutions, although it might require some technical setup and understanding of the TON smart contract capabilities.

Block explorers and analytics

Block explorers are web-based tools that allow users to view and search the transaction history, blocks, and other data on the TON blockchain. They are essential for tracking transactions, verifying addresses, and exploring blockchain activity.Understanding what’s happening on the TON blockchain can be made easier with the help of block explorers and analytics tools. Here’s an overview of the leading TON block explorers:

– TON Scan (tonscan.org) is a prominent block explorer for the TON blockchain. It features a user-friendly interface that enables real-time transaction tracking and offers comprehensive details on blocks, smart contracts, and token transfers. With advanced search and filtering options, TON Scan makes it easy to explore transaction histories and monitor wallet balances.

– TON Stats (tonstats.org) is known for its detailed analytics and clean design. It offers comprehensive information on transaction details, network activity, and token metrics. The platform provides tools for exploring account activity and balances, all presented through an easy-to-navigate interface suitable for users of all experience levels.

Notable innovations

Gaming

Gaming has become a key feature for TON, starting with Notcoin and now including games like Catizen and Fanton Fantasy Football. TON games offer both fun and real-world rewards, making them extra appealing. Unlike traditional games on iOS and Android, which require multiple steps to download and set up, TON games on Telegram are accessible immediately. Users can start playing just by opening the bot or game directly through Telegram or the Telegram Apps Center.

The TON Blockchain’s speed and low fees make it ideal for supporting decentralized games, handling a large volume of player interactions smoothly. The Play-to-Earn model allows players to earn real-world rewards, such as unique digital assets or cryptocurrency, based on their in-game achievements. Additionally, TON’s interoperability means that assets or achievements from one game can be used in another. The TON Play Toolkit also simplifies game development and launch within Telegram, making it easier for developers to reach a broad audience.

Payments

TON is redefining the standards for fast, affordable, and secure transactions in the Web3 ecosystem. With TON Payments, the platform introduces innovative micropayment channels, enabling instant payments without requiring every transaction to be recorded on the blockchain, thereby avoiding associated fees. This architecture allows services built on TON to integrate micropayments effortlessly. The leading stablecoin by market cap, Tether’s USDT, has been integrated into Telegram’s Wallet via the TON blockchain. This integration enables Telegram’s hundreds of millions of users to easily send and receive money within the app, akin to using Venmo or Apple Cash. This approach offers a highly convenient and cost-effective solution for small businesses and everyday transactions.

TON’s design allows users to interact with cryptocurrencies without even realizing it, positioning the network as a strong competitor to regional social media platforms like WeChat or Line and eliminating the need for local payment gateways for global reach. With this capability, TON has the potential to revolutionize remittances, payroll processing, and e-commerce, ensuring that transactions, regardless of their size, are completed in a fraction of the time and at a fraction of the cost compared to traditional financial systems.