The Open Network (TON) and Toncoin - An Educative Deep Dive

The Open Network, commonly referred to as TON, is a next-generation blockchain network and cryptocurrency platform originally conceived by the founders of Telegram. It aims to provide a fast, secure, scalable and decentralized infrastructure for digital payments, decentralized applications (dApps), and smart contracts.

The native cryptocurrency of the TON network is called Toncoin. Since the mainnet launch of TON in September 2021 and the subsequent listing of Toncoin on major exchanges, there has been growing interest around the project in the cryptocurrency space.

History and Background of TON

The origins of TON date back to 2017 when the founders of Telegram - Nikolai Durov and Pavel Durov - first conceived the idea for the project. They envisioned a fast, secure, scalable and decentralized blockchain network that could meet the demands of becoming a worldwide blockchain and cryptocurrency platform.

Telegram had built one of the largest global messaging platforms with over 500 million users by 2021. However, they became concerned with the growing centralized control, lack of privacy and increasing regulatory risks around user data protection and security within the tech industry.

These concerns aligned with the cypherpunk ethos held by the Durov brothers centering around privacy, decentralization and encryption. TON emerged from their desire to build an ecosystem embodying these principles while also providing a platform for secure digital payments, decentralized apps, identity solutions and more.

Initially called Telegram Open Network, the ‘Telegram’ association was dropped in 2021 to signify it becoming an independent project not tied to or controlled by any single entity. This followed a highly publicized back-and-forth with the SEC in early 2020 regarding TON’s $1.7 billion ICO fundraising round in 2018. While Telegram was forced to return funds and abandon its involvement with TON, the open-source TON network launched independently in September 2021.

After launch, TON has grown its developer and user community as an open, decentralized network. However, it continues to benefit from the alignment with Telegram in providing integrated solutions around digital asset management and payments within the popular messaging app.

TON Blockchain Architecture and Technical Design

The TON blockchain utilizes a sophisticated technical architecture optimized for speed, scalability, security and decentralization. Some of its key design components and innovations include:

Infinite Sharding Paradigm

At the foundation, TON employs an ‘infinite sharding’ paradigm which partitions the blockchain states and transaction processing into an ever-growing number of separate shards. This allows transaction throughput to scale nearly infinitely as new shards are added to meet demand.

It is implemented using a binary tree data structure where new shards can dynamically split from parent shards repeatedly as needed. By processing transactions and storing data in parallel across many shards, this greatly accelerates throughput speeds.

TON Storage and TON DNS

For storage, TON utilizes a distributed file storage system called TON Storage. It leverages a combination of distributed hash tables and Merkle Trees for efficient decentralized file storage and verification. TON Storage provides the basis for large scale storage for dApps and user data.

TON DNS is a service layer providing human-readable decentralized domain names mapped to accounts, smart contracts and blockchain resources. Together, TON Storage and TON DNS provide core components for building robust decentralized applications.

TL-BFT Consensus

As its consensus mechanism, TON utilizes a Byzantine Fault Tolerant (BFT) algorithm called Catchain Sequential Asynchronous Solution over Tree Overlay Networks (TL-BFT). This mouthful name refers to key innovations making TON's consensus fast, efficient and resilient.

Firstly, by organizing validator nodes in a tree structure better networking connectivity and information propagation is achieved allowing faster consensus. Secondly, blocks are small and only require confirmation from a subset of validators before considered finalized leading to higher throughput. And thirdly, the asynchronous design means different branches of the tree finalize independently increasing parallelization.

Overall, TL-BFT combines several optimizations to achieve very high transaction throughput speeds, currently estimated to be able to process at least 10 million transactions per second based on testing - substantially faster than networks like Solana (65K/second) or Visa (17K/second).

Virtual Machine and Smart Contracts

For smart contract execution, TON utilizes a proprietary virtual machine (VM) called TON Virtual Machine (TVM). With TVM, the C/C++ programming languages are used allowing software engineers an easier onramp. All TON smart contracts and dApps are deployed as TVM bytecode programs.

For contract security, TON utilizes a sophisticated ‘code isolation paradigm’ where all smart contract bytecode is executed in secure isolated containers. This prevents hacks or exploitation between contracts, greatly improving integrity and security.

Overall, by combining innovations across all the above components – sharding, storage, consensus and virtual machine – the TON blockchain is uniquely designed for speed, security and scaling as a robust foundation for Web3 applications.

Native Cryptocurrency - Toncoin

The native cryptocurrency utilized across the TON blockchain for value transfer, staking, governance and dApp operation is called Toncoin (TON).

As the first native coin underpinned by the high-performance TON network, Toncoin aims to become a versatile digital currency and store-of-value for everyday usage. It also fuels the TON ecosystem through staking incentives and governance rights for validators supporting the infrastructure.

Toncoin was first distributed in early 2020 to private investors who backed TON’s original $1.7 billion ICO fundraising round. However, following settlement of the SEC legal case, a new distribution mechanism was created allowing for decentralized public distribution.

In 2021, the TON Foundation launched the ‘TON Crystal’ decentralized custodial platform which allows any user to obtain Toncoins in a permissionless manner by ‘mining’ them through validating transactions or providing liquidity. This kickstarted renewed public accessibility and distribution of Toncoin following mainnet launch.

Additionally, 555 million Toncoins were locked into a special smart contract by the TON Foundation to provide longer-term incentives, staking rewards and community governance. Toncoin has a fixed maximum supply of ~5.9 billion coins.

As activity and adoption of applications built on TON grows, demand for utilizing Toncoins for transactions and gas fees also increases – aligning with its utility value. From its launch price of around $0.20 in September 2021, Toncoin has increased significantly in value to over $5 at times in 2022 based on accelerated usage and speculation by investors.

Utility and Use Cases

As the native currency and gas token for the TON blockchain, Toncoin has immediate utility for:

• Payment Transactions: Toncoin provides a fast, secure digital payment rail for global peer-to-peer money transfers and everyday purchases. Its high throughput capability also makes it suitable for credit card-level scalability.

• Smart Contracts & dApps: Toncoin fuels deployment and execution of smart contracts as gas fees, along with funding locked in contracts for access rights. As more TON-based decentralized applications come online, their usage and fees paid in Toncoin grow its utility.

• Staking & Governance: Validators stake and earn newly minted Toncoins for operating network infrastructure. Toncoin staking also grants governance votes influencing project upgrades and resource allocation from community pools.

• Beyond its native utility Some additional key use cases for TON blockchain infrastructure where Toncoin indirectly benefits from increased activity include:

• Digital Authentication and Identity: TON architecture supports sophisticated digital ID solutions for user authentication protecting privacy and preventing identity theft.

• Cloud Storage Rentals: TON Storage allows users to rent unused hard drive space for decentralized cloud storage and earn Toncoin income, similar to Filecoin.

• Microtransactions & Micropayments: For very small real-time value transfers, TON’s high throughput suits scaling global micropayments like pay-per-article or bandwidth billing.

• DeFi Applications: As an established blockchain with fast settlement, TON can support decentralized trading, lending and derivative dApps with greater efficiency over slower chains.

The combination of versatile utility drivers and application use cases provides solid fundamental demand drivers for organic Toncoin value appreciation over the long term.

Decentralized Components

A key aspect that sets TON apart from many other blockchain projects is its emphasis on permissionless decentralization across all core components from inception. These include:

Validators & Staking Operations

A global pool of independent validators operate and upgrade TON network infrastructure through staking Toncoins to confirm transactions. Anyone can permissionlessly run validators supporting sharding partitions and consensus operations. The top 1000 validators ranked by total stake are designated as ‘master validators’ earning higher rewards.

TON Foundation

The TON Foundation is an independent non-profit entity established to support ongoing research, funding, partnerships and ecosystem stewardship for advancing the TON blockchain. It utilizes various community pool funds governed by Toncoin holders to transparently align with community growth priorities.

TON Labs

TON Labs is an open-source contributor made up of the original TON architects and engineers who now serve as independent stewards driving core technology development and implementations for integrations like Telegram.

TON Crystal Wallet

The TON Crystal web and mobile wallet allows any user worldwide to seamlessly access the TON network for frictionless onboarding. Users can custody Toncoin safely, deploy smart contracts and interact with dApps without centralized oversight.

Overall, TON operates through the combined efforts of its various permissionless actors rather than a centralized entity enforcing control. Over 1000 global validator nodes and open-source developer teams define the ongoing evolution of the project based on alignment with community governance outcomes.

This degree of decentralized stewardship and governance at both technological and community levels ensures TON progresses as a robust Web3 ecosystem free from dominant centralized control points. Permissionless participation opportunities will continue expanding as the network matures.

Developer Tools and Resources

TON has focused extensively on building developer-friendly infrastructure, tools and documentation to drive rapid dApp adoption. Some key resources include:

TON Solidity Compiler

A custom Solidity compiler for developing TVM-compatible smart contracts so Ethereum developers can easily port over solutions.

TON Surf IDE

A cloud-based integrated developer environment with testing tools for coding TON smart contracts using languages like Solidity, C and C++.

TON Docs

Exhaustive TON technical documentation with code libraries for core TON components like consensus, storage, virtual machine, cryptography and more.

TON Grants

The TON Foundation provides millions in grant funding for developers building open-source applications on TON aligned with ecosystem priorities.

By leveraging these resources, both existing blockchain developers and newcomers can access comprehensive tools to start building on TON infrastructure. The simplicity significantly accelerates onboarding of solutions to drive usage growth.

For example, the adoption of the Solidity language so familiar to Ethereum developers dramatically lowers the learning curve. As more mainstream Web2 developers migrate toward blockchain over the coming years, TON’s recognizable architecture is primed for this influx.

Conclusion

TON promises to offer one of the more interesting decentralized projects to follow as it enters its next growth phases towards delivering robust Web3 infrastructure and solutions at global scale.