1. What is TON?
Telegram Open Network (TON) is a new-generation peer-to-peer multiblockchain system with built-in Gram (GRM) cryptocurrency from the developers of Telegram.TON’s creators aim to surpass existing blockchain projects, including Bitcoin and Ethereum, in speed and scalability. They plan to achieve this by using Proof-of-Stake (PoS) consensus algorithm, Byzantine Fault Tolerant protocol, sharding technology and intelligent routing mechanisms (Instant Hypercube Routing).
TON users can offer:
- secure messaging;
- the ability to pay for goods/services in Gram;
- data storage;
- decentralized applications.
The project first became known back in late 2017, but in fact Telegram only confirmed participation in the development of TON in the fall of 2019. Nikolai Durov, who took over the technical part of the launch of VKontakte and Telegram, describes TON as a “huge distributed supercomputer or super-server” for multiple services.
On May 12, 2020, Pavel Durov announced the closure of the Telegram Open Network project.
2. What is Gram?
Gram (GRM) is the internal currency of the TON network. It is assumed that it can be used:
- in the market for paid content and subscription services (on the bot platform, groups, channels, and the Telegram ad exchange);
- for stacking and payment of commissions (gas) to network validators for processing transactions;
- payment of goods and services in all components of the TON system.
According to the project documentation, the coin issue will be 5 gigagrams (5 billion) Gram.
3. Is Gram a security?
The initial offering of Gram was conducted under SEC Rule 506(c), and so far the project has not issued tokens. The regulator currently considers GRM to be a security.The SEC alleges that offshore companies TON Issuer and Telegram Group violated the Securities Act, specifically the provisions of Sections 5(a) and 5(c). According to the agency, the companies sold 2.9 billion unregistered digital tokens worth $1.7 billion to 171 investors in and outside the United States.
In October 2019, the SEC obtained a temporary ban on token distribution through the courts. Consequently, the developers postponed the launch of TON until April 30. In February 2020, the court extended the ban indefinitely. Telegram does not agree with the legal position of the Commission, neither company is going to retain control over TON after the launch.
Another regulator, the CFTC, has said that digital currencies are commodities, and the developers of TON are asking that their token be recognized as such. Exchange-traded commodities are not subject to SEC jurisdiction, but many securities have the characteristics of commodities, which often makes it difficult to determine legal status.
On April 30, 2020, the second deadline day, Durov notified Telegram Open Network investors that there would be no launch because of a conflict with the SEC and a U.S. court ban on Gram token distribution. He offered investors a deal: take 72% of the invested funds or sign a new agreement, giving the project until April 30, 2021 to launch the network. The latter option involved either receiving Gram or another cryptocurrency at the end of the launch, or getting 110% of the funds back. Durov was even prepared to sell part of his stake in Telegram in case of failure.
Then investors received several more letters, which changed the terms of the deal once again. The American investors were denied further participation in the project in a separate letter, leaving only the option to withdraw 72% of the funds. The rest were notified that they would receive nothing in Gram and other cryptocurrency.
We will find a definitive answer to the question of whether Gram is a security after the SEC litigation against Telegram, and we will add this block.
4. What does TON consist of?
The TON system includes several components integrated with third-party applications and messengers, the first of which should be the TON Blockchain multiblockchain platform. It will be accessible using the TON peer-to-peer network (TON P2P Network).TON Service will be a platform for third-party services, decentralized applications and smart contracts.
TON DNS will simplify access to services, smart contracts, nodes and accounts by giving them human-readable names.
TON Storage will allow distributed storage of files in the TON network and access to them with smart contracts, which will remind many of how IPFS and Filecoin work. This storage will also house TON Blockchain archives.
TON Proxy Anonymizer will provide anonymity and confidentiality of transactions in the network by hiding identifiers and IP addresses of nodes, and together with other components of the system – an effective circumvention of censorship.
The TON Payments platform will provide users with the ability to instantly transfer funds and make payments without registering on the blockchain and without paying fees.
At the time of the expected launch of the main network, TON Wallet will be available as a standalone application without integration with Telegram Messenger. The developers do not rule out the possibility of such integration in the future, but its depth depends on regulatory barriers.
5. How does TON Blockchain work? (if you’re not a developer, you can skip this block)
TON Blockchain is essentially a collection of blockchains made up of smaller blockchains. TON Blockchain’s design assumes that all blockchain data and statuses are represented as organized into trees of cells or directed acyclic graphs (DAG) collections of cells (bags of cells) consisting of 1023 bits of data and containing up to four links to other cells.The architecture of TON Blockchain assumes a master blockchain, and up to 292 additional blockchains. This approach will make the system flexible to changes and minimize problems associated with the growth of the size of the main chain.
The Masterchain is responsible for the operation of the entire system, including the storage of block hashes, validator information, coin issuance, vorchain status, etc.
The task of a Workchain-type blockchain is to support the functioning of up to 232 virtual workchains (working blockchains), split into shards. Workchains are responsible for executing turing-full smart contracts created in the new Fift programming language, have their own virtual machines (TVMs) and identifiers, and include up to 260 shards.
Any community member willing to pay a high fee to publish its specification in a Masterchain transaction and receive ⅔ approval from the network’s validators can create and activate a wokchain. As of today, only the Masterchain (Workchain Zero, workchain_id = 0), which works with TON smart contracts and Gram transactions, has an identifier.
Shardchain provides the system with scalability. By implementing the Infinite Sharding Paradigm, TON blockchains are expected to automatically split and merge based on network load, providing high processing speeds and low fees.
Shardchain includes many small virtual blockchains, the Accountchain, containing outgoing and incoming account messages that can have senders and receivers both within the TON system and externally (for example, TON users will be able to receive and send funds from bitcoin, Ethereum and other blockchains).
6. How does TON Blockchain work?
It is expected that there will be no more than 100 validators in the main TON chain – owners of nodes that have deposited significant amounts in Gram (stacks) to be able to generate and validate new blocks.Every 1024 blocks, a group of validators tied to a certain shard will pseudo-randomly change. The task of the group is to reach consensus to add a new block to Shardchain. For this, validators receive and share the transaction fee and new coins issued. If an invalid block is added, the validator can be punished by automatically reducing its steak size or being temporarily excluded from the validator pool.
After generating new blocks in Shardchain, a new block is generated in Masterchain when all validators reach BFT consensus. It includes hashes of the last Shardchain blocks and makes all previous blocks canonical. Thus, without waiting for 20 confirmations, a Shardchain-encapsulated transaction can be used in the next shardchain block.
Read more about the Catchain Consensus Protocol algorithm in the documentation presented by Nikolai Durov.
7. How to mine cryptocurrency in TON?
In TON, validators, not miners, are responsible for generating new coins. To get this status, you need to buy and install some high-performance servers and get access to a sufficiently powerful Internet connection. More precise parameters and requirements for validators will be published before the launch of the project.Node owners can increase the validator steak and for that receive an appropriate share of the reward when new blocks are added to the network.
Another way to earn cryptocurrency in TON is to search for bugs in the system as a “fisherman”.
You can also earn cryptocurrency as a collator node, which offers validators new blocks to add to a shardchain after checking their status, the status of neighboring shardchains, and suitable Merkle proofs. However, this feature will not be available in the early stage of project implementation.
8. What currencies will TON Blockchain support?
The primary cryptocurrency of the Workchain Zero blockchain will be Gram. However, in theory, 232 cryptocurrencies can be supported in TON Blockchain, which is the number of virtual virtual virtual urls that can function in Masterchain.Each workchain is expected to have its own main cryptocurrency and several additional ones. If a virtual currency volkchain charges a fee for transactions in its own coins, its creators must provide for the implementation of a smart contract to automatically convert funds into Gram.