The Rise and Fall of TON: Analyzing the Impact of Durov’s Announcements

In April, the team behind The Open Network (TON) blockchain, with participation from Telegram founder Pavel Durov and Tether’s Paolo Ardoino, made several announcements. These included the issuance of USDT on its network and cryptocurrency payments for content creators. Durov described this as a “real use case for Toncoin” for the messenger’s 900 million users.

However, shortly after these announcements, the price of the TON token plummeted by nearly 10%, according to CoinGecko. At the time of writing, the asset is trading at $6.4.

ForkLog spoke with experts to understand the reasons behind this price movement and the prospects for the TON ecosystem.

A Significant Boost for the Ecosystem…

Telegram serves as a primary channel for personal and corporate communication for much of the crypto community. However, until recently, payments within the messenger were not convenient, noted Allbridge.io co-founder Andrey Veliky.

In his view, the launch of USDT on TON will be a “significant boost for the ecosystem,” integrating a popular stablecoin into a popular messenger. This could potentially free users from the need to use various bots that awkwardly add payment functionality within Telegram.

“Overall, Tether has strengthened its position, and TON gains ‘legitimacy,’ as it is no longer just a project with founders from Russia, but a hub for transferring funds of a company with American roots that essentially controls the stablecoin market,” noted Veliky.

ENCRY Foundation co-founder Roman Nekrasov anticipates a massive influx of liquidity into the ecosystem and increased demand for the native coin, as transaction fees in USDT on the TON blockchain will be charged in it.

The expert predicts the emergence and launch of decentralized protocols and staking protocols that will utilize the new stablecoin.

“Considering the cooperation between TON and Telegram, we are talking about hundreds of millions of users who will receive a convenient and in-demand toolkit for interacting with crypto assets,” Nekrasov believes.

…or Nothing Conceptually New?

The concept of content monetization always contributes to the development of social media ecosystems. This is more of a plus for the media component of the business, but TON specifically will not benefit from such a function, ForkLog analyst Nikita Zuborev stated:

“Digital tips are not such a huge market to influence the balance of supply and demand. Moreover, they were implemented before—essentially, these are the same checks/vouchers in Wallet.”

Similarly, the concept of paid channels has also existed for a long time. Forcing users to switch from fiat to cryptocurrency will only create additional inconveniences, the analyst notes.

Moreover, USDT was present in the ecosystem even before Tether’s official announcement in the form of a wrapped token jUSDT.

Thus, the TON team did not offer anything conceptually new in the recent announcements. Tokenizing stickers, according to Zuborev, is clearly insufficient for “investors to euphorically buy up the ecosystem’s native token.”

“Due to the lack of real success, investors overheated by expectations reacted quite predictably,” the expert concludes.

Unload of Major Toncoin Holders

All the announced positive news was already priced in, as it had been discussed behind the scenes two weeks prior, explains trader Vladimir Cohen. He recalled the rule buy the rumor, sell the news, calling the entire situation around the TON ecosystem in recent days “a massive hype.”

“There was talk everywhere that the TON token would be worth $10-20. Clients asked me about it—I said it was necessary to sell on the news,” the expert added.

This parallels the recent launches of USDT on the Celo and Algorand blockchains, which also did not lead to increased demand for tokens. Additionally, Toncoin payments to content creators will instead put pressure on the price, as sales will increase. One should not forget about the large reserves of coins held by founders and early miners.

“In a month, the price of Toncoin nearly tripled—from $2 in early March to $7.5 (on some exchanges up to $8) in April. A 300% increase in a month—naturally, this is an overheated market, and during the preparation of this news, major players unloaded onto the crowd. This has always happened, and it happened this time,” Cohen added.

Earlier, TON developers presented a roadmap for 2024. It includes the implementation of gasless transactions, the Wallet 5.0 update, and the development of a new cross-chain technology, Teleport. The team also announced plans for expansion into the Asian market.