May 2024

Telegram and the Next Billion Crypto Users

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At Token2049 in Dubai, the founder of Telegram came on stage to make a string of announcements related to crypto integrations on the messaging platform. Telegram has almost 1bn users and over 800m of them now have access to Telegram’s crypto wallet.

In addition, Tether announced that it is partnering with Telegram and that USDT is natively accessible to all these Telegram users. Combining the largest stablecoin in the world with one of the largest messaging apps makes for a platform that can compete with banks, payment providers and global financial institutions. This is a big deal! This month we are going to dive into the Telegram and the TON ecosystem. We will dig into the technical architecture underpinning TON and will assess how Telegram’s move into crypto will impact the adoption of digital assets.

Telegram is an instant messaging platform with over 900m users worldwide. While it sits behind WhatsApp and WeChat in terms of total user numbers, it holds the number 1 spot in parts of Europe, Asia and Africa. It is also the second fastest growing messaging platform, as measured by monthly downloads. Telegram was launched in 2013 and allows users to send messages, media, files and hold group voice and video calls. On the social networking side, the platform allows users to post stories and create large public groups with up to 200,000 members. As such, it has become very popular with the crypto community, with project teams creating Telegram chat groups to share updates with their communities.

Two of the most distinctive features of Telegram are its API and bot integrations. This lets developers expand the app’s functionality beyond just messaging. Users can interact with bots directly through the messaging interface by sending them messages, commands and requests. Common use cases include news bots, reminders, CRM systems, games, quizzes and ecommerce applications. This advanced functionality places Telegram in an excellent position to integrate with crypto and decentralized applications. The latest integration is the Telegram wallet that gives every Telegram user the ability to custody digital assets on the app.

Several of the CMCC Global team were at the Token2049 event last month in Dubai. The most impactful announcement was made by Tether, announcing that it is natively deploying its dollar-pegged stablecoin (USDT) and its gold-backed token (XAUT) on TON, Telegram’s blockchain protocol. As per the Tether transparency page (listed midway down the page), there is now 223m USDT on TON. This expansion onto TON will be mutually beneficial for both Telegram and Tether. For Telegram, having the largest USD stablecoin natively issued on TON brings legitimacy to the chain and allows its users to transact USD instantly over TON payment channels – it may transform the Telegram messenger into the biggest payment application globally. For Tether, the size of the Telegram user base extends the reach of USDT and XAUT. Paolo Ardoino, the CEO of Tether, reiterated this by stating that:

"The launch of USDT and XAUT on TON will allow seamless value transfer, increasing activity and liquidity while offering users a financial experience that can match those found in the traditional financial systemThis furthers our mission of powering open financial infrastructure across the blockchain space."

This announcement makes it apparent that both Telegram and Tether have traditional payment apps and financial institutions in their sights. The World Bank's Global Findex database estimates that there are 1.7 billion unbanked people in the world. At the same time, smartphone penetration in developing countries is growing. For example, the GSMA (the global mobile industry association) reports that the smartphone adoption rate in Sub-Saharan Africa is projected to rise from 44% in 2020 to nearly 70% by 2025. Telegram and Tether together can “bank” the unbanked and in the process become one of the biggest payment platforms on the planet.

Native USDT on Telegram is also beneficial for applications building on the TON network that require stablecoins to function. The Telegram ecosystem has a large range of “Mini Apps” which include things like games and chatbots. Over 350m users interact with these apps and many of these apps may look to integrate with TON and the new Telegram wallet, which already has over 7m users. Trading bots like StormTrade and BonkBot have made millions of USD of revenue through their Telegram interfaces. On the iGaming side, BoxBet (one of our portfolio companies) has built an innovative Telegram bot with crypto functionality. We expect to see an explosion of new applications launching on TON as developers look to take advantage of the Telegram audience that is now being onboarded into crypto.

Diving into the technical side, the Open Network (TON) is the blockchain platform used by Telegram. Originally called the “Telegram Open Network”, it was introduced in 2018 and the project raised USD1.7bn from the sale of the native token in February 2018. Following an SEC complaint, Telegram repaid 70% of funds raised (USD1.2bn) and open-sourced its codebase on GitHub. This allowed other developers to continue working on the codebase and push the project forward. TON has now evolved into a team of over 40 open-source community developers, working under the TON Foundation. While outside of the control of Telegram, the TON Foundation works in collaboration with the Telegram messaging platform.

TON is a layer-1 proof-of-stake system. It is designed as a multi-blockchain system, featuring one masterchain and up to 2^32 workchains. Each workchain can further split into 2^60 shardchains, or sub-shards, containing a fraction of the workchain's state. Each layer has specific responsibilities:

  • Masterchain: this is the primary chain that stores the network configuration and final state of all workchains. It is the core directory and a single source of truth for all the shards. It carries information such as the list of active validators and their stakes. It enforces consensus across the network by maintaining a record of the latest block hashes for all workchains and shardchains.
  • Workchains: these are customized blockchains tailored to certain transactions or use cases. For example, a game can run its own workchain with bespoke tokenomics and consensus mechanism. All workchains sync up with the Masterchain for validation and interoperability. Currently, only one workchain is operating on TON and it is known as the basechain.
  • Shardchains: these are smaller blockchains that handle specific operations or transactions, enabling the network to process many transactions in parallel. Technically, they are sub-chains of workchains and many of them can co-exist within a single workchain. They allow for scalability and can be split or merged dynamically to balance the workload. When a shardchain becomes too large or too small, it can be split or merged with another shardchain to ensure that each shardchain is appropriately sized.

Outside of the TON Blockchain, the system includes:

  • TON Virtual Machine: this is TON’s equivalent of the Ethereum Virtual Machine (EVM). It executes smart contracts and handles the internal state of applications running on the TON blockchain.
  • TON Payment: uses payment channels to facilitate fast, secure, and scalable microtransactions across the TON network. These channels allow two or more parties to open a temporary, off-chain channel where they can transact freely and instantly without committing every transaction to the blockchain. This setup is particularly useful for services that require high-frequency, low-cost transactions.
  • TON DNS: this is a service that allows users to access decentralized services using human-readable names. The system is akin to the Domain Name System (DNS) used on the Internet, which translates domain names (like into IP addresses.
  • TON Storage: this is a distributed file-storage service integrated with smart contracts. It is a decentralized alternative to traditional cloud storage providers like Google Drive or Dropbox.
  • TON Sites: these are decentralized applications (dApps) hosted directly on the TON blockchain. This is a new paradigm on how websites can be built, hosted, and accessed, with an emphasis on decentralization and privacy.

The TON technical architecture is both expansive and continually improving. With Telegram's large user base, the platform naturally positions itself as an attractive location for developers to deploy new applications. As a result, it is not surprising that some of the largest players in the crypto ecosystem, like Tether, have taken notice and have started to integrate with TON.

At CMCC Global, we have a TON position in our Digital Asset Funds. One of our core theses is that the next wave of crypto will center around hundreds of millions of new users being onboarded into crypto – most likely through payment applications. For years we have been looking for applications that can bring crypto payments to the mass market and have been waiting for one of the large messaging companies to bring this vision to reality. TON, in conjunction with Tether, is uniquely positioned to do exactly this. Transforming messaging user accounts to wallets, that enable not just text messaging but also payments, could be the biggest disruptor to banks and payment providers. Telegram is pushing into an arena with huge implications for the adoption of crypto - this could hit the banking industry like the email hit the post office. Telegram has a userbase of almost 1bn people, leadership that is passionate about blockchain technology and the team is pushing digital assets aggressively into its product roadmap. Under this backdrop we have conviction that TON will become one of the largest crypto networks in the world and are excited to see this play out.