Research: The limitations of TON may make it difficult to become the next SOL or ETH

Author: Blockworks Research

Translation: Felix, PANews

The recent narrative about TON and Telegram has been very hot, and many people believe that TON will be the next SOL or ETH. Blockworks Research has written an article interpreting it, believing that TON’s subsequent growth is weak and may disappoint the public.

Telegram user stickiness is not high

Telegram has global influence, and its significant daily active user (DAU) base can be directed to TON users. By this measure, Telegram is one of the most widely used applications globally.

According to the data provided by Telegram, Telegram is one of the most popular applications worldwide. It has a total user base of 900 million, ranking 8th among global applications.

However, when measured by DAU, the user stickiness of Telegram is overestimated.

According to the DAU/MAU ratio of various social applications in the following figure, although Telegram has a high MAU (monthly active users), its DAU is relatively low (around 55-200 million, which is very low compared to competing applications), and the DAU/MAU ratio is only 15%.

By comparison, Facebook’s ratio is 69%, Wechat is about 67%, Instagram is 60%, TikTok (US only) is 49%, and Twitter (X) is 45%. This indicates that Telegram has a lower market penetration and a user base for monetization lower than market expectations.

PANews* Note: DAU/MAU ratio can measure the stickiness of network or application users*

Incompatible EVM, few programming language uses

The TON ecosystem team will face the challenge of lacking EVM compatibility and FunC (the native programming language of the blockchain).

The Ton Virtual Machine (TVM) is not compatible with the Ethereum Virtual Machine (EVM) because TON adopts a completely different architecture (asynchronous, while Ethereum is synchronous). Therefore, the TON ecosystem does not support development in Solidity, the programming language used in Ethereum.

According to a 2023 developer survey (with over 90,000 developers participating), Rust is the most favored language, with over 80% of developers hoping to use it again next year. 46.4% of developers expect to use Solidity.

TON supports three programming languages, Fift, FunC, and Tact. Currently, FunC is the most widely used language among the three. Although FunC looks very similar to the C language, it is generally not well-known or advocated.

Limitations Exist in Terminal Market Coverage

A large part of the TON narrative rise is that Telegram will become the next WeChat. However, WeChat is blocked outside the US market and only serves the Chinese market.

In contrast, the current application market is dominated by wealthy technology giants with strong financial resources and a well-established network effect, while Telegram’s largest market is in the dispersed market of the Asia-Pacific region (excluding China and Eastern Europe), which adds a layer of complexity for startups using Telegram for distribution.

The following is the annual download distribution of Telegram in 2022:

• India: download volume of 104 million.
• Russia: 34 million downloads.
• Indonesia: 27 million downloads
• United States: 26 million downloads.
• Brazil: 21,940,000 downloads.
• Egypt: 14.85 million downloads.
• Vietnam: 11.84 million downloads.
• Mexico: 11.61 million downloads.
• Ukraine: 10.76 million downloads.
• Turkey: 9.79 million downloads.

FDV****Overvalued

Despite these realities, TON still has tremendous growth potential, and new investors have almost no safety margin.

The figure below shows that among all public chains, TON’s FDV is 8.6 times the annualized DEX trading volume of its network, ranking first and at the highest level.

In addition, FDV is 927 times the annualized cost of its network, ranking among the top in all public chains.

Related Reading: A Look at 10 New Interactable Projects in the TON Ecosystem