Bitget bets big on TON

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With the crypto market recovering from its 2022-2023 slump, The Open Network (TON) is emerging as a potential powerhouse, leveraging its Telegram roots while also seeking independence. Industry experts are divided on whether this kind of ‘balancing act’ will propel TON to new heights or leave it vulnerable to regulatory scrutiny.

Bitget, a leading crypto exchange, is betting big on TON’s future. The company recently announced a $30 million investment in TON tokens, through its partnership with Foresight Ventures, a Web3 investment firm. This move signals confidence in the TON ecosystem’s potential.

“We deeply believe in TON’s success and possibilities,” shares Vugar Usi Zade, Chief Operations Officer at Bitget, in an exclusive interview with Crypto Briefing during TOKEN 2049 in Singapore.

“TON has established a strong foothold among users in regions such as the CIS, South Asia, Southeast Asia, Brazil, and Nigeria,” Zade said.

Innovative models driving user acquisition

Asked about the factors which they believe are pushing or driving this trend, Zade says that the narrative around mass adoption has largely changed.

“Back in 2016, when I started working in crypto, the narrative was that this technology is ‘revolutionizing’ and that people will come to Web3. But after six or so years, we noticed that people don’t come to Web3, we have to go to the people,” Zade said, noting that this specific aspect is also inherent in Telegram.

With over a billion users and counting, Telegram represents the ‘realistic case’ of onboarding the next billion users. Zade cites the example of Facebook, which recently launched its Threads app.

“They could onboard hundreds of millions of users to that platform because they already had a huge user base. I believe in leveraging these aspects so that people, users, could benefit from the projects, tools, and resources within TON’s ecosystem,” Zade observes.

Zade sees practical utility and mass adoption as core challenges to how TON could reach retail users, a problem which he notes is also prevalent in the crypto industry, hence the prospects of chain abstraction and the push towards greater accessibility for crypto UX.

At this point, we asked Zade what he thinks about the term “de-Telegrammization” and what its lateral effects could be across the industry.

According to Zade, there is a huge potential for Telegram to become a “core access point” for users, working as an acquisition channel, but not the only channel.

“It doesn’t necessarily mean that users should, or would choose to always stay there,” Zade opines, noting that the need to build beyond the initial Telegram audience would become more apparent.

Telegram’s massive user base: a double-edged sword?

TON’s greatest asset—and probably also potential liability—is its close association with Telegram, the encrypted messaging app that has over a billion users. This vast user base provides an unparalleled launchpad for crypto adoption, but also raises concerns about over-reliance on a single platform.

“Telegram is a great machine to acquire or introduce users to crypto or crypto projects,” Usi Zade explained. “But definitely there will be a huge need to build beyond that Telegram audience.”

The concept of “de-Telegrammization” has gained traction in the crypto community, describing TON’s gradual move away from its messaging app roots. According to data from Bitget Research, the TON ecosystem currently consists of over 1,100 decentralized applications (dApps), with leading projects emerging across sectors like DeFi, GameFi, and utility tools.

The TON blockhain recently reached over 1 billion transactions, and rapid growth can be attributed to the innovative user acquisition models, particularly in the gaming sector. “Tap-to-Earn” games like Notcoin and Hamster Kombat have attracted millions of users, many interacting with blockchain technology for the first time, and with standards such as gasless transactions being introduced to such a wide user base.

“I love to call it the IKEA effect,” Usi Zade said, drawing a parallel to the furniture retailer. “When you buy something from IKEA, you bring it home, you build it, you think that you achieve something. Now with Tap-to-Earn games, you feel like you are earning or doing something.”

These games have proven remarkably effective at onboarding new users. Notcoin, for example, accumulated over 30 million participants since its January 2024 launch, with 5 million daily active users at its peak.

While gaming and meme tokens have driven initial growth, TON’s long-term success may hinge on its ability to facilitate real-world transactions. “Recently, there is a taxi app on Telegram. I use them. They are available in Singapore, for example, where you can pay with a TON token,” Usi Zade shared.

This push towards practical applications aligns with broader industry trends. Standard Chartered Plc expects the tokenization market to reach about $30 trillion by 2034, with trade finance contributing a 16% share.

DeFi development: a critical weakness

Despite its strengths, TON faces significant challenges in decentralized finance (DeFi). According to data from DeFiLlama, TON’s total value locked (TVL) stands at just $356 million, accounting for a mere 0.43% of the total across all blockchains.

“There will be definitely players who choose not to have Telegram and they still deserve to have access to the projects that are building,” Usi Zade acknowledged. This underdevelopment in DeFi could limit TON’s growth potential and ability to compete with more established blockchain ecosystems.

As TON seeks to expand beyond Telegram’s shadow, regulatory concerns cast a long shadow. The arrest of Telegram founder Pavel Durov in France on August 25, 2024, sent shockwaves through the TON ecosystem. In the week following the arrest, the price of the TON token dropped over 17.6%, while the network’s TVL saw a sharp 60% decline in a single day.

“The regulatory environment surrounding Telegram could pose significant challenges for TON’s ecosystem, potentially affecting its global expansion and adoption,” the Bitget Research report states.

Despite this, TON continues to negotiate its complex relationship with Telegram, even as industry observers remain divided on its future prospects. Bitget’s strategy appears to be one of cautious optimism, actively working on new user acquisition channels while monitoring regulatory developments.

“If TON people can find a way where this token will turn into true utility and build more projects that serve or cater to masses, then there’s huge opportunities for them to tap beyond that [Telegram] audience,” Zade says.

With major players like Bitget continuing to invest in and support the ecosystem, TON’s ability to strike the right balance between leveraging Telegram’s massive user base and developing independent infrastructure may well determine its place in the crypto industry.

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