Blockworks Research: Market overly optimistic about TON, still facing technical challenges

Blockworks Research's report on the 27th pointed out that while TON Telegram Open Network and Telegram do have potential, the current cryptocurrency market has overly high expectations for them, overlooking their onboarding capabilities, technical challenges, and the complexity of the messaging software market.

TON rises nearly 40%, Telegram to launch ad revenue sharing in March, to be paid in TON

Advantages of TON

More Monthly Active Users

Firstly, Telegram does have a certain level of global influence, and through its large number of Monthly Active Users (MAU), it can drive traffic to the TON ecosystem.

Based on this data alone, Telegram is currently ranked eighth globally among social and messaging apps.

Challenges Faced by TON

Fewer Daily Active Users

Despite the impressive performance in Monthly Active Users, when looking at Daily Active Users (DAU), Telegram's ability to drive traffic seems to be overestimated.

Blockworks Research points out that Telegram's DAU is estimated to be between 55 million to 200 million, and in terms of the ratio of DAU to MAU, Telegram is clearly at a disadvantage:

This indicates that user engagement and participation are actually not high, which reduces Telegram's effectiveness in channeling users to the TON ecosystem and converting them into ecosystem participants.

Challenges for Developers

Additionally, the TON ecosystem faces two technical challenges:

Lack of EVM Compatibility

This means that TON cannot directly use applications and smart contracts from Ethereum.

Ethereum Foundation AMA | Scalability is a priority in the next two years, thoughts on Lido, EigenLayer, parallel EVM?

Lesser-Known Func Programming Language

TON uses a "Func" programming language similar to C, which is not widely used or favored among blockchain developers.

In contrast, Ethereum uses Solidity, and Solana uses Rust. The former is similar to Javascript, widely used and easier for developers to accept and learn; the latter has a very enthusiastic following and has contributed significantly to the Solana ecosystem.

In other words, the popularity and user base of TON's Func language are lacking compared to languages like Solidity or Rust, which will pose more challenges for the development and expansion of the TON ecosystem.

Full Dilution Valuation

Furthermore, the Fully Diluted Valuation (FDV) represents the total market value when all potential tokens are released and traded, and TON's extremely high FDV indicates both tremendous growth potential and almost no Margin of Safety and risk range for investors.

In other words, if investors buy TON tokens based solely on the promising FDV data, the risk will be very high. If TON's performance in the future does not meet expectations, investors may face significant losses.

It has been reported that since the end of mining in 2022, its FDV has grown from 0 to 11 billion USD within three years, and now stands at an astonishing 39.1 billion USD.

Interestingly, at least 85.8% of TON tokens are distributed among several groups of miners who may be interrelated and closely interact with the TON Foundation, raising concerns about the centralized distribution of the token.

Can TON rely on them not to fall? On-chain Decryption: The same group of TON Foundation miners mined 85% of the supply

Comparison with WeChat

Lastly, Blockworks Research also compared TON with WeChat, stating that TON's growth compared to WeChat can be considered more challenging.

He emphasized that WeChat is protected in the Chinese market from competition with the United States, while Telegram faces more competition and challenges:

In contrast, today's international market is dominated by well-funded tech giants with strong network effects, and Telegram's influence is mainly in fragmented markets outside of China in the Asia-Pacific region and Eastern Europe, adding difficulty and complexity to Telegram's expansion.