Blockworks Research reported yesterday (27) that even though TON (Telegram Open Network) and Telegram do have potential, the current encryption market expectations are too high, ignoring their traffic diversion capabilities, technical challenges and the complexity of the communication software market.

(TON has risen by nearly 40%, and Telegram launched advertising profit sharing in March, which will be paid in TON)

Advantages of TON

Many monthly active users

First of all, Telegram does have a certain global influence. Through its large number of monthly active users (MAU), it can attract traffic to the TON ecosystem.

In terms of this data alone, Telegram is currently the eighth-largest social networking and communication software in the world.

Challenges facing TON

Few daily active users

Despite the impressive performance of monthly active users, Telegram’s traffic diversion ability seems to be overestimated from the perspective of daily active users (DAU).

Blockworks Research pointed out that Telegram’s DAU is approximately between 55 million and 200 million. Looking at the ratio of DAU to MAU, Telegram is clearly at a disadvantage:

This shows that user activity and participation are actually not high, thereby reducing Telegram’s potential to effectively attract users to the TON ecosystem and convert them into ecological participants.

Developers face challenges

At the same time, the TON ecosystem also faces two technical challenges:

Lack of EVM compatibility

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

(Ethereum Foundation AMA | Capacity expansion has been an important issue in the past two years. What are your thoughts on Lido, EigenLayer, and parallel EVM?)

The well-known Func programming language

TON uses a "Func" programming language similar to the C language, and the C language is not used or loved by many blockchain developers.

Instead, Ethereum uses Solidity and Solana uses Rust. The former is similar to Javascript, which is widely used and easier for developers to accept and learn; the latter has a group of very enthusiastic followers and has contributed a lot to the Solana ecosystem.

In other words, TON's Func language lacks the popularity and user base of Solidity or Rust, which will make the development and expansion speed of the TON ecosystem face more challenges.

fully diluted valuation

In addition, 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 huge room for growth on the one hand, and almost no investment for investment on the other. Provides margin of safety and risk range.

In other words, when investors buy TON tokens based solely on promising FDV data, the risk will become very high. If TON's future performance is not as expected, investors may face serious losses.

Chain News has previously reported that since the end of mining in 2022, its FDV has grown from 0 to 11 billion US dollars in three years, and has reached an astonishing 39.1 billion US dollars so far.

Interestingly, at least 85.8% of the TON token supply is distributed among several groups of miners who may be related to each other and interact closely with the TON Foundation, which also points to concerns about centralization of the token’s distribution.

(Don’t rely on them to keep TON from falling? On-chain decryption: The same group of TON Foundation miners dug out 85% of the supply)

Comparison with WeChat

Finally, Blockworks Research also compared TON with Wechat and believed that the growth of TON is more difficult than that of Wechat.

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

In contrast, today's international market is dominated by technology giants with strong capital and strong network effects, while Telegram's influence is mainly in fragmented markets such as the Asia-Pacific region and Eastern Europe outside China, which adds to Telegram's expansion. difficulty and complexity.

This article Blockworks Research: The market is overly optimistic about TON and there are still technical challenges. It first appeared on Chain News ABMedia.