Article source: Wyz Research
After Trump's victory, Bitcoin broke through $76,000, and the bullish pattern is prevailing. However, compared to the price fluctuations of Bitcoin, what is most beneficial for the overall industry ecosystem growth is the altcoin season. The industry expects richer growth. In the short term, we can see that tokens in various tracks have been closely following the market to reignite enthusiasm. Among these tracks closely following the market, the 'TON ecosystem' remains tightly monitored by investors.
Since the Durov Paris incident two months ago, the TON ecosystem has fallen into a crisis, or rather, entered a new adjustment phase. Even though various Meme projects and mini-game projects within the ecosystem continue to attract new users and update activity information, the market-sensitive individuals seem to have sensed the 'limited faith' of the TON ecosystem.
For example, from market feedback, SOL has quickly rebounded and broken through 200, following BTC, but the growth of TON is far less than this.
So, what is the most favorable aspect for TON in this highly watched election event? In Trump's ten commitments regarding cryptocurrency, we can find some answers. Among the commitments, we see not only measures for Bitcoin but more actions that will represent the future 'unblocking' of the dollar economy towards the cryptocurrency industry. For Telegram and TON, which have long been shrouded in fog, this will be a strong medicine.
Under the smooth expectations of the background, if the market continues to rise, what specific development expectations can we still have for TON?
Favorable Development Background for TON
Before the Durov incident, the growth of the TON ecosystem was strong. Under the lead of the several-fold increase in TON tokens, most Defi tokens in the ecosystem increased by about 10 times. Apart from the token increases, the attention has been even more remarkable. Initially, various CEXs competed to go online before Notcoin launched to attract new TON ecosystem users, followed by DOGS once again stimulating enthusiasm among all Telegram users. These all represent a huge market base, and as long as the market rebounds, the rebound of TON ecosystem tokens will inevitably keep pace.
However, in the past two months of sluggish conditions, the decline of the TON token has led to a decrease in TVL, DEX trading volume, etc., in the ecosystem, which is currently the most thought-provoking data.
However, when we understand TON from the perspective of long-term growth of public chains, we may find that the current data performance is data that inevitably appears during the growth process of public chains, which allows us not to worry about future public chain competition losing TON's position, but rather to continue viewing TON with a long-term perspective.
Just like the trend of DEX development, the entire industry's user education is paving the way for high-speed public chains like TON.
On October 28, according to SolanaFloor, the trading volume of Solana DEX reached $15.78 billion within a week, surpassing Ethereum's $8.87 billion by 77.91%, setting a record for the largest lead over Ethereum. Consequently, Solana's trading volume share in the entire DEX ecosystem reached 35%, setting a historical high.
Meanwhile, according to data from The Block and DefiLlama, the trading volume ratio of DEXs to CEXs reached 14.12% in October, setting a new high since May 2023.
Such trends continuously confirm one trend: with the popularity of high-speed chains, the boundary between user trading behavior on DEXs and CEXs is becoming increasingly blurred.
Under multiple trends in the industry regarding the maturity of on-chain liquidity supply, on-chain token market value management, and the prevalence of small to medium-sized projects, combined with the increasingly blurred boundaries of user trading in trading scenarios, the final user behavior will become: more trading behaviors and interactive behaviors returning to native on-chain trading exchanges or trading behaviors mainly based on DEXs and Web3-style interactions.
Compared to the current various chain background facilities, TON itself is an ecosystem where the boundaries between DEX and CEX are more blurred. Its Web2 interaction model first blurs the trading categories, while the TON wallet on Telegram further lowers the barrier for native Web3 trading to cross into Web2, implying simpler and more convenient native on-chain trading, or possibly surpassing the trading convenience currently achieved on Solana.
We can imagine that in the Solana environment, excellent DEXs can achieve a trading volume surge in a short time. For example, Dune data shows that the total trading volume of the Solana ecosystem DEX aggregator Jupiter approaches $334 billion, while Uniswap took several times longer to reach the $10 billion mark.
Moreover, recently, the token price of Raydium, the most active DEX on Solana, has performed exceptionally well, maintaining an upward trend in price despite BTC, ETH, and most altcoins experiencing pullbacks. This fully demonstrates the stable advantages that DEXs and Defi can possess amid price fluctuations.
Such a development path means that TON has already established the necessary infrastructure and development ideas; it just needs a spark.
The growth history of public chains
At the beginning of this cycle, TON has already been very eye-catching. However, in today's unclear cyclical rotation, it is difficult for TON to have the previous time advantage and external momentum like Ethereum and Solana. Seeking stability, maintaining the improvement of infrastructure, and waiting for opportunities to explode seems to still be TON's main proposition, just as TON has silently prepared for a year for the development of the 2024 cycle. By tracing the growth of Ethereum and Solana, we can find clear development ideas for TON.
Firstly, the economic model of the public chain wants to enter a positive cycle, and the core lies in constantly occurring transactions, which represent all possible on-chain interaction behaviors.
On Ethereum and Solana, the behaviors of DEXs and Defi occupy the mainstream, all driven by users using DApps. Therefore, bringing a rich and diversified development approach of application types to the ecosystem is suitable for TON.
In summary, Ethereum and Solana have gone through these several steps:
1. The number of TGE tokens for ecosystem projects is rapidly increasing.
In simple terms, it means taking advantage of a good cycle, with a large number of ecosystem projects issuing tokens and listing on DEXs, or Defi being able to start businesses.
Ethereum started this phase in 2018, and by the time of Defi Summer, it had completely formed a wave. This included the emergence of Uniswap, various wallet applications, major EVM projects, DEXs, and Defi issuing tokens to stimulate business growth.
Solana emerged as a challenger to Ethereum during Defi Summer. In the early stages, the foundation pushed a large number of projects' TGEs. Even though interactions on the chain were minimal due to the chain not being perfect at that time, Solana's stimulation to the ecosystem has been ongoing, and the impact of the SBF incident has not completely stalled.
At the beginning of this cycle, the volume of tokens in the ecosystem surged, and the heat and increase of tokens were also quite impressive, which is very similar to the corresponding stages of Ethereum and Solana.
2. Growth of Defi TVL
After a large number of ecosystem project token TGEs, the most direct impact is on TVL. The native applications of public chains are all related to token trading, and the category of Defi occupies 90%. Token listings on DEXs and the initiation of Defi businesses will lead to locked assets, so TVL data is the second inevitable data for public chain growth.
Every token launched on a DEX must inevitably add trading pools, which often serve as the first locked funds. If engaging in Defi business interactions, such as lending and savings, token staking will also inevitably occur, which is the second foundational action for TVL growth. Stimulating this action will be token airdrops, mining, and earning interest from savings and lending, etc.
During Defi Summer, Ethereum received a dual stimulus from TGE and the explosive growth of Defi tokens, resulting in a TVL increase of about 100 times. Later, with rising prices, TVL surged again. Solana's growth in this aspect comes from the excitement of the ecosystem in 2023 and the airdrops, TGEs, etc., of ecosystem projects in 2024.
In the past six months, TON's TVL rose to $700 million but began to adjust before breaking through $800 million. This is a result of the retreat of ecosystem enthusiasm. Like Ethereum and Solana, after the first growth, there is a need to return to the richness of ecosystem application projects. Ethereum and Solana used another 2 years; how long will it take for TON?
3. The richness accumulation of DEXs and Defi
Ethereum and Solana completed their accumulation of richness over two years, one during the bear market of 2018 and the other during the retreat of heat after Defi Summer.
At this stage, Uniswap V1 matured on Ethereum, MakerDAO and AAVE emerged, Curve and Compound started, and Sushiswap quickly followed. Farm-type mining projects appeared one after another. These projects contributed to the maturity of DEXs and Defi. By the time of the second round of application development, Uniswap and other DEXs had iterated at least two versions, and AAVE and other Defi expanded from single chains to almost all EVM-compatible chains.
During Solana's accumulation process, DEXs like Raydium and Jupiter emerged, along with a large number of DeFi projects staking SOL tokens. Thus, the maturity of these applications is necessary, representing a more convenient and faster usage for users, effectively locking their real assets on the public chain.
TON's maturity is still early. Currently, DEX functions are relatively singular, and the number of Defi projects is small. The first step before the explosion is to increase the diversity and maturity of Defi.
The first step in TON's growth
In the past year, TON experienced the first increase in the number of ecosystem project tokens. A large number of tokens and small to medium-sized projects began listing, airdrops, and IEOs, after which TVL rapidly increased. However, after this round of TVL and price drop, enthusiasm decreased, and ecosystem projects will be affected, requiring trust to be rebuilt in the future. The more this is the case, the more it is required to provide practical help for the diversification of the ecosystem, which demands the maturity of DEXs and Defi.
In reality, TON is also in this stage, which is the first step in TON's growth.
What we can see is that the DEXs on Ethereum and Solana have matured significantly during the cycle. So how does TON compare now? How far apart are they, and where does the gap lie?
The performance and pressure capacity of TON is currently the only one that can stand shoulder to shoulder with Solana among all public chains, but the DEX of the TON ecosystem does not match well with it.
Telegram has integrated a centralized trading pool to complete the recharge of stablecoins and TON, followed by completing exchanges between TON and other tokens. The operation experience is consistent with CEX’s instant exchange. This function is the primary feature of Telegram's Wallet, and the second feature is through interaction with the TON public chain wallet TONSpace, providing an experience essentially consistent with using MetaMask on PC or mobile. If token exchange is needed, STON and Dedust are more commonly used within the ecosystem, but their functions are basically similar to Uniswap V1.
This highlights the shortcomings of TON in terms of DEX. If we say that the Telegram Wallet takes on the CEX experience, then TONSpace and DEX can interact on PC and mobile. Telegram's MiniApp and Bot would also serve as the trading front end for DEX or CEX functions. These designs meet the optimization of trading experience, but the backend of native on-chain interaction is clearly lagging.
If DEXs on Solana and Ethereum can only provide simple AMM pools and exchange capabilities like Uniswap V1, then the richness of Defi on Ethereum and Solana will be reduced by at least 50%.
On Ethereum, most Defi is an extension of financial scenarios beyond DEX functions. After Uniswap iterated on the design of LP in AMM, Defi on Ethereum gained more new businesses or directly copied business models (based on liquidity mining and savings, upgraded to multi-liquidity pool interaction, etc.). The same is true for Solana, where LPs and dedicated liquidity platforms as advanced liquidity providers are now one of the best options for asset holders.
Therefore, from the perspective of project development, what matters for high-speed blockchain DEXs is to provide trading liquidity or to modularize trading functionality, allowing the advantages of liquidity to become the reason for user choice.
In transactions on TON, the front-end entry must exist in large quantities within Telegram. DEXs still need to increase the level of business refinement like Jupiter, Balancer, etc., to achieve balance among all users, whether they are users, token providers, liquidity providers, or platform developers. Each role requires certain refined functions to cooperate.
Compared to DEXs like Uniswap, Balancer, and Jupiter, DEXs on TON have become a necessary development direction to supplement DEX functions or Defi functions.
Currently known project chain transaction middleware LayerPixel has already launched the first step in repairing DEX functions with PixelSwap based on Balancer's functionality. For DEXs, airdrops are the fastest action to attract users. In the new round of actions, LayerPixel announced that PixelSwap has already started its airdrop plan, confirming that the TGE time for the token PIX is set for Q4. In light of the current changes in the TON ecosystem, perhaps PixelSwap can still push forward stably in the short term like Raydium.
LayerPixel is a DeFi solution designed for Telegram Mini Apps, enabling seamless integration of Defi with Telegram Mini Apps. It is officially referred to as TON's Layer 1.5. It can provide a combination of various modular functions, including wallet, DEX (various trading algorithms), oracles, etc. PixelWallet focuses on account abstraction, while Pixacle can provide fast and accurate price data for DApps and smart contracts within the ecosystem.
Pixelswap is a DEX based on weighted pools, with functions consistent with Balancer, supporting LBP asset issuance methods. This Dutch auction-style issuance method is suitable for small to medium-sized projects with low FDV. The most prevalent in the Telegram ecosystem are such game/GameFi projects, which is why it can supplement the Defi needs of the TON ecosystem. The LBP asset issuance method facilitates small to medium-sized projects in completing token issuance in the early stages while maintaining a relatively reasonable trading price.
During the rapid development and growth period, ordinary DEXs are mainstream, but once entering a downward trend, the prices of tokens in DEXs are harder to market compared to CEXs. At this time, the more refined the design, the more it can achieve a win-win situation: for the B-side, it is more suitable for management; for the C-side, it also allows the unofficial LPs of DEXs to resemble the mature LPs in centralized exchanges, actively ensuring the yield of funds while isolating risks and stabilizing prices.
At this point in time, when growth is experiencing a pullback, the emergence of such DEXs is quite timely.
Apart from PixelSwap, the liquidity sharing among DEXs on TON and the potential to form liquidity hedging structures across various Defi projects also need to be stabilized. Nowadays, after project token issuance, it is not possible to establish staking mining or various types of savings and investment in most Defi.
One of the reasons for the rapid increase in the token lock-up amount on Solana is that lending projects, staking, and restaking projects have been increasing alongside popular projects. For instance, Marginfi and Meteora on Solana have actively increased token pools for newly emerging tokens on Solana. Although most tokens do not provide financial returns, platforms offer incentives such as points or expected airdrops, encouraging investors to deposit large amounts of assets to chase airdrop expectations. TON can achieve the same effect by following suit.
In Conclusion
Before the Durov incident, our expectations for TON were very high, but the declining enthusiasm of the ecosystem has caused both ecosystem projects and investors to suffer. This is already a familiar rhythm in the industry; there are always investors whose perseverance towards projects is surprisingly long. Regardless of when the next opportunity to ignite will come, whether in a week or several months, it is time for builders to enrich the ecosystem.
At this stage of TON, users and projects will gradually realize the differences in new DEXs and new functions, or they may discover one day that a new DEX like PixelSwap has already attracted a large amount of TVL, establishing numerous staking pools. This will indicate that the ecosystem is ready for another growth, prepared to handle the continuously increasing trading volume, new projects being launched, and the rapidly increasing number of liquidity pools and liquidity mining.
