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TON Blockchain: Redefining Global Payments

The Open Network

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Published on

13 Aug, 2024

Introduction

TON is a decentralized Layer-1 blockchain using a technology designed by Telegram. It is home to over 900 million users and a growing ecosystem of dApps. Their moniker on X is "Making cross-border payments INSTANT, FREE, and as EASY as sending a text message on Telegram," and that's what they intend to do.

The acronym TON stands for "The Open Network." It is a decentralized platform comprising several components: TON Blockchain, TON Storage, TON Sites, and TON DNS.

TON Blockchain is the core component that knits the infrastructure together to form the TON Ecosystem, and this article will examine it and its other main elements and features in its ecosystem.

TON Blockchain

The TON blockchain operates as a distributed supercomputer to provide multiple products and services that contribute to the decentralized version of the Web3 internet. TON seeks widespread cross-chain interoperability while maintaining a highly secure and scalable framework. Its design enables it to process millions of transactions per second (TPS), aiming to reach hundreds of millions of users one day.

Basics for Developers

Developers desiring to work with TON need to learn how to create smart contracts and dApps on the TON Blockchain. Critical need-to-know skills include wallet setup, NFT trading, and transacting with Toncoins (see below) on decentralized exchanges (DEXs).

How Smart Contracts Work on TON

In TON, a smart contract is an object with storage and properties like code, data, balance, and an address. An event happens like a contract receiving a message. The smart contract handles the event by executing its code in the TON Virtual Machine (VM). The contract modifies its code, data, and other properties and generates outgoing messages. The smart contract then rests in standby mode until the next event.

A transaction is a combination of these steps. Furthermore, events are handled strictly sequentially and cannot interrupt each other. This behavior pattern is called an "Actor."

The Actor Model

Developers build smart contracts on TON using the Actor model. Smart contracts represent Actors on the TON blockchain. Thus, a wallet is a simple Actor and a smart contract.

Accounts interact with one another by sending messages. A routing mechanism moves messages from outgoing queues to incoming queues, ensuring that all messages are delivered consecutively.

Actors process incoming messages, alter their internal state accordingly, and generate outbound messages. Thus, each Actor on TON must have an address to receive messages from other Actors. Everyday transactions between Actors occur on the BaseChain because that chain is inexpensive.

The lowest level is an AccountChain, a chain of a single account of sequential transactions such as TX-1 > TX-2 > TX-3.

Batching and Sequencing

Nodes that process transactions need to coordinate the smart contract state to reach a consensus about the state and then batch those transactions. However, batching does not interfere with sequencing. Each transaction maintains one previous transaction and, at most, one next transaction that will be cut into the blocks.

It is also efficient to include queues of messages (incoming and outgoing) to blocks. Thus, a block will contain complete information that describes what happened to the contract during that block.

AccountChains and ShardChains on TON

Regarding multiple accounts, some AccountChains can be stored together in a set. A ShardChain is simply a set of AccountChains. Likewise, we can cut a ShardChain into ShardBlocks, an aggregation of single AccountBlocks.

Since a ShardChain consists of separate AccountChains, it can be easily split. Thus, if one ShardChain describes events occurring in one million accounts, and there are too many TPS to be processed and stored in one node, that chain can be split into two smaller ShardChains. In this case, each chain will account for roughly 500k accounts, and a separate subset of nodes will process the chains individually.

Additionally, if a shard has too much empty space, it can be merged into one larger shard. Two cases where splitting is limited are when a shard only contains one account (making it impossible to split further) or when it contains all accounts.

TON and WorkChains

A blockchain is an aggregation of all shards containing all the accounts that behave according to one set of rules. In TON, there can be many blockchains with many sets of rules that operate simultaneously. They can interact with each other by sending cross-chain messages. A WorkChain is a blockchain with customized sets of rules.

Developers can customize the rules of a group of Shardchains to create a Workchain. An example is to create a Workchain that runs Solidity smart contracts based on the Ethereum Virtual Machine (EVM).

In theory, anyone in the community can create their own Workchain. However, it's complicated and expensive. Furthermore, to approve a new WorkChain, builders must procure 2/3rds of the Validator votes. Presently, there are two Workchains in TON: BaseChain and MasterChain.

BaseChain and MasterChain

The MasterChain has a unique function on TON and is called the blockchain of blockchains. Network nodes need a way to find a fixed point in a multichain state and reach a consensus about that state. Message routing synchronization and transaction execution are necessities in TON, and the chain that handles those purposes is called the MasterChain.

MasterChain blocks contain additional information about all the other chains in the system. At a single MasterChain block, any observer can determine the state of all multichains.

TON's Native Cryptocurrency

Toncoin is TON's native coin for transactions, network operations, collectibles, and games built on TON. Users can obtain Toncoin on an exchange with other crypto or by purchasing it with a bank card—whichever is most convenient for them.

TON's native cryptocurrency pays transaction processing fees for smart contracts and cross-chain transaction fees. dApps offering payment services on TON will also use Toncoin, as will users needing to pay for blockchain-based domain names. The coin is integral to the platform's on-chain governance program. Further, Validators will need to stake Toncoin to maintain the blockchain. So, Toncoin will contribute to network security via staking (see below).

Networking on TON

TON uses its own peer-to-peer network protocols, and the blockchain propagates new blocks using these protocols. Moreover, multi-blockchain projects like TON are more demanding than the networking demands of single-blockchain projects like Bitcoin and Ethereum.

Notably, after the sophisticated network protocols that support the TON chain are in place, they can be tapped for other use cases other than the immediate demands of the blockchain itself. This feature offers more flexibility for creating new services in the TON ecosystem.

How to Become a Validator on TON Blockchain

TON uses a Proof of Stake (PoS) consensus mechanism, which means a set of network Validators maintains the network's security and stability. Network Validators verify user transactions. If all the Validators agree that a transaction is valid, they include it on the blockchain. So, transactions on TON must receive unanimous approval from all Validators. Otherwise, Validators will deem them invalid and reject them.

TON Blockchain Validator

Anyone who desires to become a Validator and receive Toncoin as a reward can do so. However, there are stipulations. To become a Validator, one must own or have access to high-performance hardware on a speedy and available network and stake a minimum of 300,000 Toncoin for a specific period. Upon completion of a validation round, the stake is refunded with interest.

Earning Rewards as a Validator

Validators must win the "Validator Election" to enter the validation cycle to get rewards. A would-be Validator must have the minimum staked and successfully validated blocks during the entire Validation Cycle to win an election.

Users on the TON chain pay a small fee on their transactions, which goes to the Validators as compensation for securing consensus. This fee gets split between the Validators based on the size of their stake. Additionally, new coins are generated during validation and sent to the Validators. Annual coin inflation is approximately 0.5%.

Slashing Penalties

Validators can be penalized for idle and malicious misbehavior, which can result in fines. Idle Validators refer to those who do not participate in block creation and transaction signing for a specified time during a validation round and are thus susceptible to potential fines.

As for malicious behavior, any network participant can file a complaint against a misbehaving Validator. The participant with the complaint must attach cryptographic proof of the negative behavior. All Validators check the complaints' validity and vote on whether to pursue them. If Validator approval reaches 66%, a slashing penalty is deducted from the Validator and withdrawn from their stake.

Staking Toncoin

There are several use cases for Toncoin, but staking is a vital one. As of June 2024, Coinbase reported that users staked over $652 million in Toncoin, contributing to network security and liquidity.

Toncoin Staking

As mentioned, unlike PoW consensus, PoS selects Validators. They verify and add new transactions to the blockchain-based on how much they stake as a security deposit. The more crypto Validators lock up as collateral, the more likely they will be selected to validate transactions.

The success of PoS hinges on Validators investing in the network's success. Having "skin in the game" incentivizes them to maintain the chain's integrity, and TON seeks greater participation by making staking services more accessible. The goal is to grant access to average Toncoin holders who want to earn participation rewards.

One way is to let users pool their resources, allowing everyone on TON to participate in network security. Those desiring to become a Validator without a significant stake of Toncoin can join Nominator pools with lesser amounts of Toncoin. Independent smart contracts support the pooling process by managing user deposits for validation purposes and distributing rewards to contributors.

Luganodes is one of the top reputable projects offering a secure and efficient way for users to participate. Participants can delegate their Toncoin to Luganodes as their Validator to secure TON's PoS network and earn rewards safely and efficiently.

Notable Projects Building on TON Blockchain

Notcoin exemplifies the explosive potential of projects building on TON and Telegram. It has an impressive X following of 1.7 million and reached over 4 million players only a week after its official launch in January. It is a simple click-to-earn game you can find by searching for “Notcoin” on Telegram.

Flagship FYI is TON's first crypto management project. It allows users to invest directly in their favorite crypto portfolios (like influencers and investment communities) on Telegram.

TokenTable also recently announced it is live on TON. It is the first token distribution platform on TON that simplifies airdropping tens of millions of addresses.

TON Blockchain Roadmap

TON Blockchain - Conclusion

The TON ecosystem spans the DeFi, SocialFi, and GameFi sectors with unmatched "shardability" and scalability. However, TON further distinguishes itself from competitors by providing direct access to Telegram's user base, which comprises roughly 800 million monthly users.

In recent news, users can now trade TON on Binance in the following pairs: BTC, USDT, FDUSD, and TRY. The Binance listing makes TON more accessible to millions of global users.

For those who want to be involved in the community, TON Society is a global social network for TON enthusiasts desiring to participate in activities throughout the ecosystem and earn rewards.

About Luganodes

Luganodes is a world-class, Swiss-operated, non-custodial blockchain infrastructure provider that has rapidly gained recognition in the industry for offering institutional-grade services. It was born out of the Lugano Plan B Program, an initiative driven by Tether and the City of Lugano. Luganodes maintains an exceptional 99.9% uptime with round-the-clock monitoring by SRE experts. With support for 45+ PoS networks, it ranks among the top validators on Polygon, Polkadot, Sui, and Tron. Luganodes prioritizes security and compliance, holding the distinction of being one of the first staking providers to adhere to all SOC 2 Type II, GDPR, and ISO 27001 standards as well as offering Chainproof insurance to institutional clients.

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