Toncoin (TON)

Toncoin (TON)

Most recent update: [July 12, 2024] 

What is Toncoin (TON)?

TON, or The Open Network, is a decentralized layer-1 blockchain. It features components like TON Blockchain, TON DNS, TON Storage, and TON Sites, aiming to create a comprehensive decentralized ecosystem. Toncoin (TON) is its native cryptocurrency, and the network focuses on providing decentralized storage, services, a domain name system, and efficient transaction processing. TON blockchain aims for high scalability, capable of processing millions of transactions per second, and supports cross-chain interoperability.

Who is behind TON?

TON blockchain is supported by The Open Network Foundation, a non-profit organization established in Switzerland in 2023 and funded by community contributions. The foundation empowers TON projects without controlling the technology, contributing to the decentralized TON Community. The network operates on an open-source codebase, allowing anyone to contribute, and has no single controlling authority. The foundation's team comprises various community contributors who help shape the platform's development and drive its growth.

How does Toncoin (TON) work?

Toncoin (TON) is the native cryptocurrency of TON blockchain and is used for network operations, transactions, and payments within the ecosystem. It supports smart contract processing fees, app payment services, and network security through staking in the proof-of-stake (PoS) consensus mechanism. Validators earn rewards in Toncoin, and nominators can also earn by providing tokens to validators. Toncoin is essential for cross-chain transaction fees, on-chain governance, blockchain-based domain name payments (DNS), and decentralized data storage payments. Smart contracts are executed using the TON Virtual Machine (TVM).

The TON Token and Tokenomics

Toncoin (TON) is used to pay for transaction fees (gas) on the TON blockchain, network storage, transaction processing, and services within the ecosystem. It also plays a crucial role in network security through staking in the proof-of-stake (PoS) consensus mechanism, where validators and nominators earn rewards for their contributions.

 The total supply of Toncoin is initially capped at 5 billion coins, with a slow increase expected over time. Validator rewards, which can amount to about 20% of their stake per year, contribute to this gradual inflation. The total supply may double to 10 billion coins over 35 years. However, penalties for misbehaving validators can reduce the supply, as a portion of their stake may be burned. This combination of inflation and potential deflation ensures the network's stability and incentivizes validator performance.

Security

The TON Foundation collaborated with CertiK, a renowned auditing platform, to assess the security of TON's core components, including the catchain, system smart contracts, and vesting wallet contracts. The audit confirmed the robustness of TON, identifying only non-critical flaws which were quickly resolved. CertiK also studied TON's unique programming language, FunC, enabling future projects on TON to be audited by the platform, further enhancing the network's security.

Drawbacks and risks

The TON project initially faced criticism and legal challenges from the SEC. Despite its potential, investing in Toncoin is not without risks. Regulatory uncertainty remains a significant concern. The previous legal battles with the SEC and the potential for future regulatory challenges pose significant risks to Toncoin's stability and acceptance.

Navigating the cryptocurrency landscape, TON encounters inherent risks and hurdles, such as market volatility, regulatory shifts, and the complexities of merging traditional and blockchain finance. The platform's longevity hinges on its adeptness in mitigating these risks, adapting to regulatory evolutions, and sustaining innovation within the swiftly evolving blockchain sector. Despite Toncoin’s promising prospects, investors and users must remain aware of the associated risks, including the experimental nature of blockchain financial solutions and the unpredictable market dynamics.

Finally, as common to many Proof-of-Stake networks, their blockchain architecture dictates that those with the most staked tokens will have the most sway in the network’s functioning. This effectively places richer wallets in a position of power. Thus, if one person or a group of entities can acquire 50% of the network’s voting power, they would be able to control it.

Due Diligence  

Before listing TON on the VirgoCX Platform, VirgoCX performed due diligence on TON and determined that TON is unlikely to be a security or derivative under Canadian securities legislation. VirgoCX’s analysis includes reviewing publicly available information on the following: 

• The creation, governance, and location of TON and/or its primary development team;
• The supply, demand, maturity and liquidity of TON; and
• Legal and regulatory risks associated with TON. 

Statutory Rights under Securities Legislation

VirgoCX is offering Crypto Contracts on crypto assets in reliance on a prospectus exemption contained in the exemptive relief decision Re VirgoCX Inc. dated May 30th 2024 (the Decision). Please be aware that the statutory rights in section 130.1 of the Securities Act (Ontario) and, if applicable, similar statutory rights under the securities legislation of each other province and territory in Canada do not apply in respect of the Crypto Fact Sheet to the extent a Crypto Contract is distributed under the prospectus relief in the Decision.

Further Reading

To learn more about the technology behind TON, check out these in-depth resources here:

• The official site of TON
• Coinmarketcap’s overview of TON
• Coingecko’s overview of TON
• Coinbase’s overview of TON