Telegram Open Network (TON) & Gram Token

Pavel Durov TON Gram token

Telegram Open Network is a blockchain-based network for Telegram users and service providers. The project intends to create a platform and several related services to enable fast, scalable transactions within the Telegram messenger ecosystem. The release of the platform is scheduled for Q4 of 2019, the deadline is October 31st.

The TON blockchain will utilize Turing-complete smart contracts and GRAM token as a native cryptocurrency. The Telegram was founded by brothers Nikolai and Pavel Durov in 2013 and currently has more than 200,000,000 active users.

Messengers Audience Research
According to the globalwebindex.com study, Telegram’s audience is most interested in the money transfer feature.

Telegram Open Network Components

The blockchain itself consists of 4 types: master blockchain, a workchain, a shardchain and the block itself, which in essence is also a mini-blockchain. The masterchain contains general protocol information, list of validators and their stakes, active workchains and their shards, as well as all their hashes of most recent blocks.

From the TON’s whitepaper, written by Nikolay Durov, the TON-based economy will include several main components:

TON BlockchainThe core blockchain, a distributed supercomputer
TON P2P NetworkPeer-to-peer network to access TON blockchain or other arbitrary distributed services
TON StorageDecentralized file hosting
TON ProxyProxy and anonymizer architecturally similar to I2P and Tor
TON DHTBuilt-in torrent tracker service for TON Storage
TON ServicesPlatform to build distributed applications for TON
TON DNSSearch system for “human names” in TON DHT
TON PaymentsPayment system for fast off-chain transactions
TON Virtual MachineVirtual machines for executing smart-contract algorithms between buyers and sellers
TON MessagesService for messaging between system components at the algorithm level
TON Hypercube RoutingSystem for calculating the optimal path in the TON P2P Network for TON Messages between nodes
TON Validators Validators create and validate transactions in TON Blockchain

While the messenger team is skilled in developing distributed networks with a reliable and fast architecture, the financial component of the project will be handled by their strategic partner – Wirecard, as stated in their press release.

Gram (GRM) Token Review

The TON crypto coin or Gram (GRM) token will act as a native digital currency for the TON blockchain with several main use cases:

  • To pay for transaction fees
  • For deposits required to become a validator
  • “Gas” payments for smart contracts
  • To store files on TON blockchain

The initial supply of Grams is 5 billion or 5 Gigagrams. One Gram is subdivided in 1,000,000,000 of nanograms or nanos.

Gram token units are:

  • Nano (nGram) equals 0,000000001 of 1 Gram
  • Microgram (mGram) – 0.000001 of Gram
  • Milli – 0.001 of Gram
  • Gram (GRM) is a 1 Gram
  • Kilogram (kGram) – 1,000 Grams
  • Megagram (mGram) – 1,000,000 Grams
  • Gigagram (gGram) – 1,000,000,000 Grams

The project has already closed two stages of pre-ICO sale and managed to raise $1.7 billion of investments. Despite previous rumors that there will be no public ICO for TON, Liquid cryptocurrency platform announced the open ICO for Gram tokens would take place on July 10, 2019.

To clarify, Telegram is not related to this public offering of Gram tokens and organized by the Liquid platform with the support of their business partner and one of Telegram Open Network early investors – Gram Asia (gramasia.com).

TON Reserve

Unlike Libra coin, recently announced Facebook stablecoin, the price of Gram is not tied to any fiat currency and can be freely traded on cryptocurrency exchanges. However, Telegram wants to keep at least 52% of Gram total supply in circulation to prevent the token price from speculative manipulations and 4% is allocated for the team to support the development in the next four years of vesting period. Therefore, only 44% of all tokens will be sold to the public.

To maintain the Gram price stable there will be a special TON Reserve institute, a kind of central bank operating as a smart contract, under the control of TON Foundation, a non-profit organization managing Telegram Open Network.

According to the documentation, the initial price of the token will be equal to 0.1 USD, and the further cost of each new Gram put into circulation will be 1 billion higher than the previous one:

p(n) ≈ 0.1 · (1 + 10−9 )n USD

When the exchange rate falls below the level set by the formula, TON Reserve buys out tokens, and when it grows, it sells. Attempting to reduce the volatility of the Gram tokens for comfortable use inside the platform sounds like a good idea.

Proof-of-Stake & Mining Rewards

The consensus in the Telegram Open Network is achieved through the Proof-of-Stake algorithm where all the mining process participants could be nominators (i.e. mining pools), validators (miners running a full node) or collators (a special node that may outsource some unnecessary work from validators).

To validate transactions and create new blocks, you need to maintain a running node — specially configured server with a reliable and high-speed Internet connection and large disk space. At the same time, the nominator does not have to be the one who runs the node and act as a crowdsourced fund and delegate the deposits to the actual validator with a running node.

At the start, there will be only 100 validators chosen each month by the largest amount of Grams staked. If the blockchain will require more validators later the number of validators could be adjusted.

By securing the TON blockchain being a validator you’re able to earn Gram tokens with a profit of approximately 20% of your initial stake annually. According to the whitepaper, 10% of the total supply will be tied to the validator stakes, although the percentage number can be changed at any time at the protocol level if necessary.

According to Dr. Nikolai Durov assumptions, this will provide an inflation rate of 2% per year and double the total supply of grams up to 10 gigagrams in 35 years. In essence, this inflation is a payment made by all members of the community to validators for maintaining the system in working condition.

As opposed to inflation, there will be some deflationary impact, since ineffective validators will be fined, and a substantial part of their stake reserved in Grams as a reward for work will be burned. The one who finds a ‘misbehaving’ validator earns a portion of the transaction fees that validator couldn’t manage to validate.

Conclusion

The Telegram Open Network is a promising project in terms of team skills in building fast and efficient architectures, as well as CTO (Nikolai Durov) & CEO (Pavel Durov) expertise in their domains. Of course, Telegram’s 200 millions of active users is still incomparably small to WhatsApp’s 1.5 billion. However, Telegram has good distinctive features and developing the TON ecosystem potentially will attract a larger market audience.

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