Telegram’s blockchain network finally launched today – or, at least, a version of it.
TON Labs, a startup that helped Telegram run the test network for the Telegram Open Network (TON), launched its own version of the blockchain Thursday, with the support of professional validators. Called Free TON, the fork comes after the group decided not to wait until Telegram is able clear the regulatory hurdles it faces before it can officially send TON live.
The initiative is supported by 13 validators and used code maintained by TON Labs. During a Zoom call livestreamed on YouTube, the genesis block of the new blockchain was generated, effectively marking its existence.
“The network must not be censored, it must go to the world,” TON Labs CTO Mitya Goroshevsky said on the call.
To distinguish itself from the original TON project, this forked version is named Free TON, and its tokens are called “ton crystals,” not “grams,” as Telegram’s were dubbed.
Telegram did not reply to a request for comment on the initiative by press time.
Telegram was not involved in the launch, according to Alexander Filatov, CEO of TON Labs. “It’s an independent launch of the open-source software,” he told CryptoX. TON Labs is providing technical support for the code, while the team of (for now) 13 validators will be supporting the network. The code will be used under the GNU Lesser General Public License, version 2.
The original TON had initially been scheduled to launch in October 2019, but was delayed after the SEC sued the messaging app company for allegedly selling unregistered securities. An injunction to halt the project was granted by a U.S. court in February, making the second launch deadline of April 30 unfeasible.
Devs in
However, as the code for TON is publicly available on GitHub, it’s technically possible to launch it without Telegram’s participation. “This project has its own community, its own idea, its own ideology. Not launching it would be a mistake,” said Konstantin Lomashuk, head of P2P, a Moscow, Russia-based blockchain startup and a Free TON validator.
It’s not a mainnet, but it’s not a testnet, either, said Sergey Vasilchuk, founder of the Kiev, Ukraine-based EverStake, also a validator. “We’re trying to launch the alpha version, see how this software works in real life,” Vasilchuk said. Like the Kusama network is for Polkadot, Free TON is serving as a proving ground for the tech before it can be launched in full, he explained.
“The way we see it is as a testnet that has the real distribution but might – and will possibly be – rolled back to the genesis state at any time if there are vulnerabilities in the code and black hats [malicious hackers] decide to exploit them on the live chain,” said Hendrik Hofstadt, CEO of the Berlin-based staking startup Certus One.
Currently, the 15 entities acting as validators include EverStake, P2P, Berlin, Germany-based Certus and other professional validation-as-service startups that are already supporting networks like Cosmos, Loom, EOS and Tezos.
There are also three cryptocurrency exchanges in the role, according to a list of validators shared with CryptoX, including Kiev-based Kuna, London-based CEX and Hong Kong-based HitBTC. They won’t list ton tokens at this point, and will only act as validators, Filatov told CryptoX.
Some of the validators came from the TON Community Foundation (TCF), also supported by TON Labs. The foundation launched its own testnet for TON earlier this spring. However, Filatov said “TCF didn’t become a truly international movement,” and thus didn’t succeed in leading the blockchain launch. However, its members can join the new network, too, he added.
“There is absolutely no technical reason now for somebody to join this network (except the common reason for all altcoins – to get some coins),” cryptographer Alexey Pryanishnikov, a TCF member, wrote in a chat while watching the launch livestream.
From launch, each validator will receive 380,000 ton crystal tokens to stake and start producing blocks for the proof-of-stake blockchain. There will be a limited supply of 5 billion tokens, as was the plan for the original TON blockchain. Out of those, 85% will be distributed to “Free TON partners and users,” 10% to developers and 5% to validators, a press release says.
“We expect the TON network to mature quickly and transition into a mainnet state over time,” Hofstadt said, adding that crypto exchanges will later list ton tokens, so that early participants will ultimately be rewarded.
Investors out
As a fork of TON, Free TON will have nothing to do with Telegram’s obligation to distribute tokens to investors in its $1.7 billion token sale, the participants say.
“It’s also very cool to launch a network with just validators and developers and having the vast majority of tokens controlled by a community pool, as opposed to investors. It’s a great experiment,” said Brian Crain, co-founder and CEO of staking firm Chorus One.
Hofstadt echoed the sentiment, saying: “We’re very excited about TON because it is one of the first networks that is launching with a token distribution that is not centralized around early stage investors and VCs.”
Telegram’s investors are unlikely to get their tokens. The firm sent them a letter last week, just before the launch deadline, saying the event has been pushed back to 2021. Five days later, Telegram fired off a new letter saying that the token distribution, awaited by the investors for over two years, is now not on the table.
Those who funded TON now can opt to either take 72% of their investments back now, or lend their funds to Telegram for a year to get a return of 110% in April 2021. U.S. investors, though, have only offered the first option.
On Wednesday, the deal was further detailed. According to the Russian publication The Bell, Telegram sent over the terms of the loan, offering the 52.77% annual interest rate. It seems Telegram is reserving the option to repay investors at any time, meaning an investors would get 72% plus interest for the time the company utilized the loan, but with a minimum of three months.
Sergey Solonin, founder of the Russian e-payment firm QIWI and TON investor, told CryptoX there’s no point in lending money to Telegram on such terms.
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