We have even more information about messaging app Telegram’s plans for cashing in on its popularity within the crypto community with the massive ICO for its proposed Telegram Open Network (TON) project (that we first reported), after obtaining the whitepaper and investor prospectuses in full.
From the documents, it is clear that Telegram isn’t content with sitting on a platform like Ethereum for its token sale and services, as most ICOs are. Instead, it wants to create a platform of its own to rival Ethereum for hosting a new wave of decentralized services and internet experiences tipped to emerge thanks to the blockchain.
Telegram’s ICO will be a record if all goes according to plan, but that’s only the start.
The company plans to raise a staggering $1.2 billion in total, starting with a $600 million pre-sale that’s strictly for traditional venture capital backers and those inside its executive’s close circles. That first stage is running from January to February by invite-only, according to the letters sent to selected participants that were viewed by TechCrunch.
Following the pre-sale, the firm plans to hold a public sale in March which will allow retail investors to enter. The public sale is pegged at $600 million, which would make the overall ICO worth $1.2 billion. That blows any other token sale out of the water, and it would easily surpass the current record of $257 million raised by Filecoin in September.
Beyond money, the ICO will be notable for a product with far greater traction among consumers than any other token sale project to date. As explained in the prospectus, Telegram is on track to surpass 200 million active users this year:
In October 2017, Telegram reached 170 million monthly users, delivering 70 billion messages every day. At least 500000 new users join Telegram daily. At this rate, the service is expected to hit 200 million monthly users in Q1 2018. These users can provide the required critical mass to push cryptocurrencies towards widespread adoption
Ambitions to run the decentralized web
Telegram is best known for a messaging app, which the company claims in the documents is used for community communication in over 60 percent of ICO projects, but its own ICO is more extensive than monetizing that chat service.
The company is planning to develop the building blocks for a decentralized internet that could eventually power decentralized apps (known as DApps), smart contacts, censorship-proof websites and more.
The pitch includes four components, as we previously reported:
- Distributed file storage akin to services like Dropcoin and ICO company Filecoin
- A proxy service for creating decentralized VPN services and TOR-like secure browsing environments based on the blockchain
- Services for decentralized apps, smart contracts and decentralized web browsing experiences
- Payments for micropayments and peer-to-peer transactions
Putting these components together could allow Telegram to be the base for a new range of decentralized apps and services based on the blockchain. It could turn Telegram from a messaging app into a platform that hosts internet-based content which could, in theory, operate micro-paywalls that let users unlock news or subscriptions for small amounts of crypto payment, while there’s also the potential to become a major payment hub.
TON will provide the backbone for new kinds of internet services while also allowing existing social networks and messaging apps to join in, too.
Telegram said its services play, which lets other developers build apps and services on top of TON, can “be a gateway to blockchain-based projects for the masses — similar to how Google Play and the App Store currently work for centralized applications.”
All of these goals, of course, require technology and Telegram’s 132-page whitepaper goes into much detail on that. Those technologies outlined in the whitepaper aren’t deployed by other projects right now, so they will require some time for development, but they are based on, or inspired by, ongoing efforts from other blockchain companies that remain in progress.
More details in full, as we reported last week:
The “TON Blockchain” will consist of a master chain and 2-to-the-power-of-92 accompanying blockchains. Its most notable aspect is that it will have an “Infinite Sharding Paradigm” to achieve scalability. Thus, TON blockchains aim to be able to “automatically split and merge to accommodate changes in load”. This would mean new blocks are generated quickly and “the absence of long queues helps keep transaction costs low, even if some of the services using the platform become massively popular”.
It will also consist of “Instant Hypercube Routing” designed so the blockchain can maintain top speed even as it grows. Its proof of stake approach will reach consensus through a variant of the ‘Byzantine Fault Tolerant’ protocol, again increasing speed and efficiency. And it will also use 2-D Distributed Ledgers. This means the TON can grow new valid blocks on top of any blocks that were proven to be incorrect to avoid any unnecessary forks. In other words, TON aims to be ‘self-healing’.
TON’s third generation blockchain will be based on a dynamic ‘proof of stake’ secured by multiple parties with a high degree of fault tolerance. It will also handle storage of ID, payments and smart contracts. So, instead of relying on proof of work to create its currency, Telegram will rely on a new, less energy-hogging way of mining cryptocurrency than the original Bitcoin method.The claim is that it will be capable of a vastly superior number of transactions, around 1 million per second. In other words, similar to the ambitions of the Polkadot project out of Berlin — but with an installed base of 180 million people. This makes it an ‘interchain’ with so-called ‘dynamic sharding’.
Telegram CEO Pavel Durov speaking at TechCrunch Disrupt San Francisco
Huge discounts and a long wait
Once news of the project got out, most interest focused around the token sale itself with many investors sure the project will be a hit based on hype alone…