Layer 2 Networks Are Arriving on the Telegram-Associated TON Blockchain

Layer 2 networks, auxiliary blockchains aimed at improving transaction speed and throughput for users, are spreading to The Open Network (TON), which is closely associated with the popular messaging application, Telegram.

Emerging initially on the Ethereum blockchain as part of its rollup-centric roadmap, layer 2 networks have been widely understood as part of Ethereum’s endgame by virtue of solving the network’s scalability woes that result in high levels of congestion and expensive transaction fees.

However, L2s have expanded to Bitcoin with the advent of newer protocols such as Merlin Chain and have now infiltrated the TON blockchain. Two examples include Atlas Protocol and TON App Chain (TAC).

Layer 2 blockchain networks are “super important for the TON ecosystem for onboarding and can be hugely helpful for the long-term growth of the space,” said Jehan Chu, an investor in the TON ecosystem and managing partner of blockchain venture capital firm Kenetic, in a WhatsApp message to Unchained.

Additionally, “a few L2s on TON [are] raising as we speak,” wrote the head of growth of Ethena Labs, who goes by Seraphim, or @MacroMate8 on X.

Adding L2s to Attract Ethereum DeFi Apps

Both Atlas and TAC are touting their compatibility with the Ethereum virtual machine.

“A TON EVM L2 is vital for the short/medium term growth of the TON ecosystem since top EVM DeFi applications aren’t immediately prepared to deploy on TON VM,” said Chu, whose firm, Kenetic, is backing Atlas.

He said, with Atlas, “developers can quickly and safely access TON’s massive user base, helping to grow DeFi and total value locked (TVL), with an eye to launch natively on TON long-term.”

A pitch deck shared with Unchained for TON App Chain also highlights how people are building and raising capital to address the compatibility between TON and the Ethereum Virtual Machine. One of its founders includes Michael Egorov, who suffered nine-figure liquidations on several DeFi lending protocols earlier this month. The TAC deck says the network aims to have its mainnet rollout in September 2024.

TON Picking Up Steam

The arrival of L2s on the TON blockchain comes as the network is picking up attention in a number of different ways.

Its total locked value (TVL) has grown more than 1,368% year-to-date from roughly 6.1 million TON tokens on Jan. 1 to nearly 89.6 million at press time, according to data from DefiLlama.

Since the price of the network’s native cryptocurrency has skyrocketed over 220% in the same period from $2.33 to $7.56, TON’s TVL growth denominated in USD is more staggering when compared to its figure denominated in TON.

On Jan. 1, users had locked $14.23 million into the network and six months later, the figure has ballooned to $671.43 million, an over 4,600% percentage increase.

Part of the rise of the TON blockchain has come from a number of click-to-earn games that have garnered substantial traction from Telegram users. For instance, Hamster Kombat has 46 million subscribers, while Catizen has about 4.5 million users.

Part of Pantera Capital’s Bags

TON has become a popular favorite among heavyweight investment firms. Specifically, venture firm Pantera Capital, which has $5.6 billion in assets under management, is doubling down on the TON ecosystem, after announcing in May how the firm made its largest investment ever into the network.

Pantera is currently raising capital for a new fund called “Pantera TON Investment Opportunity,” and those interested in the fund can fill out a short questionnaire that states that the minimum investment is $250,000.

“TON is a Layer 1 network originally designed by Telegram and continued by the open-source community. We believe TON has the capacity to introduce crypto to the masses because it is used extensively within the Telegram network,” which has over 900 million monthly users, wrote Pantera managing partner and founder Dan Morehead on X two days ago.