TON - The Aftermath, History and Analysis
TON - The Aftermath
More than two weeks have passed since TON, the project of Pavel Durov, was officially declared dead by its founder. The official reason is simple - the SEC wanted it to be closed, and the SEC usually gets what it wants. But the unofficial reason was more complex. It seems that Durov wasn’t able to fulfil his promises and deliver, even with the shocking amount of $1.7 billion raised on closed presale. What doomed the project is the participation of the US investors, which gave the SEC the formal reason to halt its activities and order to return the collected funds to initial investors. Let’s see what went wrong and what does it mean now for all new ICO projects.
Too many promises are no promises
The rumours about Pavel Durov planning to develop a breakthrough blockchain began to appear in late 2017. That was the year of ICOs, and Pavel probably decided to ride this wave. It’s important to understand that as a serial entrepreneur he usually follows global trends. In 2007 Pavel created VKontakte (now vk.com), a Russian Facebook clone, sold it, and used the acquired funds to create Telegram messenger in 2013. Since then, Telegram was funded only by Pavel and according to him, it costs $1 million monthly to keep it running. Thus conducting an ICO using a popular messenger was a good way to monetize it.
The problem was that Pavel and his team had no scope. They claimed that they could create a decentralized alternative to the Internet. TON had too many things in its unofficial whitepaper, including:
- TON Storage - a distributed storage system, similar to IPFS, that shouldn’t rely on servers, keeping chunks of files in an encrypted state on its users’ devices
- TON Proxy - a VPN service, based on the blockchain technology
- TON Services and DNS - domain name services and various blockchain-based services
- TON Payments - micropayments, similar to countless other cryptocurrencies
As we see, each of these parts could easily be a separate project. Actually, there are many blockchain projects in the industry, dedicated to one of these tasks, and it took them years to release an MVP. TON team promised to deliver an all-in-one solution, making all other projects obsolete within the one-year deadline. It could be considered a sign of overconfidence, but Durov had a good reputation, and investors believed him.
As it was previously said, Durov raised $1.7 billion, which made this private presale the biggest in the industry. But the amount of money isn’t the solution here, because it’s still a developing technology, and it requires research. Thus you can’t just hire specialists and do it using common practices. TON project promised to deliver the technologies that thousands of qualified coders still struggle to create. No wonder it also failed.
There were two obstacles that prevented to release TON in a way it was intended to be:
- The SEC. During the initial presale, TON team sold more than 1 billion Grams, the platform’s native tokens, to 39 US purchasers. That gave the SEC enough ground to file a suit against the project and ban it permanently.
- The project was nowhere near completion.
Durov promised to his investors the whole ecosystem with services, scaling, and developer-friendly environment. Any blockchain ecosystem doesn’t have any value without users and especially developers. TON team released their own low-level programming language, called Fift, which was practically unusable with its very complex syntax. They didn’t add any support for high-level languages, such as Solidity or Java, which cut off the majority of developers, who could have written many applications, like in the Ethereum case. Overall, the mainnet wasn’t released, and the 30th April deadline wasn’t met. It was a failure.
The lessons learned by the blockchain community
After such an outcome, many people think that fundraising for blockchain projects is doomed. However, it’s not as bad as it seems. Of course, governments around the world won’t allow anymore to raise money from average Joes. Now the blockchain technology is becoming something mainstream, just another technology along with AR, VR, AI, robots, and 3d printing. Thus the blockchain project founders have to go to VC investors and pitch their projects and get money if their projects are worth it. Of course, it was easier back then in 2017 because FOMO-driven retail investors never bothered themselves with evaluating projects. Now only the viable ideas get funding, and that’s right.
Another important lesson is to always be realistic about your capacities. It’s pretty easy to promise something, but the only thing that matters is how you deliver it. Blockchain projects should be all about the real-world use, aimed at real customers, solving their problems more effectively than before. A project that has real application, will always meet some demand. Such projects as CoinLoan, which has a constantly growing user base, and solves real problems of lending and taking crypto loans, won’t ever have a struggle with the goal, because it already has a simple yet a clear goal. The same can be said about many other viable projects and teams. For those who work hard and don’t promise too much, everything will be alright.
We hereby inform all readers that the views, and thoughts expressed in the text are taken from the open sources and reflect only personal attitude to the issue. Neither publisher nor its author shall remain liable for any inconsistencies between the real situation and the conclusions made by this article.