The State of TON DeFi Q2 2024
Disclaimer: The tokens, exchanges, and yield instruments mentioned in this article are provided for informational purposes only and should not be interpreted as endorsements or investment advice. Readers are strongly advised to conduct their own thorough research before deciding to interact with, invest in, or participate in any transactions involving the mentioned tokens or yield instruments.
This public article is the result of an internal report conducted by The Open Platform.
As always, we continue to highlight key developments within each DeFi segment, unveil new projects, and outline the trajectory of TON’s DeFi ecosystem.
Q2 2024 was a transformative period for TON’s DeFi ecosystem, marked by a significant increase in liquidity and trading volumes following the launch of native USDt. This boost propelled TON/USDt pools on DeDust and STON.fi to become the largest multi-exposure pools with stablecoins across all blockchains tracked by DefiLlama. Additionally, the quarter saw impactful infrastructure launches. In this report, we will explore:
- Trends in the higher-level metrics
- Market dynamics within the liquidity pools of TON’s DEXs
- TVL performance of smaller protocols: EVAA Protocol and Storm Trade
- Launch of ION Finance, DEX Diamonds, and Tradoor
- The first solution to bring EVM capabilities to TON: TON Applications Chain (TAC)
- Introduction of TonFura, a decentralized development platform.
USDt-TON Launch Drives 7x TVL Growth in Q2 2024, TON’s DAAs Surpass Ethereum
Q2 2024 was marked by an explosion in blockchain usage metrics. One of the most notable events was the launch of native USDt on TON, which has provided a major boost to liquidity and trading volumes across all major DeFi protocols on TON. The accompanying incentives programs played a crucial role in driving user acquisition and enhancing the TVL across the ecosystem, with the number of wallets and monthly active wallets increasing by more than 200% over the quarter.
At the same time, TON’s average Daily Active Addresses (DAAs) have been on a steady upward trend since the start of The Open League. The growth has seemingly accelerated with the introduction of the native USDt on April 19th. In June, TON’s DAAs surpassed that of Ethereum:
This translates to TON ranking 7th by Daily Active Users and 8th by Monthly Active Users among Layer-1 blockchains as of July 29, 2024, according to Token Terminal.
These metrics were largely driven by the market dynamics on TON-based DEXs associated with the ongoing Open League and the incentive campaigns around the launch of USDt-TON.
DEX Liquidity Pools are Reaching Top Rankings Across All Networks
DEXs are regaining their TVL dominance, which previously belonged to Liquid Staking. This shift follows from the surge in TVL of liquidity pools on both STON.fi and DeDust, especially in pools for trading pairs with USDt-TON.
DeDust and STON.fi accounted for more than 50% of TON’s total TVL by the end of the quarter:
DeDust and STON.fi experienced a 10-fold and 5-fold growth in TVL respectively over Q2 2024, most of which occurred in June. This trend overlaps with the appearance of boosted TON/USDt LP pools on both DEXs.
When not accounting for the pools with USDt, STON.fi maintains its leadership, accounting for 61% of the DEX TVL in the ecosystem by the end of the quarter:
To boost the adoption of USDt-TON, TON Foundation allocated 10M in Toncoin to DeDust’s and STON. fi’s TON/USDt liquidity pools. Users can now earn ~50% APR on both DEXs by providing liquidity in TON and USDt-TON. As of this report, the TVL of the two pools reached $301.12M and $286.75, respectively, which makes DeDust the largest and STON.fi the second largest multi-exposure pools with a stablecoins across all blockchains that are tracked by DefiLlama:
This unprecedented event is highly valuable to the visibility of these protocols beyond TON’s community. TON-based DEXs are becoming a focal point for liquidity and decentralized trading that integrates TON into mainstream DeFi.
Smaller Protocols Show Strong TVL Growth in Q2 2024
While DEXs led the quarter with an absolute increase in TVL, EVAA Protocol and Storm Trade were top performers by percentage growth. Their growth, although impressive in percentage terms, reflects the smaller base from which they started:
EVAA Protocol’s spikes in TVL overlap with the large USD inflows in mid-May and mid-June. The first spike may have been influenced by EVAA announcing up to 100% APY on supplied $TON.
The increase in supply and borrow may have also been influenced by the attractive supply APY for USDt and the high demand for borrowing USDt, which may be used for various yield opportunities across the ecosystem. As of 29.07.24, USDt contributes 41% and 57% of EVAA’s supply and borrow markets, respectively.
Storm Trade’s surge in TVL overlaps with the tournament held as part of The Open League and the introduction of USDt vault, a yield optimizer that “aggregates liquidity from all markets and optionally directs it to staking protocols to optimize yield.”
Additionally, Storm Trade introduced multi-coin collateral this quarter. This new feature allows users to use multiple types of cryptocurrency, such as TON and USDt, as collateral for futures trading across various pairs. It is meant to greatly improve the user experience by increasing asset utilization and reducing the need for frequent cryptocurrency conversions.
New DEX Models are Entering the Ecosystem
Two projects with alternative trade execution models and a new derivatives DEX were introduced to TON this quarter.
ION Finance is the first concentrated liquidity DEX on TON that employs an order execution model based on a “bin” system within its Hybrid Order Book AMM. This system allows liquidity providers to allocate their funds into specific price segments, or bins, making liquidity more efficient and reducing slippage. Each bin represents a distinct price point, ensuring that liquidity is concentrated where it is most needed. This method optimizes returns for liquidity providers by focusing their capital in high-demand areas and enhances the trading experience by offering better prices and more efficient trades. Learn more about ION Finance’s order book AMM.
DEX Diamonds, a new jetton DEX aggregator, has launched its Telegram Mini App. The platform aggregates liquidity from STON.fi and DeDust. DEX aggregators like DEX Diamonds work by combining liquidity from multiple decentralized exchanges into one platform. This approach provides users with better token prices and lower slippage due to the increased aggregated liquidity compared to individual DEXs. Additionally, DEX aggregators simplify the trading process by allowing users to execute trades across various DEXs without needing to compare prices or navigate multiple interfaces manually. This results in a more efficient, cost-effective, and user-friendly trading experience, making it easier for traders to find the best rates and execute larger trades seamlessly.
Tradoor is a new derivatives DEX on TON, designed to provide seamless and efficient trading experiences for users with up to 100x leverage on its Bitcoin and Ethereum Perpetuals. Tradoor presents itself as NDMM, or Normal Distribution-Based AMM. NDMM is a unique pricing mechanism that leverages advanced mathematical models to ensure efficient pricing, enhancing trading and LP experience. The NDMM mechanism calculates the deviation rate for each trading pair based on the difference between long and short positions and then determines the premium rate using a normal distribution function. This approach ensures that liquidity providers always act as passive counterparties, transacting at a consistent price, which mitigates risks and maintains market stability (source).
TON Achieves EVM Capabilities with TON Applications Chain (TAC)
TON is a non-EVM blockchain, meaning it does not natively support Ethereum Virtual Machine (EVM) — the runtime environment for smart contracts on Ethereum. Examples of non-EVM blockchains include Bitcoin, Solana, and Polkadot. These blockchains may benefit from EVM capabilities because integrating EVM would allow them to leverage the extensive ecosystem of Ethereum-compatible tools, dApps, and developer expertise. However, bringing EVM capabilities to non-EVM chains is complicated due to differences in underlying architectures, consensus mechanisms, and programming languages, which require significant engineering efforts.
We previously discussed the possibilities for bringing EVM capabilities to non-EVM chains. Finally, TON achieved EVM compatibility through a new Layer 2 solution based on Polygon’s technology. TON Applications Chain (TAC) is a new protocol that facilitates this integration by leveraging Polygon’s zkEVM. Polygon was chosen as the base for EVM compatibility to allow TON to maintain its high throughput and low latency while leveraging Polygon’s expertise in creating scalable and efficient Layer-2 solutions.
The combination of EVM capability and TON’s integration with Telegram creates unique synergies by enabling seamless access to Ethereum-compatible dApps and smart contracts directly through the widely used Telegram platform. This integration can drive mass adoption by making Ethereum-based DeFi dApps more accessible to Telegram’s vast user base. Users can manage assets, interact with dApps, and execute smart contracts within a familiar environment, fostering broader engagement and enhancing the reach of both TON and Ethereum ecosystems.
Enhancing dApp Development on TON: Introducing TonFura
This quarter saw the launch of TonFura, a decentralized platform designed to provide fast and efficient services on TON. TonFura aims to improve the overall performance and scalability of applications on the network, offering developers powerful tools to build and deploy high-performance dApps effortlessly.
TonFura’s core products include TonFura SDK, which provides developers with a comprehensive toolkit for building and managing dApps, and TonFura API, which offers seamless access to blockchain data and services. Learn more in TonFura Documentation.
TonFura complements TON API, a comprehensive interface that simplifies access to TON blockchain’s functionalities, enabling developers to manage dApps, tokens, and payments while offering advanced data analytics and seamless integration with various blockchain services. TON API is an established platform deeply integrated across a variety of TON’s web3 landscape segments. Some of TON API’s DeFi integrations include STON.fi, DeDust, Tonstarter, and TON Whales.
TON API, part of TON Apps ecosystem, plays a crucial role in providing seamless access to blockchain data and services, including innovative features like W5 Standard, which allows TON builders to enhance their dApps with gasless USDt payments. The platform offers tools for performing detailed blockchain analytics using SQL queries and visualizing account connections, enhancing the depth and usability of data analysis. Additionally, TON API supports various integrations, such as payment processing, making it easier for developers to set up crypto payment flows and manage transactions efficiently.
Future Outlook
The launch of the native USDt has had a profound impact on TON ecosystem. USDt-TON has provided the necessary liquidity foundation, while the rise of DEX activity has catered to the growing demand for decentralized trading. This drove the liquidity pools of TON-based DEXs to achieve top rankings across all blockchains, which is an unprecedented milestone.
While these developments are highly positive, it’s crucial to acknowledge the potential risks associated with the future end of liquidity boosts. Once the incentive programs conclude, there could be a significant outflow of liquidity as users move their assets to other opportunities offering higher returns. This scenario could impact the stability and attractiveness of TON’s DeFi ecosystem in the short term.
To mitigate these risks, the TON community and developers need to focus on creating sustainable value propositions and long-term incentives that go beyond temporary boosts. This includes building more innovative DeFi applications, enhancing user experience, and continuously engaging with the community to maintain interest and participation.
DeFi is the lifeblood of a thriving on-chain ecosystem, enabling economic activity and liquidity. It unlocks consumer and enterprise use cases by offering access to capital and facilitating fast, cheap transactions.
In Q2, TON made significant strides with the launch of native USDt and several breakthrough apps, leading to a 3x growth in MAW and a 7x growth in TVL. Having a native stablecoin will enable DeFi to trade larger volumes and facilitate commerce through payments. This growth is driven by major entities like @wallet and Ston.Fi, which support the surge in consumer activity with their infrastructure and liquidity.
We are still in the early stages of TON DeFi, but we are already witnessing the emergence of a vibrant ecosystem and believe in the future of the open economy for all!
Einar H. Braathen, Web3 investor @ CoinFund
The introduction of W5, a standard for gasless USDt payments developed by Tonkeeper, adds another layer to USDt-TON’s utility. By allowing users to pay gas fees using the same tokens they are transferring, W5 encourages more users to participate in TON ecosystem but also attracts developers looking to build cost-effective and efficient applications.
The synergy between TON-based DeFi, Telegram, and the latest infrastructure updates, such as TON Applications Chain, caters to both proficient DeFi enthusiasts seeking to benefit from interoperability and emerging markets, as well as a broader audience that needs easy onboarding onto both TON and Ethereum ecosystems.
EVM capabilities present TON with multiple growth opportunities. In future reports, we will explore how the seamless deployment of Ethereum-compatible smart contracts will enhance diversity, competition, and decentralization across various DeFi segments on TON.
Do you have ideas about bringing more value and utility to our DeFi ecosystem? DM us on Twitter or visit our official website: https://top.co.
