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July 28, 2024
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TON Q2 Analysis: A Stellar Quarter for DeFi Growth
TON’s DeFi ecosystem experienced a transformative second quarter of 2024, marked by the launch of native USDT, which significantly boosted its liquidity and transaction volumes. This surge has positioned liquidity pools like TON/USDT on DeDust and STON.fi among the largest stablecoin exposure pools on the blockchain, according to data from DefiLlama.
Key Developments in TON’s DeFi Landscape
The introduction of native USDT on TON has led to a sevenfold increase in Total Value Locked (TVL) during Q2, surpassing Ethereum in terms of daily active addresses. This period has seen explosive growth across various metrics, particularly after the launch of native USDT which greatly enhanced the liquidity of major DeFi protocols on the platform. Incentive programs also played a crucial role in attracting new users and boosting ecosystem TVL, with wallet counts and monthly active wallets growing by over 200% during the quarter.
As of July 29, TON ranks seventh in daily active users and eighth in monthly active users among public blockchains, as per Token Terminal data.
Leading DEX Liquidity Pools
DEX protocols have regained a dominant position in TVL, a shift typically held by liquidity staking protocols. This change is driven by the significant increase in TVL in liquidity pools on STON.fi and DeDust, especially the USDT-TON trading pair.
By the end of Q2, DeDust and STON.fi accounted for over 50% of TON’s TVL. The TVL for DeDust and STON.fi grew tenfold and fivefold, respectively, with most of this growth occurring in June, aligning with the trends observed in the TON/USDT LP pools on these DEXs.
Excluding USDT pools, STON.fi maintained its lead, accounting for 61% of the ecosystem’s DEX TVL by the end of the quarter.
To promote the adoption of USDT-TON, the TON Foundation allocated 10 million TON tokens to DeDust and STON. Users can now provide liquidity in TON and USDT-TON on these two DEXs and earn an annualized yield of about 50%. Currently, the TVLs of these pools stand at $301.12 million and $286.75 million, respectively.
Strong TVL Growth in Smaller Protocols
While DEXs led in terms of TVL growth value this quarter, smaller protocols like EVAA and Storm Trade showed the best percentage growth due to their smaller sizes, making their growth percentages particularly impressive.
EVAA’s TVL soared in mid-May and mid-June, coinciding with substantial inflows of funds, the first peak potentially influenced by EVAA announcing its annual yield on TON rising to 100%.
Storm Trade’s TVL surge aligned with The Open League activities and the introduction of a USDT treasury, a yield optimizer that “pools liquidity from private markets and channels it into staking protocols to optimize returns.”
Moreover, Storm Trade launched multi-coin collateral this quarter. This new feature allows users to use various cryptocurrencies like TON and USDT as collateral for futures trading on various currency pairs. It aims to significantly improve user experience by increasing asset utilization and reducing the hassles of frequent token conversions.
Emerging DEX Models Enter the Ecosystem
This quarter, TON introduced two projects with alternative trading execution models and new derivatives DEXs.
ION is the first liquidity DEX on TON, adopting a ‘bin’ system-based order execution model in its hybrid order book AMM. This system allows liquidity providers to allocate their funds to specific price ranges, enhancing liquidity efficiency and reducing slippage. Each range represents a different price point, ensuring liquidity is concentrated where it is most needed. This method optimizes returns for liquidity providers by concentrating funds in high-demand areas and enhancing the trading experience by offering better prices and more efficient transactions.
DEX Diamonds is a jetTON DEX aggregator launched via its Telegram Mini APP. The platform aggregates liquidity from STON.fi and DeDust. DEX aggregators like DEX Diamonds operate by merging liquidity from multiple decentralized exchanges into one platform. This approach offers better token prices and lower slippage for users, as aggregated liquidity increases compared to a single DEX. Additionally, DEX aggregators allow users to execute trades across various DEXs without needing to compare prices or manually navigate multiple interfaces, simplifying the trading process. This leads to 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 a seamless and efficient trading experience for its users offering up to 100x leverage for its Bitcoin and Ethereum perpetual contracts. Tradoor positions itself as an NDMM (i.e., a Normally Distributed AMM). NDMM is a unique pricing mechanism that uses advanced mathematical models to ensure efficient pricing, enhancing the trading and LP experience. The NDMM mechanism calculates the deviation rate for each trading pair based on the difference between long and short positions, then uses a normal distribution function to determine the premium rate. This method ensures liquidity providers always act as passive trading counterparts, trading at consistent prices, thereby reducing risk and maintaining market stability.
TON Implements EVM Features Through TON Application Chain (TAC)
TON is a non-EVM public blockchain, meaning it does not support the Ethereum Virtual Machine (EVM)—the runtime environment for smart contracts on Ethereum. Examples of non-EVM blockchains include Bitcoin, Solana, and Polkadot. These blockchains could benefit from EVM features because integrating EVM would allow them to leverage a broad ecosystem of Ethereum-compatible tools, DApps, and developer expertise. However, introducing EVM features to non-EVM chains is highly complex due to differences in underlying architecture, consensus mechanisms, and programming languages, requiring significant engineering efforts.
Ultimately, TON achieved EVM compatibility through a layer-two solution based on Polygon technology. The TON Application Chain (TAC) is a new protocol that facilitates this integration by leveraging Polygon’s zkEVM. Polygon was chosen as the basis for EVM compatibility, allowing TON to maintain its high throughput and low latency while utilizing Polygon’s expertise in creating scalable and efficient layer-two solutions.
Enhancing DApp Development on TON: Introduction of TonFura
TonFura aims to improve the overall performance and scalability of applications on the network, providing developers with powerful tools to effortlessly build and deploy high-performance DApps.
TonFura’s core products include the TonFura SDK, which offers developers a comprehensive toolkit for building and managing DApps, and seamless access to blockchain data and services.
TonFura complements the TON API by simplifying access to TON’s features, allowing developers to manage DApps, tokens, and payments while providing advanced data analytics and seamless integration with various blockchain services. The TON API is deeply integrated into various Web3 domains on TON. Some of the DeFi integrations with the TON API include STON.fi, DeDust, TONstarter, and TON Whales.
Disclaimer: The projections and information presented here are for educational purposes only and should not be considered financial advice. CoinGrab.Asia assumes no responsibility for any losses resulting from the use of this data. Readers are encouraged to perform their own research and proceed cautiously before engaging in any related activities.
