TON Scalable DeFi
In 2015, the Ethereum blockchain saw the arrival of a new standard called ERC-20, allowing anyone to create their own tokens (cryptocurrencies) in the network.
A few years later, in 2018, the ERC-721 standard was introduced for NFTs, which prove ownership over something.
These standards have given birth to the DeFi, or decentralized finance, phenomenon. Exchange, purchase, sale, and other operations in digital assets happen entirely in blockchain's smart contracts.
When trading on centralized venues, you temporarily transfer ownership of your funds to the platform. A successful hacker attack, system malfunction, or data center incident may each cause the loss of all your money. It can also be restricted by the exchange itself, often for no good reason.
It shouldn't come as a surprise that most recently, we've seen surging popularity of decentralized exchanges (DEX), liquidity pools, and other DeFi services that are immune to such shortcomings.
Scalable DeFi
One of the TON's major missions is to ensure mass adoption of decentralized tech.
Exposure to blockchain and cryptocurrency grows by the day, but they are still used only by a small percentage of the world's population.
In order to become a massively-adopted, billion-user-and-transaction-scalable solution, we've invented a new approach toward the design of tokens and DeFi.
In most other chains, a token represents a single smart contract.
The Ethereum-powered USDT token stores balances of all 4 million users in a single smart contract.
All 10,000 NFTs of the Ethereum network's Bored Ape collection are stored in a single smart contract of the collection.
The rest of the tokens and NFTs are built in the same way. Even third-party blockchain projects retain the identical architecture in a bid to preserve their compatibility with Ethereum.
Each and every user turns to just one contract, congesting the single point in the network.
While a blockchain is used by millions, that's somewhat tolerable, but once it enjoys hundreds of millions or even billions of users, that scheme is destined to collapse.
TON-powered tokens and NFTs do not have a single center and do not create bottlenecks.
Each NFT in a given collection is a separate smart contract. The token balance for each user is stored in a separate user wallet.
Smart contracts interact with one another directly, spreading the load on the whole network.
With the growth in user and transaction count, the load will still be even, allowing the network to scale.
The TON network itself employs the infinite sharding mechanism (which implies splitting into subchains in order to withstand loads). The flatter the load, the more efficient that mechanism is.
It's around 500 times less expensive to mint an NFT on TON than on Ethereum. Even if the Toncoin's rate fluctuates significantly, the network fee will stand at the same level.
Thanks to a distributed architecture, the current high speed of processing transactions will remain even when their number increases astoundingly.
Development
TON's implemented new concepts that were unavailable in previous-generation blockchains.
For the last three months, we've been working to locate a proper solution for creating scalable DeFi in TON.
To tell the truth, we didn't immediately find a sound approach to bringing tokens and DeFi as a whole to The Open Network. In order to work in new distributed, asynchronous paradigms, one needs to change the way they think.
But over time, we managed to do just that. Today, we are happy to present ready-made standards and examples of smart contract implementation for Fungible, Semi-Fungible, and Non-Fungible Tokens as well as applied contracts for marketplaces and ICOs.
You can already use them to create any DeFi service that will be ready to onboard a huge number of users. With new approaches come new opportunities, and we've already started covering those.
We are certain that distributed, asynchronous DeFi in TON is one of the developments that brings the mass use of decentralized tech closer than ever.