Synthetic Assets: The Promising Frontier of On-Chain Financial Engineering


<figure><img alt="" src="https://cdn-images-1.medium.com/max/1024/1*p7ncYcpWA2V6hdpEJY50tw.jpeg"></figure><p>Note from First Stage Labs: This public article is the result of an internal report conducted between May 2023 and June 2023.</p>
<h3>How We Collected the Data</h3>
<p>This report provides insights from market research conducted in Malaysia, Indonesia, and Brazil. The findings are derived from in-depth interviews with crypto investors and traders. We will cover the following topics in this report:</p>
<ul>
<li>Crypto market overview</li>
<li>Crypto trading and investing behavior</li>
<li>Awareness of Telegram and TON</li>
</ul>
<p>It is important to note that the insights presented in this report reflect the perceptions of a specific group of crypto investors and traders from Malaysia, Indonesia, and Brazil. Results may differ for other target audiences with different criteria or perspectives.</p>
<h3>Crypto Market Overview</h3>
<p>This overview offers a concise summary of the current state of the cryptocurrency market in three specific countries: Malaysia, Indonesia, and Brazil, providing valuable insights into the factors that could potentially impact the performance of the crypto market in these regions.</p>
<h4>Malaysia</h4>
<p>Cryptocurrency has garnered significant attention among the younger generation as they eagerly delve into its ever-evolving landscape. In Malaysia, a growing number of crypto traders and investors are flocking to this digital realm for a multitude of reasons. Some view it as a lucrative profit-making tool, while others consider it a more secure means of utilizing and storing their finances. Curiosity also drives many individuals to explore the world of crypto trading.</p>
<p>In Malaysia, a growing number of individuals view cryptocurrencies as a promising investment opportunity with significant growth potential. They see digital assets as a pathway to potentially profitable returns.</p>
<p>Malaysians hold a positive outlook on the future growth of cryptocurrencies, perceiving them as a profitable investment tool. With their enthusiasm for digital innovation and a prudent approach to volatility, Malaysians are positioning themselves to embrace the opportunities offered by these digital assets.</p>
<p>The legal and regulated status of cryptocurrency in Malaysia is overseen by the Securities Commission (SC) under the Capital Markets and Services Order 2019. While recognized as a security and subject to the country’s securities laws, cryptocurrencies and tokens are not classified as legal tender or payment instruments by Bank Negara Malaysia, the nation’s central bank.</p>
<p>Currently, Malaysia does not have a tax framework for crypto businesses, and there is no capital gains tax enforced for the sale of investments or capital assets. However, companies with digital assets as their primary business activity may be liable for income tax, and crypto exchanges are subject to corporate income tax.</p>
<p>Section 10 of the Currency Act 2020 stipulates that ‘only currency note and currency coin issued by the Bank shall be legal tender in Malaysia at its face value provided that the currency note is not defaced and the currency coin is not tampered with’.</p>
<p>Moreover, Malaysia has no intention of recognizing cryptocurrencies as legal tender, Deputy Finance Minister I Mohd Shahar Abdullah<a href="https://www.bloomberg.com/news/articles/2022-03-24/malaysia-rules-out-adopting-cryptocurrency-as-legal-tender?leadSource=uverify%20wall"> said</a> in parliament (March 24, 2022).</p>
<p>Although many believe that crypto and blockchain hold immense potential, some Malaysian traders and investors do not possess any NFTs. Whether due to a lack of understanding or missing out on the NFT trend, these individuals have yet to explore the possibilities NFTs present.</p>
<h4>Indonesia</h4>
<p>Attitudes towards cryptocurrencies vary among individuals in Indonesia. As one crypto trader mentioned, “There is nothing in between — either you have no idea of what crypto is, or you are crazy about it.”</p>
<p>Like Malaysia, a growing number of younger people in Indonesia are displaying a keen interest in cryptocurrencies, viewing them as promising technology with novel opportunities. While younger generations embrace the potential and technological advancements offered by cryptocurrencies, concerns about market volatility and trustworthiness linger among their families.</p>
<p>Crypto traders and investors in Indonesia expressed concerns about the widespread corruption in the country, fostering a pessimistic outlook not only toward cryptocurrency taxation but also toward other forms of taxation.</p>
<p>Indonesia imposed a blanket ban on crypto payments starting in 2017, while trading in digital assets has largely remained legal in the country. In 2020 Indonesia issued a <a href="https://bappebti.go.id/resources/docs/peraturan/sk_kep_kepala_bappebti/sk_kep_kepala_bappebti_2020_12_01_i6tg8tfb_id.pdf">list</a> of crypto assets (229 in total) that can be traded in Indonesia.</p>
<p>At the same time, Indonesia <a href="https://blog.chainalysis.com/reports/2022-global-crypto-adoption-index/">was</a> one of 2022’s fastest-growing crypto markets, driven primarily by speculative trading. Last year, the country’s trade ministry recorded around 14 million crypto traders against 9 million stock traders.</p>
<p>Indonesia currently bans the use of cryptocurrencies as a means of payment but allows transactions of digital assets in the commodity futures market for investment purposes.</p>
<p>To support the exclusivity of the Rupiah as the only payment instrument, the Central Bank of Indonesia prohibits any payment providers from processing payment transactions using crypto. Payment providers violating this matter will be subject to administrative sanctions.</p>
<p>The current status of cryptocurrency as a commodity in Indonesia has limited the adoption of cryptocurrency by merchants. However, a limited selection of businesses are accepting crypto payments, among them:</p>
<ul>
<li>ESO Trans Digital: ESO Trans Digital is a platform that uses blockchain and NFC technology to facilitate payments and transactions. Users can pay for goods and services with crypto via QR Codes and other payment options.</li>
<li>Nobi: Nobi is a blockchain savings platform that offers users interest on their cryptocurrencies. Users can deposit, save, and stake cryptocurrencies for rewards on its mobile applications.</li>
<li>BCS technology: BCS technology is a blockchain consulting company that builds projects. The company accepts crypto payments for its services.</li>
</ul>
<p>Despite the strong belief in the potential of crypto and blockchain technologies, Indonesian investors and traders exhibit caution when it comes to NFTs. The shared reasons behind the avoidance of NFTs among Indonesian and Malaysian crypto investors and traders reflect a common theme of lacking awareness or missed opportunities.</p>
<h4>Brazil</h4>
<p>In recent years, the Brazilian crypto landscape has witnessed a notable shift in the perceptions and preferences of traders and investors. Many individuals view cryptocurrencies as long-term investments, poised to be utilized in a future where crypto is widely accepted, both within Brazil and worldwide. Apart from seeing the investment potential of cryptocurrencies, Brazilian traders and investors are driven by underlying trust issues with politicians and the state.</p>
<p>Skepticism and misunderstandings surrounding crypto persist among the older generation, who often perceive it as a form of money laundering and associate it with pyramid schemes. Some traders limit their involvement in conversations with their friends and families regarding cryptocurrency until the topic arises spontaneously, while others engage in active discussions about crypto, encouraging interest in this field.</p>
<p>Brazilian crypto traders and investors exhibit a predominantly positive attitude towards taxes, driven by the perception that current laws are not overly stringent. With hopes of legalization, they anticipate an improvement in the overall quality of the Brazilian crypto market.</p>
<p>Since cryptocurrencies represent valuable property rights, their taxation follows the generally applicable rules for movable goods.</p>
<p>Holders of virtual assets must declare them in their income tax statements and are subject to capital gains tax arising from their sales. The exchange of cryptocurrencies, without their conversion at any time into legal tender (fiat currencies), is also subject to capital gains tax, so individuals who solely hold cryptocurrency in a wallet do not need to pay taxes.</p>
<p>Another interesting fact is that Brazil will launch a Central Bank Digital Currency (CBDC) in 2024.</p>
<p>In 2020, the Brazilian Central Bank launched PIX, an instant payment infrastructure that operates 24/7 and has seen tremendous adoption rates. Currently, PIX has more than 122 million active users, which accounts for 57% of the Brazilian population, and 40% of users made their first electronic transfer.</p>
<h3>Crypto Trading and Investing Behavior</h3>
<h4>Indonesia and Malaysia</h4>
<p>Regarding trading and investing in the crypto market, notable differences in attitudes and behaviors emerge between Malaysians and Indonesians. Malaysians exhibit a greater sense of caution, actively managing risks during bearish trends. On the other hand, Indonesians display a resilient approach, continuing to trade and buy cryptocurrencies regardless of market conditions.</p>
<p>These two neighboring countries with shared cultural ties, showcase notable disparities in their approaches to cryptocurrencies. While they may have numerous similarities, their perspectives on crypto diverge. In Indonesia, the National Religious Council deems crypto as haram. In contrast, crypto is considered halal in Malaysia, but with specific conditions, like being traded on registered exchanges, set by The Shariah Advisory Council of Securities Commission Malaysia.</p>
<h4>Brazil</h4>
<p>For Brazilian traders as well as Indonesian ones, bear markets serve as windows of opportunity. They perceive the current market conditions as favorable for strategic investments, enabling them to acquire assets at lower prices. This strategy is driven by the understanding that a bear market can offer attractive entry points, potentially yielding significant gains when the market inevitably rebounds.</p>
<h3>Telegram and TON Awareness</h3>
<p>Participants expressed a positive overall impression of Toncoin, emphasizing the project’s transparency as a key factor that garnered their attention. They appreciate the availability of comprehensive information, such as the project’s ranking, volume, and market capitalization, contributing to trust and security. Additionally, participants emphasize the importance of monitoring the coin’s performance and availability on various exchanges, suggesting a focus on practical aspects and market dynamics.</p>
<p>Telegram has cemented its position as an indispensable messaging app for crypto enthusiasts in Indonesia, Malaysia, and Brazil. Serving as a nexus for crypto traders and investors, it offers a range of features that foster seamless communication, privacy, and professional connectivity within the crypto community. While participants primarily rely on Telegram for receiving crypto-related news and updates, they recognize its complementary role alongside other messaging apps in maintaining social connections beyond the crypto realm.</p>
<h3>What’s next?</h3>
<p>Our research team will continue to conduct market research in various countries, offering valuable insights into the current market state, potential customer behavior and preferences, and competitive landscape.</p>
<p>Ready to build on TON? DM us on Twitter.</p>
<p>Our website is <a href="http://fslabs.io/">http://fslabs.io/.</a></p>
<p>We are First Stage Labs. Accelerating Blockchain Startups to Escape Velocity.</p>
<img src="https://medium.com/_/stat?event=post.clientViewed&amp;referrerSource=full_rss&amp;postId=5fc42ab7f45c" width="1" height="1" alt="">


Crypto Market Research: Malaysia, Indonesia, Brazil

Stablecoins: Collateralized vs Algorithmic


<figure><img alt="" src="https://cdn-images-1.medium.com/max/1024/0*e6iQlqZNz53fxkBF"></figure><h3>History of GameFi</h3>
<p>In 2022, the GameFi industry experienced substantial growth and innovation. The aggregated market capitalization of all GameFi tokens reached a significant milestone of $25B on April 1, 2022. While this figure did not surpass the industry’s all-time high of $36B from November 2021, the resilience of the sector is evident. Footprint Analytics collated this data by integrating the market cap of governance tokens with other in-game currencies across various GameFi projects.</p>
<p>There was also a 2022 surge in blockchain games with 717 new products being introduced that matched the robust growth of 2021. As a result, there were 2,171 GameFi protocols on blockchain by the end of the year. However, this influx of new games did not translate into widespread usage, as only <strong>14.5% of GameFi products managed to attract more than 1,000 users</strong>. This suggests that the majority of games, despite their availability, struggled to secure significant traction among players.</p>
<p>In terms of transaction volumes, the industry witnessed a peak in the week of January 2–8, 2022, with an impressive $916.5M in capital flowing through GameFi protocols. However, a surge in transaction volume does not necessarily indicate heightened activity, as transactions can also reflect bearish sentiment, such as selling and outflows. This was exemplified during the week of July 17–23, when GameFi transactions reached their zenith at 184.5K. Interestingly, the most substantial monthly decline in volume occurred from April to May, when GameFi volume reduced by approximately 62%, primarily due to the collapse of Terra Luna in the first half of May.</p>
<figure><img alt="" src="https://cdn-images-1.medium.com/max/1024/0*v2LAgX-UyE4gvnGE"></figure><p>From the perspective of blockchain games, as of December 25, 2022, 62 active GameFi projects made up the main sphere. STEPN, a game pioneering the Move-to-Earn model, garnered the most users, boasting a total of 1.8 million. Other games that achieved significant user engagement include Splinterlands and Alien Worlds, both of which dominated the leaderboard for active users throughout the year. Despite Ethereum’s known challenges with congestion and high gas fees, Cryptokitties had the highest total users among all games on Ethereum, with 112.6K users.</p>
<figure><img alt="" src="https://cdn-images-1.medium.com/max/1024/0*U3YEUyMNVr7aLMZL"><figcaption><em>Top Projects by Total Users</em></figcaption></figure><p>Examining the chains used for GameFi, Wax emerged as the most active in 2022, with 351K active users and a Daily Active User Ratio of 57%. Wax also held the largest market share, with 40.47%, closely followed by Hive, which held 20.86%. A growing trend in 2022 was the adoption of multi-chain strategies, with 149 games opting for this approach, a considerable increase from 63 in 2021. Among developers, BNB emerged as the chain of choice, hosting 748 projects by the end of the year, largely due to its low gas fees and the ease of launching protocols.</p>
<figure><img alt="" src="https://cdn-images-1.medium.com/max/1024/0*aaxqC4YvyZtsrbqE"><figcaption><em>Top Chains by DAU 2022 vs 2021</em></figcaption></figure><p>When looking at investment and fundraising in the GameFi sector in 2022, Epic Games stood out with the largest funding round. They secured an impressive $2B investment from Sony and Kirkbi for their metaverse project. Animoca Brands, the company behind The Sandbox, raised $434M in two funding rounds and distributed funds in 61 rounds, establishing itself as one of the largest recipients of funding and the most significant investor in GameFi. Despite the nascent status of GameFi, the sector received 16% of total blockchain industry investments in 2022, more than any other category. This led to an 84% increase in total gaming investment from 2021 to 2022, highlighting the escalated interest in the GameFi industry.</p>
<h3>GameFi on Solana, BNB, Wax, and TreasureDAO</h3>
<figure><img alt="" src="https://cdn-images-1.medium.com/max/1024/0*1MTEqJqqkqpSvM9A"><figcaption><em># of Projects by Chain</em></figcaption></figure><figure><img alt="" src="https://cdn-images-1.medium.com/max/1024/0*G9xp799B9n_fM5pz"><figcaption><em>GameFi Protocols by Chain</em></figcaption></figure><p>In the realm of GameFi, the choice of blockchain significantly impacts the success and reach of a product. In 2022, a wide range of chains demonstrated varying levels of activity and growth. Wax emerged as the most active chain with 348,070 users, a 55.2% increase in its user base from 2021. Hive came second with an impressive growth rate of 97.35%, increasing its user base to 258,876. BNB Chain and Polygon also experienced considerable growth, with Polygon exhibiting a staggering growth rate of 379.59%, albeit from a smaller base. Conversely, Ronin and ThunderCore both experienced a contraction in their user base, with Ronin witnessing a substantial decrease of -44.4%.</p>
<p>The BNB Chain, an early entrant in the dApp ecosystem, has evolved into a robust platform, boasting 904 games by May 2023. The chain, renowned for its vibrant community and comprehensive developer toolkits, has become a prominent platform for GameFi projects. It has seen the development and launch of notable games such as MOBOX and Radio Caca. With a market capitalization of $325,422,740 and a 24-hour trading volume of $26,822,185, the BNB Chain represents a significant portion of the GameFi industry. MOBOX dominates the BNB Chain with a market cap equal to 24.17% of the chain’s total.</p>
<p>Solana, a more recent entrant in the blockchain space, has seen exponential growth, particularly in 2022. With a focus on scalability and user-friendly dApps, Solana has quickly established itself as a major player. The chain hosts 175 games, with its market cap reaching $355,397,632 and a 24-hour trading volume of $30,385,810. Solana’s market is primarily dominated by STEPN, with a market cap that makes up 66.34% of the chain’s total. Other noteworthy games on Solana include Star Atlas and Aurory. This surge in Solana’s popularity can be attributed to its technological breakthroughs, commitment to investing $100M in developing gaming projects, and a rapidly expanding ecosystem.</p>
<p>Towards the end of 2022, TreasureDAO, an ecosystem focused on gaming, gained prominence in the GameFi sector thanks to The Beacon, a new dungeons ARPG. According to Arbitrum statistics, The Beacon exceeded 40K mints, 22.7K users, and 20K average DAU in the first weeks of December, with their Discord and Twitter numbers increasing in tandem. The main ecosystem advantage is its specialized infrastructure, characterized by high performance, low costs, and fast processing speeds, specifically tailored for GameFi projects.</p>
<p>The Wax blockchain has played a pivotal role in the GameFi industry, demonstrating resilience and sustained growth even amidst challenging market conditions. Despite the bearish market and macroeconomic pressures that pervaded 2022, the GameFi sector continued to grow, and Wax held its place among the top three GameFi blockchains by users.</p>
<p>One of the most compelling aspects of Wax’s performance in 2022 was its dominance in terms of gaming transactions. Data from Footprint Analytics indicated that over 82% of all gaming transactions were conducted on the Wax blockchain, a substantial lead over other chains. This dominance is indicative of the robustness of the Wax ecosystem and the trust users place in its security and reliability.</p>
<p>Although there was an overall decrease in daily unique active wallets in the GameFi industry in 2022, Wax maintained a strong user base. Despite an 11% decrease in active wallets in August, Wax still accounted for over 50% of the industry’s overall usage. Moreover, Wax led the market in terms of the number of active cross-chain GameFi users, boasting 326,516 active users.</p>
<p>The diversity of the Wax ecosystem also stood out in 2022. Volume distribution of Wax game protocols revealed that Taco and Alien Worlds were the most active, with volumes of 23,639 and 21,055 respectively. The top 10 game protocols by trading volume on Wax was led by Alien Worlds, which commanded a daily volume of over 670 million.</p>
<h3>The TON GameFi Ecosystem</h3>
<p>TON Blockchain has made substantial advancements in expanding the prospects of its GameFi sphere. Initiated in 2022, TON’s GameFi project development has resulted in an ecosystem with</p>
<blockquote><em>25 games, 30 gambling platforms, and the TON Play GameFi platform</em></blockquote>
<p>The TON Punks team, creators of one of the first NFT collections on the TON, holds a significant place within the ecosystem. With a primary sale of $1.5 million and a secondary market volume of $2 million, a community of up to 80,000 members on Telegram, they have demonstrated their capacity for successful project implementation and community engagement. Their latest project, PunkCity, further underscores their commitment to the GameFi platform. As the first game in the $punk ecosystem, PunkCity’s integration with Telegram and fair play guaranteed by smart contracts opens a new way for games on the TON. The TON Punks team’s pioneering efforts are instrumental in supporting the TON ecosystem’s growth and development.</p>
<p>TON Play is an integral part of TON Ecosystem, providing a toolkit that empowers game developers to tap into the extensive user base of Telegram, which currently stands at over 700 million users. It offers a plethora of services including international pay-in and pay-out options, near-instant payouts in TON for games with cash prizes, and revenue-share programs in TON for power players.</p>
<p>The integration of the Unity SDK with TON Play allows developers to publish Unity-based games as Telegram Web Apps, thereby providing access to Telegram’s vast user base in countries such as India, Brazil, and the Philippines. TON Play also facilitates the creation, publication, and management of unique digital assets like items, skins, passes, etc., adding an additional revenue stream for developers.</p>
<p>TON Play also enables the launch of in-game marketplaces, where assets can be sold directly to users, further enhancing monetization opportunities. The platform’s use cases extend across various game genres, from casual games to RPGs and mobile games, providing innovative ways for game developers to monetize their content in restricted markets.</p>
<h3>TON Ecosystem’s Potential</h3>
<p>In the dynamic GameFi landscape, the ability to leverage an established and far-reaching user network can be a true game-changer.</p>
<p>One of TON’s key advantages is its integration with Telegram, which provides it with a readily available and massive user base. Given that TON is Telegram’s native chain, it benefits from the robust technological infrastructure and innovative spirit of Telegram, which recently began to build its own products on TON.</p>
<p>A diverse collection of games, ranging from casual to RPGs, and especially mobile games, has proven to be a magnet for diverse user bases across various successful ecosystems, and TON also needs to increase the number of such projects. The release of tools to unleash the full potential of innovative monetization instruments are also vital catalysts for growth.</p>
<p>TON’s payment solution allows for seamless transactions in any country, negating the need for separate payment systems in different markets. This ease of payment, coupled with minimal compliance requirements, enhances the user experience significantly. Furthermore, the integration process is exceptionally efficient, with the initial integration of TON’s payment solution requiring just one day, followed by the addition of a digital assets API to boost game revenue.</p>
<h4>Useful Links</h4>
<ul>
<li><a href="https://chainplay.gg/chain/bsc/">Top BNB Chain by Market Cap 2023 - Chainplay.gg</a></li>
<li><a href="https://chainplay.gg/chain/solana/">Top Solana by Market Cap 2023 - Chainplay.gg</a></li>
<li><a href="https://www.footprint.network/chart/Top-Volume-Games-in-2022-fp-34973">Top Volume Games in 2022 - Footprint Analytics</a></li>
<li><a href="https://tonplay.io/">TON Play - a platform to build and play web3 games.</a></li>
</ul>
<p><a href="https://ton.app/">https://ton.app/</a></p>
<p><a href="https://dune.com/treasuredao/the-beacon">https://dune.com/treasuredao/the-beacon</a></p>
<img src="https://medium.com/_/stat?event=post.clientViewed&amp;referrerSource=full_rss&amp;postId=791e2b8db073" width="1" height="1" alt="">


The State of TON GameFi

MENA Region: Web3 Ecosystem


<figure><img alt="" src="https://cdn-images-1.medium.com/max/1024/1*x_L1zBJFJLlpgSE8_KPLWw.jpeg"></figure><p>The first quarter of 2023 has been an exciting period for the decentralized finance (DeFi) ecosystem of TON. We have seen the launch of new projects and increased TVL performance when compared to peer blockchains. This update will discuss an overview of existing DeFi projects, the network’s performance in comparison to other blockchains, and the drivers of TVL growth in this quarter.</p>
<h3>Overview</h3>
<p>While the number of wallets increased by 35.4%, MAU and transaction volume stalled in Q1 2023. The key DeFi metric, TVL, saw a 26-fold upsurge during that period. The rise is related to the launch of Megaton Finance and other new DEXs which we will discuss in the following sections.</p>
<figure><img alt="" src="https://cdn-images-1.medium.com/max/1024/1*up1Dbr0dHKEFTlGK1HZyyA.png"><figcaption><em>Sources: TonApi.io, DefiLlama, TonTech.io</em></figcaption></figure><p>The TON DeFi ecosystem currently has several competing DEXs and two new lending protocols, but no advanced capital efficiency tools such as yield optimizers or derivatives exchanges are there yet. Users can swap tokens, yield farm, provide liquidity, or make staking deposits in non-DEX protocols such as TonStake, Ton Whales or pTON.fi.</p>
<p>DeFi checklist:</p>
<figure><img alt="" src="https://cdn-images-1.medium.com/max/1024/1*-ypSnmy1bbMhIKk3U9op3w.png"></figure><h3>DEX projects</h3>
<p>Overview of the DEX projects on TON:</p>
<figure><img alt="" src="https://cdn-images-1.medium.com/max/792/1*h0n5eaiRQ5VikFfpCI72cQ.png"></figure><p>This quarter saw the launch of two new DeFi projects on TON: Megaton Finance and DeDust.</p>
<h4><a href="https://megaton.fi/">Megaton Finance</a></h4>
<p>Megaton Finance is a DeFi platform developed by Ozys, a blockchain company with a strong record in the development of DeFi protocols. Megaton Finance is an AMM-based DEX on TON Mainnet offering revenue generation opportunities such as swap, yield farming, and dashboard. It will be integrated with Orbit Bridge which connects 18 mainnets.</p>
<p>Ozys has a long history of developing DeFi protocols, having built several like KLAYswap on Klaytn, Meshswap on Polygon, a cross-chain platform Orbit Bridge, and a lending protocol Belt Finance on Binance Smart Chain. With Megaton Finance, Ozys aims to further strengthen TON Ecosystem through integration with the TON-supported Orbit Bridge. Megaton Finance will also bring major crypto assets like ETH, BTC, USDT, and USDC to solidify the foundation of the TON Mainnet ecosystem.</p>
<p>TONcoin.Fund, the main incubator and accelerator for The Open Network (TON) has led a $1.5 million seed funding round for Megaton Finance in March. Megaton Finance secured strong backers early on, including Cypher Capital, First Stage Labs, Orbs, MEXC Ventures, and other strategic investors.</p>
<p>Megaton Finance plans to expand its financial offerings for TON holders and those interested in blockchain ecosystems. This includes features like swapping and yield farming, as well as advanced services such as lending, leverage farming, staking, governance, and more. The Ozys-developed Telegram chatbot function will also be integrated with the Megaton Finance protocol, allowing it to reach both current DeFi users and the 700 million Telegram users (based on MAU).</p>
<h4><a href="https://dedust.io/">DeDust</a></h4>
<p>DeDust is a DeFi platform developed by Scaleton for TON. The project is focused on providing tools for managing assets. It offers a full-featured DEX and portfolio estimation functionality.</p>
<p>The previous exchange project, Scaleton, was extensively revised and changed during the implementation process. DeDust is more than just a new version of Scaleton: While the previous DEX only worked with the contract of a trading pair, the new one allows users to import tokens and open listings after adding liquidity.</p>
<p>The team is currently working on auto-routing, which is meant to make the UX more smooth. There are also plans to release an SDK to allow other developers on TON to easily integrate the DEX into their products.</p>
<p>Presently, Scaleton positions itself as an ecosystem of three products: DeDust, Tonkite (a toolkit for developing dApps), and $SCALE (the native token of the ecosystem).</p>
<p>Megaton Finance currently contributes 92.57% of the TVL, followed by <a href="http://ston.fi/">STON.fi</a> and DeDust.</p>
<h4><a href="https://ston.fi/">STON.fi</a></h4>
<p><a href="http://ston.fi/">STON.fi</a> is the first decentralized trading platform on TON, launched in Q4 2022. It is an AMM with “virtually zero fees, low slippage, an extremely easy-to-use interface, and direct integration with TON wallets from its main website.” The platform positions itself as a “DEX with a human face” that provides users with fast support and takes their opinions into account. <a href="http://ston.fi/">STON.fi</a> aims to achieve mass adoption by leveraging the Telegram audience.</p>
<p>In February, <a href="http://ston.fi/">STON.fi</a> ranked first on <a href="https://openrating.xyz/">Open Rating</a> with an expert score of 85%, making it the first A-rated DEX on the list. The <a href="https://openrating.xyz/stonfi">report</a> emphasized the transparency of their documentation, the team’s availability to address queries and feedback on various social media platforms, and their willingness to commit to creating inclusive contracts, such as the Jetton Vote System, as expressed on their GitHub page.</p>
<p>In late March, the team announced their decision to integrate cross-chain exchanges with TRON. This will allow Toncoin to be swapped with USDT in TRC-20 in a single step. This promising development could attract a large amount of liquidity to TON, due to the popularity of USDT on TRON.</p>
<p>Megaton Finance currently contributes 92.57% of the TVL, followed by <a href="http://ston.fi/">STON.fi</a> and DeDust.</p>
<figure><img alt="" src="https://cdn-images-1.medium.com/max/1024/1*bFQSxzQdQ6hgCxG9xMKiBg.png"><figcaption><em>Source: DefiLlama. The chart only includes projects listed on DefiLlama.</em></figcaption></figure><h3>Lending protocols</h3>
<p>The first lending protocol, Tonpound, was launched on TON, while Evaa Protocol is currently in testnet:</p>
<figure><img alt="" src="https://cdn-images-1.medium.com/max/703/1*SJIeQUxgaQHZyJCg0Gw59w.png"></figure><h4><a href="https://tonpound.com/">Tonpound</a></h4>
<p>Tonpound is the first lending protocol on TON designed to connect the network with the Ethereum blockchain. Currently, Tonpound offers borrowing and lending in six markets.</p>
<p>Tonpound allows lenders to earn funds by offering their assets to borrowers who pay interest. Interest rates for each asset are determined by supply and demand, with higher demand leading to higher interest rates. To borrow one asset, a user must deposit a greater amount of another asset as security. Tonpound continuously monitors asset prices through oracles. If the collateral value falls below a certain threshold, the position can be liquidated. Tonpound’s wrapped TON (pTON) is a key feature attracting liquidity from both The Open Network and Ethereum blockchains. Users can earn TON node feeds and Supply APR simultaneously, boosting their profits from low-risk passive income.</p>
<p>Tonpound will implement a new system to track user involvement and gradually give the community more voting power. The Tonpound Participation Index token (TPI) will show how involved the community is. The token will only be given to the team and users who actively contribute to the protocol’s development.</p>
<h4><a href="https://evaa.finance/">Evaa Finance</a></h4>
<p>Evaa Finance is another money market on TON created by developers of <a href="https://tonana.org/">Tonana Bridge</a>. Similarly to Tonpound, the protocol allows borrowers to access capital quickly and easily while providing lenders with high APYs.</p>
<p>Evaa Finance released its Testnet V1 in March 2023, with a Mainnet launch planned for April. While only three assets are currently supported, the team also intends to add oBTC (Orbit Bridge BTC), tETH (Tonana Bridge ETH), and other tokens later.</p>
<p>Furthermore, the team will also be introducing a TON-native stablecoin in June 2023. The roadmap also includes the implementation of DAO governanceto give the community voting power.</p>
<h3>Staking</h3>
<p><a href="http://pton.fi/">pTON.fi</a> is a new staking protocol that was launched in March and now complements the two existing protocols, TonStake and Ton Whales. Unlike TonStake and Ton Whales, pTON allows users to earn liquid rewards.</p>
<figure><img alt="" src="https://cdn-images-1.medium.com/max/791/1*luHe4fBe-xQs3enHnzMflw.png"></figure><h4><a href="https://pton.fi/">pTON.fi</a></h4>
<p><a href="http://pton.fi/">pTON.fi</a> is a project that offers the first staking solution for TON on the Ethereum blockchain via its own bridge. It enables users to easily stake TON and earn rewards from node fees without having to lock their assets. This is accomplished by minting stTON on the Ethereum blockchain at a 1:1 ratio to TON. stTON can always be burned to retrieve the native TON tokens. It can also be wrapped into pTON to provide users with additional trading and borrowing power on the Ethereum chain.</p>
<p><a href="http://pton.fi/">pTON.fi</a> is governed by its DAO. Members of the <a href="http://pton.fi/">pTON.fi</a> DAO can affect the project’s development by creating proposals and voting on them.</p>
<h3>Bridges</h3>
<p>TON Foundation has commissioned <a href="http://rsquad.io/">RSquad Labs</a> to develop a token bridge that will enable cross-chain transfers of tokens minted on Ethereum or BNB Smart Chain blockchains to TON and vice versa. The upcoming token bridge is expected to increase the utility and broaden the appeal of The Open Network to a wider range of users and use cases.</p>
<p>The new bridge will upgrade the existing <a href="http://bridge.ton.org/">bridge.ton.org</a> and complement Orbit Bridge.</p>
<figure><img alt="" src="https://cdn-images-1.medium.com/max/790/1*qEqqbPAfypgZnsh3IBySYw.png"></figure><h3>Launchpads</h3>
<p>There are currently two launchpads on TON:</p>
<figure><img alt="" src="https://cdn-images-1.medium.com/max/794/1*x5uvTw2VeA46en6-_mSnPA.png"><figcaption>Source: CryptoRank.io</figcaption></figure><p>In March Megaton Finance completed a Community Incentive program on Tonstarter with 17,918 participants, 1,100 of which were selected as winners and shared a pool of $500,000.</p>
<h3>TON vs peers</h3>
<p>The growth in TVL on TON vastly outpaced its peers in Q1 2023.</p>
<figure><img alt="" src="https://cdn-images-1.medium.com/max/1024/1*3XS6eOp1_ajcutnnY9tcLg.png"><figcaption><em>Sources: DefiLlama, First Stage Labs</em></figcaption></figure><p>The TVL experienced a spike first on February 16, when Megaton Finance was launched, and then on March 10, which is also associated with the rapid increase in trading volume on Megaton Finance.</p>
<figure><img alt="" src="https://cdn-images-1.medium.com/max/1024/1*K3rZppAHSoskJTefNzLkAQ.png"><figcaption><em>Source: DefiLlama. The chart only includes projects listed on DefiLlama.</em></figcaption></figure><p>While the TVL is still not comparable to networks like Polygon or Solana in absolute values, the 24-hour volume is keeping up with Aptos. The difference in TVL is still significant:</p>
<figure><img alt="" src="https://cdn-images-1.medium.com/max/1024/1*6nDACLleg3-WdFyclFZBzw.png"><figcaption><em>Source: DefiLlama</em></figcaption></figure><p>Currently, TON has the highest TVL concentration in its top protocol by DeFi dominance (Megaton Finance) compared to peers, with Aptos and Near coming next. This suggests that the DeFi ecosystem is still in its early stages of development, as the competitive landscape remains sparse.</p>
<p>A similar situation exists in Aptos, where the deployment of PancakeSwap led to an immediate surge in TVL. However, TVL shares have yet to become more evenly distributed among competing protocols.</p>
<figure><img alt="" src="https://cdn-images-1.medium.com/max/1024/1*6HqMKt5K-0cf8e0nwZOg4Q.png"><figcaption><em>Sources: DefiLlama, First Stage Labs. Data as of 27.03.23.</em></figcaption></figure><p>The TVL ratio (market cap/TVL) also correlates with the maturity of the network. This indicates that emerging alts are currently drawing more interest from investors compared to more established networks. Therefore, TON can currently be viewed as overvalued if we take TVL as a measure of the fair value of the network.</p>
<figure><img alt="" src="https://cdn-images-1.medium.com/max/1024/1*cYUPd8GUrk1Em4myQdS03g.png"><figcaption><em>Sources: DefiLlama, CoinMarketCap, First Stage Labs</em></figcaption></figure><p>Notably, the TVL ratio of TON experienced a 26-fold decrease compared to Q4 2022, but still significantly exceeded the valuation of its peers.</p>
<figure><img alt="" src="https://cdn-images-1.medium.com/max/1024/1*Ivh9mNIllogzxjYdxCGwDA.png"><figcaption><em>Sources: DefiLlama, CoinMarketCap, First Stage Labs</em></figcaption></figure><p>It is clear that the market is pricing in a lot of growth in TON given the current modest TVL values. We are pleased to see recent developments in TON, including the deployment of a new DEX which contributes a large portion of the trading volume and TVL, as well as the implementation of new bridges and lending protocols. These represent a significant increase in real value that is following the market valuations, but still has a long way to go. As the TVL increases, we are likely to see more conservative valuations that are closer to those of our peers.</p>
<p>A mature DeFi ecosystem with various complex tools for improved capital efficiency is still a few steps away at the moment.</p>
<p>The developers are still taking efforts to bring a single bridge standard that will improve interoperability and connectivity between different DeFi protocols, increasing liquidity and trading volumes, and in return promoting liquidity flows from one protocol to another.</p>
<p>Recent concerns about the safety of common stablecoins, namely, the short-term depegging of USDC and regulatory pressure on BUSD, make it clear that the DeFi ecosystem of TON would greatly benefit from its own decentralized and reliable stablecoin. The native stablecoin would not only improve volumes and liquidity in existing protocols, but also provide utility for people interested in performing international payments, paying for services, or storing assets in non-national currency, thus boosting adoption.</p>
<p>Once the base layer for DeFi is fully established, we are looking forward to see the first lending protocol reach one of the top positions by TVL within the network. This would serve as a starting point for other capital efficiency solutions, such as autocompounders and derivatives exchanges. The first protocols are already emerging, but none have achieved widespread adoption within the network yet.</p>
<p>DeFi ecosystem of TON continues to evolve and mature, it is likely that we will see a more even distribution of TVL across competitive protocols, which will promote healthier competition and sustainability.</p>
<h3>TLDR:</h3>
<ul>
<li>A new AMM-based DEX, <a href="https://megaton.fi/">Megaton Finance</a>, was launched causing the TVL in TON to spike from $0.52m in Q4 2022 to $13.83m in Q1 2023. Megaton Finance is contributing 93.11% of the TVL in TON.</li>
<li>First lending protocol, <a href="https://tonpound.com/">Tonpound</a>, was launched in March. Another lending protocol on TON, <a href="https://evaa.finance/">Evaa Finance</a>, is currently in testnet.</li>
<li>The first liquid staking protocol, <a href="https://pton.fi/">pTON.fi</a>, was also launched in March.</li>
<li>A new bridge was released shortly before we prepared this report: A bridge by Rsquad Labs is meant to complement <a href="http://bridge.ton.org/">bridge.ton.org</a>. The upcoming token bridge introduces the possibility of exposing TON to a wider range of users and use cases.</li>
<li>TON is overvalued compared to its peers, but demonstrates an outstripping growth in TVL.</li>
</ul>
<h3>What to build on TON now?</h3>
<p>We are looking forward to seeing:</p>
<ul>
<li>TON-native collaterized stablecoin</li>
<li>More lending protocols</li>
<li>More decentralized exchanges</li>
<li>DEX aggregators</li>
<li>Autocompounders/yield optimizers</li>
</ul>
<p>You have ideas on how to bring more value and utility to our DeFi ecosystem? DM us on <a href="https://twitter.com/firststagelabs">Twitter</a>. Visit our official website: <a href="http://fslabs.io/">http://fslabs.io/</a></p>
<p>We are First Stage Labs. Accelerating Blockchain Startups to Escape Velocity.</p>
<img src="https://medium.com/_/stat?event=post.clientViewed&amp;referrerSource=full_rss&amp;postId=9c64bc6555f9" width="1" height="1" alt="">


The State of TON DeFi Q1 2023


<figure><img alt="" src="https://cdn-images-1.medium.com/max/1024/1*m0pu4QpiZLjOYzBpEQKRyQ.jpeg"></figure><p>Note from First Stage Labs: This public article is the result of an internal report conducted between December 2022 and March 2023.</p>
<h3>How we collected the data</h3>
<p>This report presents an overview of the market research conducted in India, and Turkey, based on the insights gathered from in-depth interviews with crypto investors and traders from the countries mentioned above.</p>
<p>In this report, we would like to cover the following topics:</p>
<ul>
<li>Crypto market overview</li>
<li>Crypto trading and investing behavior</li>
<li>Telegram and TON awareness</li>
</ul>
<p>Before we begin, it is important to note that the insights presented in this report reflect the perceptions of a specific group of crypto investors and traders from India, and Turkey. The results may differ from those of other target audiences with different criteria or perspectives.</p>
<h3>Crypto Market Overview</h3>
<p>This overview provides a summary of the current state of the cryptocurrency market in two countries: India, and Turkey, including insights into the factors that may be influencing the performance of the crypto market in these countries.</p>
<h4>India</h4>
<p>India is a growing cryptocurrency market, with the use of digital currencies on the rise. Despite some uncertainty about tax regulations and confusion about some terms, people are generally optimistic about the prospects of crypto.</p>
<p>There has been a significant increase in the number of shops and restaurants that accept cryptocurrency as payment. This trend is particularly evident in major cities such as Mumbai, Delhi, and Bangalore, where a growing number of businesses are beginning to embrace digital currencies as a means of payment. Bitcoin, Ethereum, Ripple, and Litecoin are among the most widely used cryptocurrencies in India.</p>
<p>Furthermore, the increased popularity of cryptocurrency investments in India can be attributed to a higher rate of return compared to traditional investment options such as the stock market or mutual funds. In recent years, the Indian stock market has experienced significant fluctuations, leading many investors to turn to cryptocurrency as a more stable investment option. As a result, the number of cryptocurrency exchanges and trading platforms operating in the country has increased, giving audiences easy access to digital assets.</p>
<p>Overall, people in India have a positive outlook on the future of cryptocurrency. Many believe that digital currencies have the potential to revolutionize the financial industry and promote financial inclusion in the country. Thus, there has been a growing interest in blockchain technology and its potential applications beyond just cryptocurrency.</p>
<p>Prior to 2022, the Indian government had no official stance on the classification of crypto assets or the subsequent taxation of Bitcoin and other cryptocurrencies. But recently, the Indian authorities acknowledged cryptocurrencies in India by classifying them as Virtual Digital Assets (VDAs).</p>
<p>Virtual Digital Assets (VDAs) — cryptocurrencies, NFTs, tokens, and other digital assets.</p>
<p>Predictably, it has caused some concern among investors and traders. While some people believe that the tax will make it more difficult to invest in cryptocurrency, others see it as a positive development that will increase the legitimacy of digital currencies in the eyes of the government and the broader public. Some individuals are also choosing to hold onto their crypto assets, hoping that the tax will be reduced in the future or that the growth of their assets will outpace the sum of the tax.</p>
<p>Regardless of unfamiliarity and insufficient knowledge, many Indians are still investing in cryptocurrency, demonstrating a strong belief in the long-term potential of digital currencies. As the market evolves and regulations become clearer, it is expected that the use and adoption of cryptocurrency in India will continue to grow.</p>
<p>In recent years, there has been a significant increase in the number of blockchain products and services available in India, including non-fungible tokens (NFTs). Nevertheless, many people in India still prefer to trade cryptocurrency rather than buy NFTs or use other blockchain products.</p>
<p>One possible explanation for this preference is the inadequacy of information about these products. NFTs, for instance, are a relatively new concept that can be difficult to grasp for those who are not familiar with blockchain technology. Additionally, the use cases for other blockchain products, such as decentralized finance (DeFi) or digital identity management, may not be apparent to an average investor or trader.</p>
<p>Another possible explanation is that the Indians prefer to invest in something that is more familiar and well-established. Cryptocurrency has been around for over a decade and has gained significant mainstream attention in recent years, making it a more common investment option. In contrast, NFTs and other blockchain products are still relatively new and untested, making them a riskier investment option for some.</p>
<h4>Turkey</h4>
<p>Unsurprisingly, the Turkish crypto market is showing significant growth as more traders and investors choose Binance Global/Turkey as their preferred exchange.</p>
<p>Due to the high inflation rate in Turkey, many individuals are turning to cryptocurrency as a way to protect their wealth from the devaluation of the Turkish Lira. The current inflation rate in the country stands at a staggering 57% as of February 2023. As such, cryptocurrency is seen as a more stable investment option that can provide a hedge against inflation. Bitcoin, in particular, has grown in popularity as a means of storing value, given its limited supply and decentralized nature. In addition to Bitcoin, many citizens in Turkey are also investing in other cryptocurrencies such as Ethereum and Binance Coin in order to diversify their portfolio and potentially profit.</p>
<p>While the government’s ban on accepting crypto as payment is currently in place, there is a growing conviction among Turkish crypto enthusiasts that this ban may be lifted in the future. This opinion is fueled by the increasing popularity of cryptocurrency in the country and the fact that many individuals see it as a viable alternative to traditional currency. However, while there have been rumors about the potential taxation of crypto investments, many participants are skeptical that the government will follow through with such measures, citing the upcoming election and poor cryptocurrency expertise among the government officials.</p>
<p>Even though Turkish traders and investors are aware of NFTs and other blockchain projects, there is a difference in opinion among them. Some see NFTs as an easy investment tool to generate quick profits, while others consider them time-consuming and not worth the effort, despite believing in the underlying technology. However, there is a general consensus that these technologies are still in the early stages of development and may take some time to reach their full potential.</p>
<h3>Crypto Trading and Investing Behavior</h3>
<p>Crypto market is known for its volatility, with prices frequently fluctuating in response to market conditions. Still, many crypto enthusiasts continue to trade and invest in cryptocurrencies, believing in the long-term potential of this asset class.</p>
<h4>India</h4>
<p>In bear market conditions, the Indians behave in two different ways: half of them stop trading whatsoever, while the other half actively engage in investing in crypto. This demonstrates the diverse attitudes towards crypto in India, where the government has been hesitant to embrace this capital market. However, the bearish market trend has also led some Indians to reconsider their approach to investing in crypto, with many taking a more cautious approach to trading.</p>
<h4>Turkey</h4>
<p>The present downward trend in the crypto market has prompted slightly noticeable changes in the trading behavior of Turkish crypto investors and traders. Although the majority of them persist in purchasing and trading crypto assets, they have opted for a more cautious approach, characterized by lower risk-taking tendencies. Additionally, some traders have resolved to enrich their knowledge of the crypto industry by learning programming and exploring other avenues that enhance their comprehension of crypto. This shows that Turkish crypto investors and traders remain optimistic about the potential of crypto despite market volatility and are willing to adjust their trading tactics to align with the market situation.</p>
<h3>Telegram and TON Awareness</h3>
<p>Telegram, as one of the most widely used messaging apps, has established itself as a crucial platform for crypto enthusiasts globally and is strongly associated with the crypto market among crypto traders and investors from India, and Turkey. However, they have different reasons for using Telegram, such as maintaining privacy, staying connected with business partners.<br>Although the majority of participants use Telegram primarily for receiving crypto-related news and updates, they do not perceive it as a substitute for other messaging apps used by their acquaintances, friends, and family members.</p>
<p>In recent years, blockchain technology and cryptocurrencies have become increasingly popular worldwide, and TON is one such blockchain that has gained significant attention from the crypto community.</p>
<p>During the conducted research with crypto enthusiasts, it was observed that participants held a favorable initial impression of Toncoin. This was primarily due to their evaluation of specific factors such as Toncoin’s ranking on CoinMarketCap, its highest and lowest market price, Whitepaper, and the development team.</p>
<h3>What’s next?</h3>
<p>Our research team will continue to conduct market research in various countries and offer valuable insights into the current market state, potential customer behavior and preferences, and competitive landscape.</p>
<p>Ready to build on TON or we missed some terms/your company? DM us on Twitter.</p>
<p>Our website is <a href="http://fslabs.io/">http://fslabs.io/.</a></p>
<p>We are First Stage Labs. Accelerating Blockchain Startups to Escape Velocity.</p>
<img src="https://medium.com/_/stat?event=post.clientViewed&amp;referrerSource=full_rss&amp;postId=43dec59c81a9" width="1" height="1" alt="">


First Stage Labs. Accelerating Blockchain Startups to Escape Velocity

We Build and Scale Innovative Blockchain Companies

Thriving on Synergy of Product for Mass Adoption of TON Blockchain

We Are Open to Your Ideas