Why Grow Studio is Going All In on Telegram and Its TON Blockchain

As a passionate member of the Web3 community and an enthusiastic writer, I’ve always sought to deeply understand the innovation going on around me. In a disruptive industry like blockchain, there is no shortage of concepts that draw our attention; every bull cycle comes attached with a litany of narratives drawing intrigue from builders, users, and venture capitalists alike. Having started my personal journey back in 2016, I have seen many trends rise and fade away, but the calm (and turmoil) of two bear markets has sharpened my understanding of what constitutes genuine value in this domain.

As a Founder, this blog post is the first time in three years that I have sat down and attempted to convey my thoughts on the opportunities at hand. It’s a time when my own start-up, Grow Studio, is gaining traction with interest from the largest and most respected investors in the space. I find myself reflecting on a path I never could have envisioned back in 2016 when I was a new father to one-year-old twins, working in the Offshore Drilling Industry, and casually exploring crypto through Telegram.

Today, roughly three years after my Co-Founder Dougie and I established Grow Studio, I felt I should share my thoughts for two reasons: Firstly, it’s overdue for me to explain to my family why I quit my steady career in Oil and Gas for “The Magic Internet Money Industry”; secondly, I want to address my oversight of something that’s been evident all along… Telegram is THE killer app!

Background - Mission Driven

Grow Studio aims to redefine IP development by leveraging Web3 and AI technologies to empower creators and reward peer production. We believe that Web3 and Gen AI are the key ingredients for democratizing AAA production, making it possible for new story worlds to emerge from little-known cultures previously without a voice on the world stage.

Our goal is to foster a vibrant creative ecosystem where players, developers, and fans can collaboratively design, build, and monetize innovative gaming experiences supported by a sustainable decentralized model that benefits all participants. In essence, we hope to flip the Entertainment industry's current top-down approach to Franchise creation and ownership to an inclusive, community-fueled, bottom-up approach. We believe that as a professional development studio, it is our responsibility to first create and inspire a fanbase with all of the key ingredients needed to build a successful Gaming IP, simplify the collaborative process, organize goals, and empower the community with ownership.

Our Fascination with Network Effects

In July of 2020, as an amateur/hobbyist writer before Grow Studio sprung to life, I often attempted to convey my thoughts around a particular topic that fascinated me when looked at through the lens of crypto/Web3: Network Effects. The image below is my early basic understanding of the principles that I could see and was attempting to articulate via my personal blog;

Understanding Network Value

Back then, my limited understanding but deep interest had led me to constantly evaluate opportunities based on the potential of Network Effects because it was obvious that traditional valuation metrics often fall short in the world of digital networks. Instead, the true value of a network is best understood through the lens of network science. Metcalfe’s Law, which I am sure many of you will be familiar with but for those who are not; states that a network’s value is proportional to the square of the number of its users, for me this provided a clear and compelling framework for understanding value in Web3.

• Exponential Growth: As new users join a network, the value of the network grows exponentially. This non-linear growth means that the addition of each new user increases the network’s value significantly more than the previous one.
  
  

• User-Centric Value: In a platform like Telegram where users interact, communicate, and transact, the value generated is directly tied to the number of active participants. This is especially true for blockchain applications where user engagement translates to increased utility and consequently value.

The Bear Market Provided Lessons on Network Growth in Web3

As the hype of Web3 Gaming began to fade at the end of 2022, I wanted to understand why certain projects whose social media vanity metrics painted a picture of establishing early signs of Network Effects were suddenly down 90%+ in token value. I decided to self-fund a personal learning program via Maven and the fascinating thought leader Sameer Singh, who was lecturing on the subject of Applied Network Effects. The course opened my eyes to the complexities involved with Network Effects and the nuances dictating success in their establishment.

I spoke to the subject in 2023 at the AVAX Summit;

Why Telegram is the Ideal Platform for Grow Studio

• Unmatched Distribution Edge: Telegram provides unparalleled access to both Web3 enthusiasts and the mass market. This creates a unique distribution advantage over other protocols with 37,000 active crypto communities and 400 million users interacting with bots and mini-apps every month.
  
  

• Seamless Monetization: The introduction of Telegram Stars and other monetization tools allows for straightforward in-app purchases, digital goods transactions, and ad revenue generation. This opens up new revenue streams for our games and digital services.
  
  

• Community Engagement: Telegram’s emphasis on community and social interaction aligns with our goal to foster a vibrant, engaged user base. The platform’s features facilitate community building and user-generated content, enhancing the overall gaming experience.

The Inherent Value of Telegram and TON Blockchain

Telegram, with its 900 million monthly active users, represents a massive and vibrant network. This extensive user base provides fertile ground for digital innovation, particularly through the integration of the TON Blockchain.

• Scalability and Security: TON Blockchain offers a scalable and secure platform for a wide range of applications, from gaming to financial services. Its architecture supports high transaction throughput and robust security features essential for the seamless operation of digital services.
  
  

• Integrated Ecosystem: Telegram’s integration with TON Blockchain enables a cohesive ecosystem where users can engage with mini-apps, bots, and blockchain services seamlessly. This integration reduces friction, enhancing user experience and driving adoption.
  
  

The Unique Opportunity with Telegram and TON Blockchain

Telegram’s integration with the TON Blockchain represents a unique convergence of an extensive user base, advanced blockchain technology, and an open, decentralized approach. This creates unparalleled opportunities for Web3 businesses.

• Open and Decentralized: Telegram’s open-source nature fosters innovation and collaboration. Developers can create mini-apps, bots, and blockchain-based services that integrate seamlessly with Telegram’s core functionalities.
  
  

• Global Reach and Accessibility: Telegram’s decentralized infrastructure ensures that it is accessible to anyone, anywhere, without the restrictions imposed by centralized platforms. This openness is crucial for the growth of Web3 businesses.

• Leveraging Network Effects: Founders developing Web3 businesses on platforms like Ethereum, Solana, or others are banking on those chains which don’t have even a fraction of Telegram’s network effects. Building on Telegram gives us an unprecedented advantage, leveraging a massive engaged user base from day one.
  
  
  

  

  
  

Will TON Surpass Ethereum's Value Permanently by Establishing Reed's Law Through Telegram's Super App Platform?

• Grow Studio’s Proposition: TON (The Open Network) will not only surpass the value of Ethereum (ETH) but will do so irreversibly due to its establishment of Reed's Law through the Telegram platform. Unlike Ethereum, which we feel due to network fragmentation and an unsupportive environment for "white hot clustering" on a mass market scale is currently constrained to Metcalfe's Law, TON benefits from Telegram's 900 million user base, which interacts within a single, homogeneous Super App platform, enabling the exponential value growth described by Reed's Law.
  
  

• Reed's Law: Reed's Law states that the value of a network grows exponentially as users form sub-groups, with the value of the network increasing at a rate of 2^N, where N is the number of participants. This law is particularly relevant for networks that facilitate the formation of many sub-groups or communities, driving significant increases in network value through enhanced collaboration and sharing.
  
  

Supporting Data for Reed's Law in the Context of TON and Telegram

Key Data Points Supporting Reed's Law for TON and Telegram:

1. Daily Active Users (DAU) Growth:
   
   

   • Start of 2024: 10,000 DAU

   • Mid-2024: 350,000 DAU

   • Growth: 35x increase in six months
     
     

   • Implication: Rapid growth in DAU indicates strong user engagement and the potential for forming numerous sub-groups, a key aspect of Reed's Law. As more users join, the number of possible sub-groups grows exponentially, increasing the network's value.
     
     

2. Transaction Volume Surge:
   
   

   • Q2 2024: Transaction volume surged to $1.6 billion
     
     

   • Implication: High transaction volumes suggest active user participation in economic activities within the network. The ability to conduct transactions within sub-groups enhances network value by facilitating trade and collaboration.
     
     

3. Total Value Locked (TVL):
   
   

   • March 1, 2024: $22 million

   • Today: Over $600 million

   • Growth: 27x increase in a few months
     
     

   • Implication: A substantial increase in TVL reflects growing trust and investment in the network. The presence of multiple sub-groups managing and growing their assets further amplifies the network's overall value.
     
     

4. Holder Count Increase:
   
   

   • One Year Ago: 2.9 million holders

   • Today: 32 million holders

   • Growth: 11x increase in one year
     
     

   • Implication: A large number of holders indicates widespread adoption and the formation of various sub-groups or communities. Each new holder potentially creates or joins a sub-group, exponentially increasing the network's value.
     
     

5. Price Growth:
   
   

   • August 2023: $1.20

   • Today: $7.12

   • Growth: Nearly 6x increase in 10 months
     
     

   • Implication: The rising price of TON tokens reflects increased demand and network utility. The formation of sub-groups within the network can drive specific use cases and applications, further increasing token value.
     
     

6. Daily Active Addresses (DAA) Comparison with Ethereum:
   
   

   • Data from April 6, 2024: Daily active addresses for TON have surpassed Ethereum, driven by Telegram's 900M user base.
     
     

   • Implication: Higher DAA for TON indicates more frequent and diverse interactions within the network. The formation of numerous sub-groups enhances overall network value, as described by Reed's Law.
     
     

7. Crypto/Web3 Communities in Telegram:
   
   

   • Estimated 37,000 crypto/web3 communities: These communities represent diverse interests and activities within the broader network.
     
     

   • Implication: The large number of crypto/web3 communities within Telegram supports the exponential growth of network value through sub-group formation and collaboration, aligning perfectly with Reed’s Law.

Ethereum's Fragmentation Issue and Attempts to Solve It

Developer Efforts:

• Data Insight: Developers have knowingly or unknowingly attempted to solve the silo/fragmentation issue of Ethereum’s network effects by creating Ethereum-based social networks such as Lens, Farcaster, and at least 57 others.
  
  

• Implication: Despite these efforts, none of these Ethereum-based social networks have scaled substantially enough to reach a mass adoption tipping point. In terms of active user base, they are at least 890 million users behind Telegram.
  
  
  

Strategy for Grow Studio

At Grow Studio, we are strategically positioned to capitalize on Telegram’s tipping point for Web3 adoption. Our approach is data-driven and focuses on maximizing network effects through the following strategies:

1. Fostering High Network Density
   

   • Strategy: Using Helika's analytics platform, we analyze user interaction patterns to identify and nurture the most active and engaged communities within Telegram. By focusing on these high-engagement clusters, we drive deeper interaction and stronger network effects.
     
     

   • Execution: Targeted marketing campaigns and feature enhancements tailored to these communities can ensure sustained engagement and growth.
     
     

2. Creating a "White-Hot Center"
   

   • Strategy: We prioritize the development of features and content that can resonate most with our core user base. This involves creating exclusive content and rewards that incentivize participation and foster a central hub of activity.
     
     

   • Execution: By leveraging the initial engagement and enthusiasm of early adopters, we aim to create a vibrant and dynamic community that attracts new users and amplifies network effects.
     
     

3. Leveraging Community Co-Creation
   

   • Strategy: Our peer-production model allows users to contribute to game development and governance through the use of $PUSH tokens. This approach fosters a sense of ownership and loyalty among players.
     
     

   • Execution: Facilitating and rewarding user contributions ensures a vibrant and dynamic ecosystem that thrives on user input and engagement, further driving exponential growth as described by Reed’s Law.
     
     

4. Utilizing Advanced Analytics
   

   • Strategy: We leverage tools like Helika’s analytics suite to monitor user behavior, optimize engagement, and drive retention. By tracking metrics such as DAU, session length, and retention rates, we can make data-informed decisions to enhance the user experience.
     
     

   • Execution: Our goal is to achieve a DAU growth rate of 15% month-over-month and maintain a 30-day retention rate of 30%+, ensuring continuous and sustainable growth.
     
     
     

Projected Market Growth and Value for $PUSH Based on Catizen's Success

Using Catizen’s early success as a benchmark, we can use comparative assumptions to project the conservative market growth for $PUSH tokens after one year of launch. We will consider the ARPU to be $2 for spending across various products.

Initial Success Metrics

1. User Base After One Year:

   • Benchmark: Catizen achieved 2.3 million users within one month of its open beta test launch.

   • Conservative Projection for $PUSH: Assuming similar success can be achieved even within a 12-month window rather than the one month described above; 2.3m user in year one.
     
     

2. Daily Active Users (DAU):

   • Benchmark: Catizen had over 520,000 daily active users within the first month.

   • Projection for $PUSH: Targeting 520,000 DAU after one year.
     
     

3. On-Chain Transactions and Revenue:

   • Benchmark: Catizen users completed over 2.6 million on-chain transactions, generating over $3 million in revenue within one month.

   • Projection for $PUSH: Assuming similar activity, targeting $3 million in revenue from 2.6 million transactions after one year.
     
     

Additional Revenue from Other Products Y1

1. Annual Revenue per User (ARPU) for Other Products:

   • ARPU: $2 for spending on NFTs, skins, and merchandise.
     
     

2. Total Revenue from Other Products:

   • Total Annual Revenue from Other Products: 2,300,000×2×12=$55,200,000
     
     

Combined Revenue and Market Cap Projections Y1

• Revenue Potential:

• Revenue from On-Chain Transactions: $3 million (as per Catizen's benchmark)

• Revenue from Other Products: $55.2 million

• Total Annual Revenue: $3,000,000+$55,200,000=$58,200,000
  
  

• Market Cap Projection:

• Using a market cap to revenue multiple of 10x (common for high-growth tech companies):

• Projected Market Cap: $58,200,000×10=$582,000,000

Summary

• User Base After One Year: 2.3 million users

• Daily Active Users (DAU): 520,000

• Annual Revenue from On-Chain Transactions: $3 million

• Annual Revenue from Other Products: $55.2 million

• Total Annual Revenue: $58.2 million

• Projected Market Cap: $582 million
  
  

These projections highlight the significant potential market value for $PUSH tokens after one year of launch, considering both on-chain transactions and additional revenue from other products. Grow Studio aims to leverage the network effects and expansive user base of Telegram to drive substantial adoption and engagement for $PUSH tokens.

Early Implementation of Network Effects in $PUSH

Phase 1: Launch

• User Growth and Social Sharing: Leverage Telegram’s user base and social media integrations to initiate viral growth.

• In-Game Economy and NFT Trading: Start with a basic marketplace for NFTs and power-ups.
  
  

Phase 2: Expansion

• Community Hubs and Localized Content: Create localized community hubs and offer region-specific content.

• Staking and Transaction Mining: Introduce staking mechanisms and reward users for transactions to boost engagement.
  
  

Phase 3: Developer Ecosystem and Collaborative Tools

• Developer APIs and SDKs: Provide tools for third-party developers to create additional content and features.

• Co-Creation Tools: Enable players to collaboratively create and vote on new game features.
  
  

Phase 4: Continuous Improvement and Competitive Dynamics

• Team Competitions and Leaderboards: Implement team-based challenges and leaderboards.

• Auction Systems and Transactional Features: Introduce auction systems for rare items and enhance transactional features.

“Pantera Capital's Largest Investment Ever: $250M TON Investment Rationale by Ryan Barney, Partner

Introduction

TON is a Layer 1 network originally designed by Telegram and continued by the open-source community. Pantera Capital believes TON has the capacity to introduce crypto to the masses because it is used extensively within the Telegram network. Telegram has over 900 million monthly active users on its future-facing, fast, and secure messaging platform that is used for personal and group communications, large-scale community building, content sharing, and more.

By leveraging Telegram’s vast user base and seamless UX with the vibrancy of TON’s emerging ecosystem, Pantera believes TON has the potential to become one of the largest crypto networks.

Telegram's Unique Value Proposition

• Privacy and Neutrality: Telegram does not sell user data and maintains a neutral platform free from government influence. It has been central to community organization for protests from Hong Kong to Belarus and more.
  

• Unmatched Growth: Telegram adds almost 2.5 million users a day and has never spent on marketing. With 930 million monthly active users, its growth outpaces competitors like Signal by a factor of 10.

Integrating Web3 Ethos with Massive Distribution

• Pavel's Vision: At Token2049, Telegram’s founder Pavel Durov highlighted how blockchain empowers individuals, aligning with Telegram's ethos of privacy and decentralization.
  

• Scalable Platform: The TON Blockchain's dynamic sharding mechanism ensures it can handle millions of transactions per second, supporting a vast number of applications without compromising speed or security.

User-Friendly Onboarding and Mini Apps

• Easy Onboarding: Telegram’s Wallet in Telegram allows users to manage tokens and NFTs seamlessly, featuring both custodial and self-custodial management options.
  

• Crypto Mini Apps: Over 360 million users engage with Telegram’s mini-apps monthly. TON-based applications are set to enhance these experiences, with significant early success observed in platforms like StormTrade and Notcoin.

Revenue Opportunities

• Fragment Marketplace: Telegram's Fragment platform allows users to trade collectibles such as virtual phone numbers and custom usernames, with sales exceeding $350 million.
  

• Native Stablecoin Payments: The integration of Tether’s USDt stablecoin allows seamless transactions within Telegram, significantly reducing transaction costs compared to other platforms.
  

Conclusion

Pantera Capital's $250 million investment in TON underscores its belief in Telegram’s potential to revolutionize the crypto landscape. With its vast user base, scalable infrastructure, and strong alignment with Web3 values, TON is positioned to achieve unparalleled growth.”

Arguments Against the Proposition? Let us know your thoughts!

Discussion Points

• How does Telegram's user engagement and community formation capabilities compare to Ethereum's ecosystem growth?
  
  

• Can the scalability and security of the TON blockchain meet or exceed the standards set by Ethereum?
  
  

• What role do developer communities and innovation play in the long-term value creation of blockchain networks and could Ethereums vast network of committed developers be considered as groups able to establish the fundamentals of Reeds Law?
  
  

• How significant are the differences between Metcalfe's Law and Reed's Law in the context of blockchain adoption and network effects?
  
  

At Grow Studio, we’re not just building games; we’re building the future of digital entertainment. Join us on this exciting journey as we harness the power of Telegram and the TON Blockchain to create, play, and belong.

By focusing on achievable goals and leveraging the inherent advantages of Telegram and the TON Blockchain, Grow Studio is positioned to capture a significant share of the emerging Web3 gaming and entertainment market, creating a vibrant, engaging, and valuable ecosystem for our users and stakeholders.