Why $TON Token Is Struggling: A Deep Dive into Its Performance Challenges

The Open Network (TON), originally developed by Telegram as the Telegram Open Network, is a layer-1 blockchain designed for high scalability, fast transactions, and seamless integration with Telegram’s massive user base. Its native cryptocurrency, Toncoin (TON), powers the ecosystem, facilitating transaction fees, validator staking, smart contract execution, and decentralized services like TON Storage and TON DNS. Despite its ambitious vision and Telegram’s backing, TON has faced challenges in maintaining strong price performance and market traction. As of May 1, 2025, TON is trading at approximately $3.18–$3.40, significantly below its all-time high of $8.23 in June 2024. This article explores the reasons behind TON’s lackluster performance, analyzing technical, market, and ecosystem factors.

Current Price and Market Context
TON’s price has seen volatility in 2024 and early 2025. After peaking at $8.23 in June 2024, it has declined by about 60%, trading at $3.18 (CoinMarketCap) to $3.25 (Coinbase) as of March 31, 2025, with a market cap of $7.9–$9.6 billion, ranking it #11–#18 among cryptocurrencies. Over the past week, TON has risen by 1–4%, but it has underperformed the broader crypto market (up 1.7%) and similar smart contract platforms (up 1.4%). Its 24-hour trading volume is $110–$131 million, reflecting moderate activity but a 10–12% increase from recent days. Despite earlier gains in 2024, with year-to-date returns exceeding 200% by June, TON’s momentum has waned, raising questions about its struggles.

Reasons for TON’s Poor Performance

1. Oversupply and Tokenomics Concerns
TON’s tokenomics present a significant hurdle. With a circulating supply of 2.5–3.47 billion tokens and a maximum supply of 5.21 billion, TON’s large supply dilutes its price appreciation potential compared to scarcer assets like Bitcoin (21 million cap). The issuance model, tied to an inflation rate of 0.6–2%, adds 25–100 million new tokens annually, increasing supply pressure. Without a token-burning mechanism, supply is likely to outpace demand, suppressing price growth. Additionally, token concentration is a concern: as of March 31, 2025, one wallet holds 25.71% of the supply, and the top five control nearly 40%, raising fears of centralization and potential sell-offs.

2. Declining Network Activity and User Engagement
Despite TON’s integration with Telegram’s 900 million users, network activity has declined. In May 2024, daily transactions dropped from 8.2 million to 4.3 million, and active addresses fell from 500,000 to 320,000. This suggests reduced user interaction, possibly due to waning interest in TON-based dApps or games like Notcoin and Hamster Kombat. Posts on X highlight community frustration, noting that TON’s marketing strategy, particularly the Notcoin airdrop, attracted low-quality users who sold tokens quickly, draining liquidity. The lack of sustained engagement from new users and low trading velocity further hampers price momentum.

3. Technical and Scalability Issues
TON boasts impressive scalability, with a theoretical capacity for millions of transactions per second (TPS) via sharding and workchains. However, real-world performance has been inconsistent. A Reddit post from November 2024 criticized TON for frequent outages, slower transaction speeds during high demand (e.g., the DOGS token launch), and higher fees compared to competitors like Solana. These issues undermine TON’s claim of being the “Speed of Tomorrow.” The network’s reliance on a single client software maintainer also raises concerns about centralized control, potentially deterring developers and users seeking true decentralization.

4. Regulatory and Telegram Dependency Risks
TON’s close ties to Telegram, while a strength for user onboarding, expose it to regulatory risks. Telegram’s legal battles, including a 2020 SEC lawsuit that halted the original Gram token, continue to cast a shadow. Pavel Durov’s arrest in France in August 2024 and ongoing regulatory scrutiny increase uncertainty. Industry experts, like Rumi Morales of Outlier Ventures, note that TON’s reliance on Telegram ties it to the platform’s legal and operational challenges, potentially deterring institutional investors. Efforts to “de-Telegramize” the ecosystem are underway, but progress is slow.

5. Weak DeFi and Ecosystem Development
TON’s ecosystem, while growing, lags behind competitors like Ethereum and Solana in decentralized finance (DeFi) and lending. Total value locked (TVL) rose from $14 million in September 2023 to $386 million in July 2024, but this is modest compared to Solana’s $4 billion+. Limited DeFi offerings and low trading activity restrict TON’s appeal to yield-seeking investors. The TON Foundation’s $124 million incentive program and partnerships with Tether and HashKey Group aim to boost adoption, but projects like Blum have been criticized for adding little value, diverting resources from more impactful initiatives.

6. Market Sentiment and Competition
Market sentiment for TON is mixed, with technical indicators showing bearish signals. On April 30, 2025, CoinCodex reported 19 bearish versus 10 bullish indicators, with an RSI of 50.20 (neutral) and a Fear & Greed Index at 56 (greed). TON’s price is positively correlated with smaller altcoins but less so with top-tier coins, suggesting it struggles to follow Bitcoin’s bullish trends. Competition from high-performance blockchains like Solana, which offers lower fees and faster transactions, and Ethereum, with its robust DeFi ecosystem, overshadows TON’s value proposition.

Short-Term Outlook
Price predictions for TON in 2025 vary widely. Analysts from Changelly estimate a range of $0.0596–$0.0703, with an average of $0.0617, implying a significant drop from current levels. More optimistic forecasts from CoinCodex suggest an average of $6.36 by November 2025, driven by potential bullish trends in March. Technical analysis indicates support at $2.97–$3.11 and resistance at $3.24–$3.38. For TON to recover, it must break above $7.66 and sustain momentum. However, ongoing supply pressure and network issues could push prices toward $2.50 if bearish trends persist.

Conclusion
TON’s struggles stem from a combination of structural, technical, and market challenges. Its large token supply, declining network activity, scalability issues, regulatory risks, and underdeveloped DeFi ecosystem hinder its ability to compete with leading blockchains. While Telegram’s user base and initiatives like the “Tap to Earn” model provide growth potential, TON must address centralization concerns, improve transaction reliability, and expand DeFi offerings to regain traction. Investors should approach TON cautiously, monitoring network upgrades and regulatory developments before committing.

Disclaimer: This analysis is for informational purposes only and not investment advice. Cryptocurrency markets are highly volatile, and investors should conduct their own research.

Sources: CoinMarketCap, CoinGecko, Coinbase, CoinCodex, AMBCrypto, Reddit, Medium, The Fintech Times, posts on X.