For more than a decade, the blockchain industry has struggled with a self-determining question: how do we go mainstream? The quest for the killer app or company that suddenly moves the masses to cryptographic infrastructure has proven to be a daunting task. But unlocking product-market fit here represents more than a win for the consumer: it will signal a profound shift in how the internet is structured and governed for our lifetime. So who will be the powerhouse distributor of Web3, controlling the wallets and app store of the future?
The prize for owning Web3 distribution is enormous but increasingly out of reach for the FAANGs. Despite their vast resources and influence, to date these giants have been most successful in a supporting role, passively assisting the transition to a decentralized future by, for example, granting convenient access to compute.
Turning on Web3 is a multifaceted challenge and one not well suited for companies that prey on data and advertising to post big profits. The “world’s most innovative companies” are too entrenched in the mud of legacy business models, partners and products, slowed further by their own culture shock and shareholder short termism.
It’s clear Big Tech doesn’t take crypto seriously. They’ve never been public about how their open-source initiatives might be redirected to crypto, nor bought a meaningful piece of a base layer by acquiring a token, despite the associated governance rights that could come with it to influence the roadmap. One might ask what we’ve come to expect from these legacy platform companies who unofficially govern the global web, and the true value they provide to users versus themselves.
Despite having ubiquitous distribution and seemingly unlimited opportunity to hire emerging talent in blockchain, the story has always been that it is not a big enough addressable market opportunity today. After sunsetting Libra due to regulatory backlash, Facebook’s metaverse unit has a net loss of $40bn over the past three years and still doesn’t have chips on the table in crypto. Instead of leaning into being a distributor for Web3 users, they’re trying to innovate the product suite in order to continue generating more than 95% of revenue through ad sales, in part because of a pervasive belief from regulators that consumers can’t be trusted with the responsibility of their finances or their own data.
We are becoming accustomed to having our email screened to help “tune the AI model,” and, subconsciously, most consumers have acquiesced to giving up privacy in exchange for modern conveniences. This further entrenches the FAANGs’ reach and power but doesn’t bring us any closer to implementing truly modern technology like blockchain that would materially improve the average person’s life.
Giving away more and more of ourselves and our businesses’ IP to these institutions will become a requirement as the arms race for AI reinforces data-focused differentiation. This might be the moment that tilts the power structure into full greed mode, breaking entirely.
By design, the next era of the web will not be controlled by a handful of monoliths who refuse to accept a powerful but light-touch role to service end-users without overreaching. The new internet requires fresh leadership that is willing to plot a very long term course: a new generation of decentralized projects and startups built on principles of user control and community governance, who will help the industry adapt to the ethos of Web3.
Today’s builders are relentless in their pursuit of regaining power to defy exploitative Web 2.0 practices, operating systems and app store constraints, so that 10 years from now, decentralized organizations are the new more benevolent leading class and the FAANGs become service providers.
The existential threat to blockchain is that without a well organized and a strategic global marketing strategy, we will build it and no one will come. However, if we enlist a distribution partner who brings enough scale to make it lucrative to build Web3 apps, developers will start testing fun things that may unlock a big enough prize to justify the risks of building for an app store that doesn’t yet exist. Developing one “killer app” matters less than being the distributor who unlocks the opportunity for developers to acquire lots of potential users.
One well-poised incumbent is Telegram.
Building a base layer blockchain and associated community is a formidable task and so far very few have been successful in tapping into true consumer activity outside of cryptonatives. Every kingmaker seems to align with a new blockchain: Coinbase created BASE, FTX knighted Solana, Facebook attempted Libra, Amazon envisioned its own chain for NFTs, and so on. The scalability of new-age base layers is impressive, but it won’t be enough to win on technology alone. Distribution and activity are the scaling solution; infrastructure is becoming easier to build and could trend toward commoditizing.
The revolving door will jam when developers start sniffing out low customer acquisition cost and a huge prize in global adoption: the Telegram mini-app opportunity. Telegram Mini-Apps are an open platform for new and emerging brands to deploy crypto-friendly games and apps. The platform supports seamless authorization and crypto and fiat payments, and empowers projects to incubate, fundraise and market themselves all within the familiarity of Telegram UI. Today, The Open Network’s (TON) strategic ties with the messaging app Telegram combines both the technical capabilities to tackle web3 and the distribution power of a top-10 mobile application, and crucially, the credibly neutral geographical launchpad for a consumer-focused approach to Web3. TON already boasts Web3 primitives such as a wallet, active DeFi ecosystem and tokens with a scaled web2 user container and 900M MAUs.
Telegram’s strategic pivot allows its app developers to align their revenue models with the long-term growth of the Web3 ecosystem. By providing critical distribution, a wallet, infrastructure and support services, they can continue to generate substantial revenue while contributing to the broader goal of a decentralized internet. This symbiotic relationship benefits both the TON blockchain and Telegram, creating a more sustainable and inclusive digital economy. Telegram has always been on the fringe of Big Tech, successfully scaling a user-focused messaging app amidst heavy competition and following an unorthodox playbook: no advertising or hardware moat, just a great tech and user experience. Their mission-driven focus is akin to being religious about the user-centric approach to the new internet – aligning perfectly with Web3’s consumer and developer-led revolution.
And while the U.S. is core to the growth trajectory for most of today’s top-10 apps, for otherwise global crypto adoption, perhaps American MAUs are a “nice to have.” Strategically, Telegram go-to-market excludes the U.S. but includes the unbanked which is over four times the size of the U.S. population. While it would be great to frame this as a socially-conscious decision and it may be, it also excludes the U.S. out of necessity due to the lack of regulatory clarity and 2020 SEC lawsuit. And the proven upside outside our borders is massive: see the mini-program economy of Wechat which has grown to 5 million mini-programs since launching in 2017, achieving $400bn of annual transaction volume via the apps by 2021.
In response, Telegram has supercharged the intersection of basic financial services and a gaming economy. As the first platform to showcase a glimmer of greatness at the application level, it is finally awakening the Eastern Web3 developer community. Lately, it’s been impossible to miss the frenzy around Notcoin (35M users,) $TON entering the top 10 of all crypto tokens and the TVL surging to a new all time high through STON.fi. And if the super-app use case isn’t compelling outright, the ability to supercharge it with Web3 will be a challenge for both X and Wechat due to geopolitical pressures and the risk to their legacy businesses. As recently as this week, X rolled out a new payments platform that does not accept crypto. The company had acquired a transmitter license for crypto payments last year. Despite his personal advocacy for blockchain, Elon Musk’s ambitions and hurdles with X illustrate the complexity and regulatory challenges inherent in adopting decentralized technologies within a centralized platform.
The TON ecosystem is the closest we’ve come to mainstream adoption. If successful, it may lead to more large companies like Telegram helping crypto apps converge with the mass market. If the benefits of blockchain are clear in the user value proposition no one should think about whether a service is running on a blockchain or in the cloud.
As the Web3 revolution unfolds, it is clear that the race for control is not just about technology but about a fundamental reimagining of power, control, and trust in the digital age. Distribution is up for grabs in crypto because web3 is fundamentally at odds with the business and ethos of Web 2.0.
Eliminating irrevocable data ownership, losing 30% App Store fees and the ability to train AI on your data, and emphasizing portable identity and consumer-centric developer goals and other general side effects of de-platforming, would drive a stake through the heart of Big Tech. It will be fascinating to see Telegram’s role as a distributor and believer unfold while the rest of Big Tech tackles questions of mission and purpose and decides whether to join the party in service to the future’s protocols.
Disclosure: CoinFund is an investor in STON.fi, a DEX on the TON blockchain, and holds additional exposures across the TON ecosystem.
Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.
