Why I’m Starting a DeFi Project on TON
Entrepreneurial Spark
In November 2022, just before the first-ever TON community meetup (dubbed TON Fam), core members of the TON Foundation (“Foundation”) gathered in person for the first time in Dubai. I vividly remember the boardroom where we sat and listened to an inspiring pep talk from Steve Yun @steveyun_yun, President of The Open Network Foundation.
While I can’t recall his words verbatim, his message was clear: in two years, he hoped the need for the Foundation itself would dissolve, allowing members to pursue their own projects within the TON ecosystem. In that moment, the room felt a mixture of shock and uncertainty — how could this be when we were about to host the very first community meetup? Since then, my journey has been an exhilarating roller-coaster, from managing incubation and growth to working with institutions during my tenure. One of my proudest achievements was organizing the first global Hack-a-TONx in 2023, which helped now-established leaders like DeDust and Storm Finance gain crucial funding and recognition.
Looking back, I now see why the vision was essential. TON Foundation @ton_blockchain is decentralizing in real-time, with new entities like TON Society @ton_society, TON Ventures @ton_ventures, and TON Studio @thetonstudio emerging.
Now, on the two-year anniversary of that pep talk, I’m stepping up to co-found Factorial Finance @FactorialFi — a DeFi lending project built on TON.
Factorial aims to be the gateway to yield on TON by offering composable lending that is flexible and tailored for institutional adoption of TON DeFi.
TON DeFi Enigma
In 2023, at the TON Gateway, my keynote focused on “Liquidity Incentives for Web3 in the Telegram Ecosystem.” This served as a catalyst for The Open League, a competition designed to help projects attract users and capital by rewarding them with incentives like airdrops and liquidity provision. Millions of TON were allocated in 2024 to strengthen key trading pairs like TON-USDT, and in a short time, we achieved impressive total value locked within the TON ecosystem.
However, despite the Foundation-led incentives, liquid funds and institutional players often noted challenges in deploying to TON DeFi strategies due to the lack of a capital-efficient environment and infrastructure that met their internal risk thresholds. Some even questioned, “Is TON a suitable blockchain for serious DeFi?”
This leads to the problem statement:
Despite the rise of TON and TON-USDT, TON DeFi still lacks institutional adoption, capital efficiency, and deep liquidity.
The Calling
When I was introduced to my now co-founder, my deep desire to pinpoint the missing pieces in TON DeFi found its purpose. Hyung, my co-founder and leader of B-Harvest, oversees a powerhouse in blockchain R&D with a team of DeFi experts. My initial reaction to Hyung’s idea was one of skepticism — I was prepared for yet another EVM project copycat for Telegram’s 950M users on TON. Yet within minutes, our conversation shifted to EVM DeFi innovations over the years and TON’s unique architecture. Rather than dismissing EVM’s approach, Hyung highlighted how TON’s architecture, though distinct, is exceptionally well-suited for scaling with mass adoption in mind. This discussion ignited the vision for what could become TON’s DeFi Renaissance (1), and I found in Hyung an exceptionally strong execution partner who complements my extensive network and understanding of the TON ecosystem, finally giving me the conviction to pursue entrepreneurship full-time.
TON’s DeFi Renaissance will arrive when we create a landscape where liquid funds, market makers, institutions, and whales can easily access TON DeFi. By extension, Telegram users who benefit from this boom will transition to centralized exchanges, becoming high-ROI users rather than simply claiming airdropped tokens once. As the left side of the barbell (Telegram users) and the right (crypto funds and institutions) strengthen, we can set a DeFi flywheel in motion on TON.
Factorial aims to bring composability to TON DeFi. For too long, the lack of synergy among projects has hindered value creation across our ecosystem, with incentives siloed and lacking a broader vision for wealth creation through new assets and strategies. By paving the way for institutions seeking to explore TON DeFi within their internal risk thresholds, we can elevate TON into a professional DeFi landscape.
So, how do we approach this systematically? The idea is to tackle the previously mentioned issues step-by-step. We believe the following steps will make TON DeFi an attractive playground for both builders and users:
- Institutional Readiness: Adhere to open-source standards and develop SDKs for greater accessibility.
- B2B Partnerships: Onboard institutional staking service partners through custom vaults curated by select market participants.
- Enhanced Capital Efficiency: Introduce undercollateralized loans and leveraged yield farming via private vaults to maximize capital efficiency.
- Deeper Liquidity: Collaborate with market makers to implement intent-based market-making solutions that offer on-demand liquidity.
- Increased Trading Volume: Expand lending pools with new assets and enhance liquidity in major assets.
- Establish TON as the Base Currency for Major Pairs: Adopt upcoming assets like Teleport BTC and yield-bearing assets, positioning TON as the base pair to minimize impermanent loss from using USDT as the base.
Factorial will work closely with existing TON DeFi projects to maximize the positive impacts of institutional adoption. We can’t do it alone. Just as a rising tide lifts all boats, this collaboration will help usher in a new era for DeFi projects on TON.
Potential for TON DeFi
In case you haven’t been paying attention, TON’s growth in 2024 has been truly impressive. Tap-to-Earn projects like Notcoin and Catizen propelled TON into mainstream crypto spheres and rewarded the community handsomely. The focus on mass adoption paid off, with tens of millions of new wallets created and many first-time crypto users onboarding to TON through Telegram’s channels.
But this alone isn’t enough. The initial ‘to-earn’ incentives (2) sparked adoption, but they must be followed by nurturing the right environment for mass distribution, initially supported by a few dedicated power users — institutions and whales — who provide the liquidity and capital essential for a thriving ecosystem. This foundational approach enables wealth effects to reach everyday users, establishing a balanced ecosystem that caters to both entertainment-focused users and professional DeFi services. A community stays and supports a narrative because they have achieved wealth by doing so — note the past tense. This is why, while TON’s focus on memes and games is effective in attracting initial users, it must be balanced by foundational liquidity provided through robust lending and DEX solutions.
I am extremely bullish on TON DeFi because we have ample case studies from the DeFi Summer gold rush, collapse, and ongoing revival to learn from. Adding to this is the anticipated arrival of Teleport BTC, announced this summer. The upcoming interoperability solutions on TON mean that attractive assets, including yield-bearing ones, will also find their way to TON. By ensuring that customizable lending and DEX solutions enable users to adopt these assets within TON, we’re tapping into a trillion-dollar opportunity. Unlike many other ecosystems fragmenting liquidity across chains with separate Bitcoin L2s and RWAs, TON is prepared to consolidate this liquidity due to our strengths in security — Teleport BTC is trustless (with the same validators as TON), and upcoming interoperability solutions (like LayerZero and Axelar) are based on native endpoints.
Factorial’s mission is to capture the interest and capital of Bitcoin and Tether holders — two of the strongest product-market fits in crypto. We believe there is an overlap between Bitcoin and Tether holders and the TON community, given its focus on fundamental rights and freedoms, which also aligns with the ethos of Telegram. With Telegram’s vast user base and TON’s potential, our strategy is clear: to unite the power of dedicated Telegram users and institutional players, creating a modular lending ecosystem with true composability and deep liquidity.
TON DeFi is Young
The TON DeFi ecosystem is ramping up, and it’s time to build and launch truly composable DeFi building blocks. Factorial will help open TON to a new world of liquidity and capital, driving growth for our community long after points farming and token generation events have ended.
I’ve never felt more inspired to work on a project than I do now — fully locked into founder mode. Stay tuned for exciting updates ahead!
Until then, fade TON DeFi at your own risk.
Follow our updates — https://x.com/FactorialFi
(1)@Arthur_0x https://x.com/Arthur_0x/status/1845844922085335457
(2) Much has been said about the new generation of token releases, with Day 1 mass unlock touted by voices like @Rewkang https://x.com/Rewkang/status/1850542826448445801. However, to build sufficient treasury for future incentives and marketing, teams may have needed to hedge on centralized exchanges, which could partially explain the post-launch price action of T2E tokens.
