The Protocol: The Impact of Telegram CEO’s Arrest on TON Blockchain

In
this
week’s
issue
of
CoinDesk’s
weekly
newsletter
on
blockchain
technology:
Fresh
SEC
charges
hit
the
OpenSea
NFT-trading
platform,
the
arrest
of
Telegram
CEO
Pavel
Durov
impacts
the
TON
blockchain,
and
crypto
twitter
erupts
over
Ethereum
co-founder
Vitalik
Buterin’s
antipathy
toward
DeFi.

JUST
IN:

OpenSea
Gets
‘Wells
Notice’
From
SEC,
Calling
NFTs
Sold
on
Platform
Securities

TON
OF
TROUBLE.
With
Telegram
CEO

Pavel
Durov
set
to
appear
in
a
French
court
on
Wednesday,
blockchain
analysts
are
weighing
the
possible
impact
on
the
closely
affiliated
TON
blockchain,
officially
called

The
Open
Network.
Alex
Thorn,
Galaxy
Digital’s
head
of
research,
reminded
investors
in
a
report
that
the
value
of
the

TON
blockchain
and
its
native
token,
toncoin
(TON),
are
“substantially
dependent”
on
the
project’s
integration
with
Telegram.
The

TON
price
tumbled
after
the
news
that
Durov
was
arrested
on
Saturday
–
detained
as
part
of
an
investigation
into
crimes
allegedly
planned
or
broadcasted
on
Telegram.
The
TON
blockchain
has
more
than
350
validators
globally,
but
it
is
unclear
how
many
of
these
Telegram
operates,
if
any,
according
to
the
Galaxy
report.
(A
source
told
The
Protocol
that
Telegram
doesn’t
operate
any
of
them,
although
our
attempts
to
reach
the
supporting
TON
Foundation
for
comment
were
unsuccessful.)
It’s
not
clear
“how
resilient
TON
can
be
in
the
case
that
France
or
any
other
major
governments
attempt
to
attack
it
or
to
take
it
down
as
part
of
Durov’s
arrest,”
Thorn
wrote.
The
TON
Society,
describing
itself
as
a
community
organization
affiliated
with
TON,
circulated
an

open
letter
condemning
Durov’s
arrest
and
calling
upon
France
to
release
him.
In
a
very
crypto-style
interlude
to
the
saga,
the
TON
blockchain
suffered
a

near-six-hour
outage
on
Wednesday,
caused
by
a
surge
in
network
traffic
–
and
possibly
linked
to
the
recent
airdrop
of
a
TON-based
memecoin
called
DOGS.
In
a

post
on
X,
the
TON
blockchain
team
explained
that
“Several
validators
are
unable
to
clean
the
database
of
old
transactions,
which
has
led
to
losing
the
consensus,”
assuring
that
“no
cryptocurrency
assets
will
be
lost
due
to
the
issue.”

Kain
Warwick,
founder
of
the
DeFi
projects
Infinex
and
Synthetix,
appeared
on
the
Steady
Lads
podcast
(Steady
Lads/YouTube)

ELSEWHERE:

Cardano
founder
Charles
Hoskinson
speaks
last
week
on
a
video
posted
to
X.
(@IOHK_Charles/X)

Cardano,
launched
in
2017
by
Ethereum
co-founder
Charles
Hoskinson,
is
pushing
toward
its
biggest
upgrade
in
two
years,
with
major
changes
to
the
structure
of
its
main
network,
introducing
mechanisms
for
users
to
participate
in
on-chain
governance.

The
upgrade,
known
as
the
“Chang
hard
fork,”
is
a
major
milestone
in

Cardano’s
roadmap,
punctuated
by
the
much-awaited
addition
of
smart
contract
functionality
in
2021.
The
Chang
hard
fork
was
initially
set
to

go
through
this
week,
but
Hoskinson
announced
on
Friday
that
it
had
been
pushed
back
to
Sept.
1
so
some
exchanges,
including
Binance,
could

prepare
their
systems.

“The
magic
of
deadlines
is
that
people
who
aren’t
taking
upgrades
seriously
suddenly
say
damn
we
got
to
get
moving,”
Hoskinson

wrote
on
X.

The
main
feature
of
the
latest
upgrade
is
to
give
Cardano
the
ability
to
introduce
on-chain
governance
features.
Those
that

hold
ADA,
Cardano’s
native
token,
will
be
able
to
elect
representatives
(called
Delegate
Representatives,
or
dReps)
and
vote
on
improvement
proposals
as
well
as
future
technical
changes
to
the
blockchain.

Click
here
for
the
full
story
by
Margaux
Nijkerk

Top
picks
of
the
past
week
from


our
Protocol
Village

column,
highlighting
key
blockchain
tech
upgrades
and
news.

Photo
of
Tonkeeper
dApp
browser
on
smartphone
(Tonkeeper)

Fundraisings

Space
and
Time
co-founders
Scott
Dykstra
(left)
and
Nate
Holiday
(Space
and
Time)

Deals
and
grants

Data
and
Tokens

Regulatory,
Policy
and
Legal

Chart
showing
the
spike
in
Bitcoin
fees
(expressed
in
sats/vByte)
as
the
staking
platform
Babylon
went
live.
(Mempool.space)

The
Bitcoin-focused
staking
project
Babylon

went
live
last
week,
and
a
rush
by
users
and
projects
to
get
in
caused
so
much
congestion
on
the
blockchain
that
it
briefly
sent

transaction
fees
spiking
to
their
highest
levels
since
June.

The
project
had
established
a

1,000
BTC
cap
for
the
first
phase,
so
there
was
limited
space.
And
it
took
just

74
minutes
for
the
allotment
to
fill
up,
with
participants
motivated
by
the
prospect
of
bragging
and

marketing
rights,
not
to
mention
the
ostensible
motivation
to
qualify
for
eventual
rewards.
Fees
for
an
individual
block
shot
as
high
as

15.5
BTC
(nearly
$1
million),
versus
the
more
typical
level
of
0.1
BTC
or
less,
according
to
the
data
site

Mempool.space.
One
project,

Lombard
Finance,
managed
to
squeeze
in
as
a
“Day
1
Babylon
staker”
but
dialed
back
from
the
250
BTC
it
had
lined
up
because
leaders
“just
couldn’t
justify
paying
miners
nearly
3/4th
of
a
$million,”
according
to
a

tweet.