Telegram had a terrible few weeks. The founder of the messaging app, Pavel Durov, was arrested in late August and then released on €5 million bail in France, charged with operating a company that is complicit in the distribution of child sexual abuse material and the facilitation of drug trafficking and organized fraud. Not surprisingly, that sent the price of the network's cryptocurrency, Toncoin, plummeting by a third.

But last Wednesday, in the ritzy Dosan-daero part of Seoul, you could see no signs of gloom in the long line of people waiting to get into a party hosted by TON, the blockchain that runs on Telegram. Indeed, the crowd of developers, marketers, investors, and other players from the blockchain ecosystem was in the mood to celebrate: A few hours earlier, TON had announced at Korea Blockchain Week that transactions on the blockchain had crossed the 1 billion mark.

Ironically, the high-profile arrest of Durov has proved to be a boon for Telegram. The app downloads surged shortly after his arrest, and it appears to have boosted metrics on TON too.

"Last week, TON hit all-time highs for active users and number of transactions during what, let's be honest, is probably one of the worst weeks ever in news for TON," said Jack Booth, co-founder of TON Society, which manages the TON community, at a conference at Korea Blockchain Week.

A complicated relationship
In theory, Durov's status should not have any material impact on TON. Telegram and TON Foundation, which develops the blockchain, claim to be two independent entities. However, things are more complicated in reality.

Durov launched TON with his brother Nikolai Durov under Telegram, but the messaging app had to abandon blockchain after the U.S. Securities and Exchange Commission sued Telegram for conducting a massive unregistered initial coin offering. The app has since tried to distance itself from TON-at least by separating its corporate structure.

Meanwhile, a group of open source developers and blockchain enthusiasts founded The Open Network Foundation, or TON Foundation, to continue developing the blockchain. Since then, TON has spawned several entities to support its fast-growing operations, including TON Society and The Open Platform, or TOP, which created the TON-based crypto wallet that runs on Telegram.

And to address concerns that the disproportionate holding of Toncoin by the app could compromise the decentralized nature of the network, in February Durov announced that he would "limit Telegram's share of TON at ≈10% of the supply.

Still, the fact that people panic-sold Toncoin speaks to the perception that TON and Telegram are closely related and somewhat interdependent. A fellow who identified himself as Minho told me at Korea Blockchain Week that he bought more TON since Durov's arrest in hopes that "prices will rebound following his release.

Operationally, Telegram's super app ambitions also rely heavily on TON's success. In order to attract third-party developers to build in-app commerce on a solid payments network, Telegram needs an appropriate tech stack. However, instead of using a fiat system, it has selected cryptocurrency.

“When you’re tying your ecosystem to the success of the Telegram platform, then obviously when that comes into question, people start to doubt what could happen,” Booth told me. Still, he stressed that TON being a blockchain network gives it a level of independence that would let it survive without Telegram.

At the end of the day, TON's ecosystem is simply using Telegram as a front-end experience. The app works on the website, too, so even in the most horrible event that Telegram is shut down, TON will still be available to run," he said.

Optimism galore
A billion transactions sounds like a big number, but how big is TON really? It's a tough comparison in terms of on-chain activity, as decentralized networks are usually tracked by different parties and measured by different metrics. But to give you a rough idea: Daily transactions on TON stood at 14.6 million on September 10 — that's about 40% of the "non-vote" transactions on Solana, a more established blockchain that's currently the fifth-largest by market cap. Toncoin, by market cap, stands at tenth place.

However, the total value locked on TON is only $408 million, about 8% of Solana's current worth of $4.77 billion, according to DefiLlama.

These numbers are in line with Booth's comments that TON's current boom is being driven by a few viral "tap-to-earn" games that reward users with in-game assets for merely clicking on a button, and players trade these assets on exchanges where they are accepted. Solana, on the other hand, attracts far more capital thanks to its vibrant and much more varied decentralized finance (DeFi) ecosystem.

One such TON-based game, Hamster Kombat, where people role-play as crypto exchange CEOs, has drawn 250 million monthly active users, says Booth. That is impressive, but then again should be taken with a grain of salt, as this "tap-to-earn" mechanism here is pretty weak by the standards of contemporary video games and does provoke valid questions about such games' potential longevity.

But for TON, and by extension for Telegram, the value of clicker games is in bringing people to web3 with just a few taps (and keeping them there with a financial incentive), Booth said in his presentation. And it should be noticed that to play web3 games users already have to jump a few hoops in the first place — they have to download an app, set up a crypto wallet, and keep lengthy wallet passkeys safe. Therefore, anything that makes things more effortless will probably be liked.

However, studios are not sitting idle when it comes to building more complex games for TON. In fact, one of its titles, called Catizen, allows players to manage and optimize a colony of cats that drew 30 million monthly users of over 2 million of them using the blockchain, Tim Wong, chairman at Catizen Foundation, said in a conversation with TechCrunch. The game has racked up revenue of $21 million in less than six months.

"Most web3 games acquire users without generating any in-game revenues," Wong told me. "The mini-game ecosystem is already very established on WeChat, and it's just starting on Telegram. We believe humans' need for high-quality gameplay and their desire to spend on entertainment are universal."

Toncoin is probably not going to the moon with charges against Durov, or how often Telegram gets mentioned in bad news. But as is often the case with crypto projects, there is a good amount of fervor and optimism on display here. Denmark-based Roy Chen, who has created a console-inspired title, HypeSaints, that runs on TON, noted that the significant effect of Durov's arrest was on the prices of Toncoin and not the ecosystem.

"After all, the potential for crypto mass adoption through TON is huge, thanks to Telegram's 950 million users," he said.