Toncoin Community to Vote on TON Believers Fund with Incentives for Long-Term Holders

 Key takeaways

• TON Foundation’s latest community governance proposal is now nearing an end, with just 2 days remaining before the final votes are counted
• The governance proposal will decide whether TON Foundation joins a new initiative from the Toncoin community, known as TON Believers Fund
• TON Believers Fund has created a smart contract that will lock TON tokens in escrow over a period of 5 years to reduce liqiudiation risks and make Toncoin’s tokenomics more robust

TON Foundation has been running a governance proposal over recent days in a bid to gauge community support for a new initiative known as TON Believers Fund (TBF). TBF incentivizes TON miners to lock a portion of their token supply into a specially-made smart contract, hoping to reduce the risk of major sell-offs and encourage long term commitment to the project.

TBF has already attracted support from prominent projects in the TON ecosystem, including First Stage Labs, Kilo Fund, ConnecTON, DWF and Orbs. TON Foundation is now deciding whether to also back the initiative, sharing a governance proposal that will run for a total of seven days until 24th August 2023.

Important message to the #TON Community.

Recently, enthusiasts from our community have proposed the TON Believers Fund (TBF) – a special smart contract that incentivizes miners to lock their Toncoin for a period of 5 years.

Several notable projects have already supported the… pic.twitter.com/cwDyPSlF3B

— TON ? (@ton_blockchain) August 17, 2023

What is TON Believers Fund?

To understand what TBF aims to achieve, it’s worth noting how The Open Network (TON) operates. TON is a fast-growing layer-1 blockchain that supports a variety of Web3 applications, including wallets, trading bots, and play-to-earn games. These applications are seamlessly integrated with Telegram and can be used without leaving the instant messenger.

The decentralized network uses a proof-of-stake consensus mechanism; however, TON tokens can still be mined. This is a solution to a protocol change that happened when Telegram left the project in May 2020, where 5 billion TON tokens were locked in ‘Proof-of-Work Giver’ smart contracts.

The TON mining process has led to a growing concentration of supply in a relatively small proportion of wallets. To help reduce counterparty risks associated with a high concentration of supply, TBF was launched by the community to encourage TON whales to lock funds in a specially made smart contract.

How does the smart contract work?

The TBF smart contract will lock all tokens that are sent to the address for a period of 5 years. For the first 2 years, no TON tokens can be accessed at all; and for the remaining 3 years, tokens will be unlocked periodically using a monthly vesting schedule.

To incentivize token holders to send TON tokens to this address, a yield will be earned as a reward. Yield is generated by a donate address that has been linked to the smart contract, where TON holders can send tokens that will then be used to pay rewards to liquidity providers.

A portion of TBF’s Open Letter sent to TON Foundation. Image via Telegram.

How will locking tokens in the smart contract help TON’s tokenomics?

Since a growing percentage of TON supply has been concentrated in a small proportion of wallets, TBF can reduce liquidation risks for Toncoin by incentivizing miners to lock up funds for the long term. All tokens that are locked in the smart contract are unable to be sold, which reduces the possibility of any large token holder instigating a sell-off event. An additional effect of the TBF initiative is that TON’s biggest backers are now incentivized to commit to the project for the long term.

Both key results of the community-run initiative can help to reduce counterparty risk when investing in Toncoin. This is because a growing percentage of the total circulating supply will be unsellable for the foreseeable future, and major stakeholders will continue to contribute towards project development regardless of the price action during this timeframe.

TBF stated that it hopes the initiative will increase the level of decentralization for Toncoin and fix key problems that “hinder the ecosystem from reaching its full potential.”

TON Foundation set to join the TBF initiative based on the results of the community vote

TON Foundation’s governance proposal has been running for almost 5 days. This means that there are only 2 days left before the final votes are counted on 24th August. At this moment in time, the result looks set in stone. Votes have been overwhelmingly in favor of the TBF initiative, which means that TON Foundation looks set to join.

How will TON Foundation support TBF?

TON Foundation stated that it will lock-up 1 million TON tokens into the TBF smart contract, if the community votes in favor of them joining. These tokens will be donated directly from the TON Foundation treasury. In addition to locking up 1 million TON, the Foundation stated that it will help to boost awareness about the TBF initiative by promoting it across TON community channels.

Until now, there has been 90,000 TON tokens locked into the TBF smart contract. These tokens were donated by major supporters of the initiative, as well as by small token holders and other community members. TON Foundation’s decision to donate 1 million TON tokens will boost the TVL of the smart contract by more than 1100%.

TON Foundation stated: “We commend and encourage productive community action towards achieving shared goals.”

TON price prediction

Toncoin (TON) is currently valued at $1.36 per token, down 1.5% in the past 24 hours. The CoinCodex price prediction algorithm anticipates bullish price action for TON over the coming month, highlighting $1.47 as a key price target by 21st September 2023. This would be a 8.99% price rise in total.