The Evolving MEV and Restaking Landscape on TON

The Open Network was launched in January 2019 and was initially named ‘Telegram Open Network’ since it was created as a project by the secure messaging app Telegram to build a user-led community of decentralised apps and payments. After a $1.7bn token sale and scrutiny from the US Securities and Exchange Commission, the network decoupled from Telegram and in 2021 it was rebranded to ‘The Open Network’ (TON) under open-source community control.

The Open Network operates as a Proof-of-Stake (PoS) protocol that encourages users to lock up their TON tokens, providing the cryptoeconomic security necessary to maintain the network and participants are rewarded for their contribution with staking rewards in the native TON token.

The adoption of TON within the broader ecosystem has driven significant growth in this staking activity and the total staked TON has risen from 320 million tokens in January 2023 to 450 million by the start of 2024, and is now nearing 700 million. During this period, the staking APR has exhibited significant variation, ranging between 3% and 8%. At the start of the year, the APR was at its peak, but it trended downward beginning in April. More recently, it has shown signs of recovery, stabilizing at an average of 5.3% over the past three months.

This increased staking interest and attractive APR has meant that staking innovations seen on other chains are now beginning to emerge on The Open Network, most notably the concept of MEV - maximal extractable value and restaking are now starting to gain traction.

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MEV on The Open Network

Maximal Extractable Value (MEV) is where validators can extract additional profit by manipulating the ordering, inclusion, or exclusion of transactions within a block. This manipulation arises because certain transactions—such as those in decentralized finance (DeFi)—can yield significant financial opportunities when placed in a specific order. For example, front-running (executing a transaction ahead of a pending one) or sandwich attacks (placing transactions before and after a target transaction to manipulate its outcome) are common MEV strategies.

MEV is particularly prominent on Ethereum due to its auction-style transaction prioritization and the high-value nature of its DeFi ecosystem, but there is also a maturing MEV landscape on Solana as it’s activity and use cases continues to grow.  Similarly The Telegram Open Network is now experiencing growing use cases and transaction activity which is what’s driving the emergence of MEV opportunities and new players in this space.

One example company in the TON MEV space is Mevton Labs who offer “advanced MEV infrastructure for the TON blockchain, aiming to enhance TON's efficiency, reduce the adverse effects of MEV on users, and maximize the MEV rewards distributed to users and stakers”. This project is still in the development stages and so the potential APR boost is unclear. It is, however, a clear indicator that there is enough expected upside on TON from an MEV perspective that companies dedicated to this focus are now being created.

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Restaking on The Open Network

Restaking is primarily associated with Ethereum, where it is used to enhance the utility of staked ETH by allowing it to secure additional layers of decentralized services. Projects like EigenLayer and Symbiotic have since grown to support the restaking of additional assets and the TVL across these projects now stands at ~$16.65bn.

Twinstake is an active Operator on EigenLayer and we demonstrate our commitment to the restaking landscape by contributing our expertise to ensure that the protocol is suited to institutional needs: https://www.twinstake.io/news/twinstakes-recent-contribution-to-eigenlayer-enhancing-restaking-for-institutional-clients

This concept of restaking is starting to emerge on other chains and The Open Network now has UTONIC as its first restaking platform designed specifically for the nuances of TON. UTONIC enables validators and token holders to restake their TON tokens and secure new services, support innovative projects, and earn additional rewards, all while leveraging the existing TON infrastructure. Conceptually this is very similar to EigenLayer and the restaked TON has additional encumbrances put on it from these services within the UTONIC ecosystem. This opt-in feature introduces supplementary slashing conditions tailored to the specific needs of validated services, such as wallets, bridges, or oracles. Under the hood - UTONIC allows users to mint uTON, a native embedded liquid restaking token, through restaking their TON or Liquid Staking Tokens (LSTs) like tsTON or stTON.

UTONIC has suggested their staking mechanism can increase yield to between 5 and 15%, although it is likely too premature to provide a more accurate estimate of this. At the time of writing, there is a modest TVL of $15M locked on UTONIC.

The MEV and restaking landscape on The Open Network is therefore nascent but illustrating growing interest by companies exploring innovations in this space to better provide APR boosting opportunities for TON stakers.

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For institutions interested in exploring staking and staking innovations on The Open Network, we invite you to connect with us via [email protected] .

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