Telegram’s Journey to Web3: A SuperApp in the Making
Telegram is a social media platform but unlike X and Linkedin it does not have an aggregated feed. Instead, users can join individual channels and groups to view content there.
Telegram was launched 11 years ago (August 2013) and unlike other messaging apps:
1. Telegram has very few employees — 50 full-time employees and for a long time it was only 30.
2. Telegram is fully owned by Durov who claims he has been offered a $30+ Billion valuation (FT article)
3. Telegram is hoping to become profitable in 2024 or 2025 and the focus is not on advertising
Telegram`s select unique Features
The Secret Chat feature in Telegram allows users to have end-to-end encrypted conversations not stored on Telegram’s servers. This ensures that even Telegram itself cannot access these conversations.
Self-destructing messages allow users to set a timer for messages to automatically delete after a certain period, adding an additional level of security for sensitive information.
Large Groups and Channels: Telegram supports large groups of up to 200,000 members and channels for broadcasting to unlimited audiences, making it suitable for mass communication
Telegram Revenue Streams
1. Premium Subscriptions (introduced in 2022): Users can subscribe to Telegram Premium for additional features like faster downloads and premium stickers.
2. In-App Purchases (introduced in 2022 with the premium subscription):: Users can buy stickers, themes, and other customization options within the app.
3. Sponsored Messages (end of 2021): Telegram sells sponsored messages that appear in large public channels
4. Rewards for Creators: . Telegram shares 50% of its advertising revenue with channel owners.
Telegram users generate over 1 trillion monthly views in channels according to Telegram`s site. Owners of public channels with at least 1000 subscribers can be rewarded with 50% of the revenue from ads displayed in their channels.
5. Coin: Telegram introduced a coin on the TON blockchain called Toncoin, used for purchasing ads and other services on the platform.
While there are no 2024 revenue figures, Telegram generated $45 million in 2023, primarily through its Premium service which include in-app purchases. The company emphasized that they do not intend to grow their ad revenue business because they want to avoid this kind of conflict of interest. They want to grow user-generated revenue revenue.
Telegram Mini-Apps
In 2022 Telegram enabled third-party developers to create versatile applications within Telegram. These are actually mini-apps similar to what Tencent`s secret sauce is on WeChat.
The advantages of mini-apps within an App that already has a large user base (apparently, the average time the 800 million users spend on Telegram as of 2023 was c. 4 hours per month) are well documented.
• Convenience for the user: Mini-apps offer a flexible interface similar to a website but the user doesn’t have to leave the app environment.
• Low Cost for the business: Mini-apps have low development costs compared to traditional apps.
• Low to zero rent to Digital Landlords: Mini-apps allow businesses to avoid platform fees associated with traditional app stores like Apple`s 30% cut.
• Lower Marketing Costs: Mini-apps can be easily marketed to Apps with a large user base.
Telegram is the only Scaled non-Asian app (900 million and growing), Global (relative to the Chinese well established Super Apps) in its user base, and has successfully launched Mini-Apps.
Keep in mind that this development is in its early days. We can agree that Telegram (the 6th most downloaded app globally from March to May 2024 ) is the only non-Asian App that is successfully integrating mini-apps — the secret sauce of Super-Apps.
More importantly, Telegram a very centralized and traditionally run organization, is on a mission to use the SuperApp business model to transition its users from a Web2 world to a Web3 world.
Some of you may remember the Telegram TON ICO back in 2018 which ran into major regulatory issues with the SEC and had to be canceled in 2019. I certainly do, as it was marketed in a private placement style and it was one of the highlights of my hilarious talk at the infamous annual `Crypto Mountains Rock` event in Davos (I`d call it standup comedy talk but unfortunately, I had a cast on my leg and sat on stage) — Watch The Telegram ICO 2018 clip.
Fast forward to today and the current TON Blockchain (8th in market cap despite the recent 15+% drop due to the arrest of Durov) while not a Telegram-built blockchain, has become an integral part of it in several ways. TON (The Open Network) and Telegram’s Mini Apps are interlinked. The Telegram mini-apps are actually mostly Dapps (Decentralized applications) built on the TON Blockchain. Currently, there are DEXs, NFT marketplaces, non-custodial wallets, Staking platforms, Gaming and Entertainment mini-apps/Dapps. So, most of the standard crypto activities can be processed within Telegram, via the mini-apps, which are Dapps, without leaving the ecosystem. Now that is a FIRST!
The TON network currently hosts 650+ Dapps. Not all are integrated on Telegram. Apparently, the most popular Dapps on Telegram are `Tap-to-earn` apps like Notcoin (NOT) and Hamster Combat (HAMSTER).
NotCoin has over 40 million users and is just a simple click-to-earn game. Yescoin is a web3 game attracting over 18 million players, swiping to earn gold coins on a blockchain. Catizen is a GameFi Dapp that combines virtual pets with blockchain, AI, and the Metaverse. Users interact with AI cats and engage in various activities directly within Telegram.
On the Defi front, StonFi is a leading decentralized exchange on Telegram and Flagship FYI is the first `crypto -robo` on Telegram to manage investments and engage with the crypto community.
Telegram`s footprint
Don’t be fooled that Telegram is only crypto and for crypto natives. Despite being used largely by the crypto community, Telegram is also used by large parts of the population because of its unique UX, and its privacy features, especially in non-democratic regimes (which these days is subject to interpretation). The audience overlap of Telegram with the audience spending time on the Zuck Empire App ecosystem, speaks for itself.
It will be very interesting to watch how the judicial proceedings of the Durov arrest affect the growth of the user base. The decision of the judge in this case will affect the direction of social media businesses (Elon Musk certainly agrees) more than any policymaker, politician, or regulator can at this time.
Note that Telegram has fully integrated all types of payments via its Payments bots platform. Stripe, for example, was integrated with Telegram in late 2023.
It makes a lot of sense, that the initial growth spurt of Mini-Apps/ Dapps on SuperApp Telegram comes from Gamefi and then Defi. By now, everybody agrees that these are the Web3 growth hacks. As ArunKrishnakumar and Theo Lau mention in their book `Gamefi is the growth hack that the Metaverse needs to become mainstream: it is to the Metaverse what Social Media was to the Internet`[1].
Conclusion
Telegram has already built the foundations to become a unique SuperApp by integrating mini-apps, leveraging its vast user base, and doing so with a Web3 approach.
Since there isn't full consensus on what Web3 is and isn't: in my book, a Web3 approach is first and foremost about substantially reduced rent-paying to Digital overlords and fairer distribution of revenues to creators and users. Second, it is about fairer Data Ownership Rights and reduced Conflicts of Interest via Transparency. Third, Web3 uses innovative technologies (blockchain, AI, the Metaverse etc.) to execute these missions.
With the introduction of Mini Apps and integration with The Open Network (TON), Telegram offers decentralized services. This Web3 twist not only enhances Telegram’s potential as a Super App but also positions it as a leader in blockchain adoption in scaled social networks, providing users with a seamless and secure experience in the evolving digital landscape.
It is early days and a single judge`s decision can change the Telegram trajectory.
[1] Excerpt from their book The Metaverse Economy which we covered in the Fintech Book Club (recording here). Join our Fintech Book club for quarterly discussions on Fintech books — see here.
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