Why Are Most VCs Watching But Not Investing in the Hype-Fueled TON Ecosystem?
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Why Are Most VCs Watching But Not Investing in the Hype-Fueled TON Ecosystem?
Relying solely on the惯性 of token investment to view the TON ecosystem may no longer be effective.
Navigating Web3 tides with focused insightsAuthor: flowie, ChainCatcher
Editor: Marco, ChainCatcher
Recently, Donald, founding partner of FA firm D2 Capital, spoke with over 60 VCs and found that not a single one wasn't looking at the TON ecosystem. "Even the latest movers started researching it three to four weeks ago."
But while everyone is watching, few are actually investing. Most of the VCs Donald has spoken to remain in wait-and-see mode. Bruce Lan, managing partner at Bing Ventures, has reviewed nearly 100 projects but hasn't made any investments yet.
According to RootData, TON ecosystem funding rounds over the past six months remain in single digits. In contrast, the Bitcoin ecosystem—equally hyped—saw nearly weekly fundraising during its three-month boom period.
Investment firms interviewed by ChainCatcher firmly believe the TON ecosystem differs from any previous ecosystem or narrative and won’t be a flash in the pan. However, on this ready-made traffic platform, the game rules have changed.
NotCoin, listed on Binance and OKX, didn't raise funds from VCs; Catizen generated $12 million in revenue without launching a token. More than one investment firm stated, "Future projects in the TON ecosystem may not need to issue tokens at all."
If crypto VCs continue applying their traditional token-investment mindset to the TON ecosystem, it may no longer work.
No VC Is Ignoring the TON Ecosystem
Owen, founder of PAKA, remarked that focusing on TON was niche a year ago, but now almost none of his peers ignore it.
At a private gathering during Hong Kong Blockchain Week early in 2023, Owen received a small USDT transfer from a Telegram contact—a new feature Telegram had announced just a month prior.
The idea that nearly one billion users could transact directly on-chain thrilled Owen, who has long focused on mass adoption.
After researching with his team, Owen concluded the TON ecosystem would differ fundamentally from any prior ecosystem. "Other ecosystems introduce obscure technologies and ask users to come play—but users only care about airdrops. Telegram, however, holds massive real user bases and can use Web3 tech to serve them, clearly aligning better with mass adoption."
But when he began scanning the TON ecosystem, it was hard to get started.
Subjectively, many projects felt mediocre—“too good to discard, too poor to enjoy.” Liquidity was also weak; TON’s TVL was under $10 million at the time.
Owen first looked at a TON-based DEX with an extremely rough interface. He thought, “Our PAKA investment team, with development experience, could probably build something better in a week.”
Similarly, CGV Fund partner Shigeru, who also began reviewing TON in early 2023, was temporarily turned off after checking a few projects. Besides limited quantity and low quality, he sensed the market timing wasn’t right—“infrastructure was too sparse, even lacking self-custody wallets.”
Owen quickly realized, “Due to the new programming language and incomplete infrastructure, building a solid DEX isn’t simple.”
But within months, as TON ecosystem infrastructure improved across multiple fronts, projects Owen once dismissed already attracted millions of users.
In September last year, Telegram announced an exclusive partnership with TON. Following WeChat’s commercialization path, they integrated payment wallets and other infrastructure, enabling 900 million Telegram users to directly buy/sell tokens and NFTs, and participate in GameFi projects. In April this year, Tether partnered with TON, giving TON its own native stablecoin.
Meanwhile, TON pushed mini-program applications, allowing Notcoin, Catizen, and many other mini-games to rapidly register tens of millions of users. Many small apps now have multiple revenue streams without issuing tokens.
The phased success of games like Notcoin and Catizen has drawn in a wave of Web2 “mainstream” players.
A founder providing technical solutions for TON blockchain and developers often meets builders and project teams through offline salons. He noted, “Many Web2 game studios and entrepreneurs from ecosystems like WeChat are now targeting Telegram.” With traffic on platforms like WeChat and TikTok already expensive and saturated, Web2 entrepreneurs seeking new growth frontiers naturally turn to Telegarm, which has nearly 1 billion monthly active users and resembles WeChat in key ways. “Methodologies honed through years of Web2 battles can be partially applied on Telegram.”
Owen added that established Web2 game companies such as Glacier, MicroYou, and 37Games have already launched projects on the TON ecosystem.
But compared to internal ecosystem changes, a more critical factor driving widespread attention from Asia-Pacific VCs is increased Western top-tier capital involvement at the application layer and within the TON ecosystem.
Paradigm and a16z both participated in Farcaster’s $150 million funding round this year. Pantera Capital publicly announced a major bet on TON in the first half of the year, reportedly investing over $250 million. Before this, the TON ecosystem was primarily funded by Chinese and Russian capital.
Donald clearly noticed that after Western capital entered, more VCs started asking about TON ecosystem projects. “Of the 50+ VCs I’ve talked to recently, not a single one isn’t looking at TON.” Shigeru, who was discouraged by TON last year, has refocused his attention this year.
Donald said, “Many VCs understand that even if 50+ APAC VCs pool their capital, it’s still just several billion dollars—insufficient to drive the entire TON ecosystem forward alone.”
Western capital entering also means potentially bringing more Western developers and builders into the ecosystem. Currently, most development on TON comes from Eastern entrepreneurs and developers.
Having interacted with both Eastern and Western founders and developers in the TON ecosystem, Donald clearly observes that Eastern teams remain focused on short-term monetization, while Western founders tend to think more about how to build super-apps akin to Facebook or Snapchat around nearly one billion active users.
“Many VCs may expect that once Western teams pioneer new paradigms, APAC teams can launch localized versions leveraging lower traffic costs and superior operational skills to break through. Two years from now, perhaps half of million-DAU products will come from each side.”
Why Do Most VCs Watch But Not Invest?
Donald understands why most VCs he speaks to hesitate to pull the trigger. While foundational infrastructure and project growth in the TON ecosystem are visibly accelerating compared to a year ago, investable opportunities remain scarce.
Ton.app shows there are currently 910 projects in the TON ecosystem, with 60% emerging in the past eight months. After mapping 300–400 ecosystem projects, Donald said, “90% are games.” Owen also said there are so many games on the TON ecosystem now that they’re overwhelming.
Most small game teams don’t heavily rely on VC funding.
Owen engaged with Notcoin’s core team last year. “They were initially building a TON Launchpad called Tonstarter. I wanted to invest in Tonstarter, but the team said their focus had shifted to Notcoin and they weren’t taking VC money—they’d go full community route.” Indeed, Notcoin has never announced any funding.
Even when raising funds, these small game teams might only do a single seed round with minimal amounts. From talking to multiple small game teams, Donald found “they have strong monetization capabilities.” Scarlett, investor in Pluto—the publisher behind Catizen—said that by adding in-game item purchases, Catizen has already earned over $12 million in revenue, with more than 500,000 paying users.
For VCs, pure small games aren’t worth investing in. Many VCs instead hope to see models like China’s 4399 Mini Game Mall or WeChat Mini Games emerge and scale on TON.
Bruce Lan, managing partner at Bing Ventures, reviewed most TON mini-games and believes, like WeChat’s “Sheep Jump” series, they likely have short lifecycles—quickly monetize and disappear. “VCs struggle to ensure positive ROI returns; these projects are better suited for fair launches.”
Moreover, while many TON mini-games claim tens of millions or even hundreds of millions of registered users, “the numbers still contain some inflation.” Key metrics for evaluating game performance—such as real user count, user stickiness, and future growth potential—remain in early or opaque stages, according to Bruce Lan.
Given the hyper-competitive gaming landscape, CGV Fund partner Shigeru has shifted more focus to TON ecosystem infrastructure. Recently reviewing over 20 projects, he finds that amid limited supply, certain targets have seen valuations inflated due to the recent TON hype, making it hard to act.
While the market holds high hopes for mass adoption on TON, Donald believes without breakout projects emerging, the TON ecosystem is no different from fleeting narratives—“at best, just different flavors of hot air.” To truly break out, a project must achieve at least 3 million real DAUs.
Many investors Donald speaks to remain on hold, waiting to see whether TON can attract heavyweights like ByteDance, Tencent, NetEase, and Western entrepreneurs to bring transformative projects to the ecosystem.
Additionally, VCs’ own liquidity issues may constrain investment in the TON ecosystem. Donald notes that APAC VCs overall have been deploying capital less frequently recently. With this ETF bull market failing to ignite an altcoin season, “institutions are more eager to offload existing holdings.” Even amid TON’s rising热度, investment decisions often get rejected at the partner level.
In Donald’s view, the TON investment boom won’t arrive until the next rate-cut cycle, when traditional Web2 dollar funds and APAC Web3 funds complete fundraising, restoring sufficient capital and liquidity to the broader Web3 space.
Grab Traffic Early
Mid-last year, Scarlett invested in Pluto, Catizen’s publisher, becoming one of the earliest investors active in the TON ecosystem.
Scarlett believes tap-to-earn mini-games will eventually become obsolete, but he values Catizen’s potential to grow after capturing massive traffic. After accumulating tens of millions of users, Catizen expanded its business scope, launching a Launchpool model—“essentially a gamified Pump.fun.”
PAKA is among the few VCs aggressively investing in the TON ecosystem, having backed over ten projects spanning infra, gaming, red packet apps, DeFi, and DePIN.
Owen wants to quickly cover every niche within the TON ecosystem. In his view, “Securing traffic first matters more than anything.” Although TON ecosystem projects may appear simple, dull, or even crude, this is precisely the best moment to capture traffic—once you have traffic, everything else becomes possible.
It’s like when WeChat first opened official accounts—even poorly designed, low-quality accounts with slight uniqueness easily attracted millions of users and monetized effortlessly. Later, as competition intensified, everything became harder.
Bruce Lan compares TON’s tap-to-earn games to web mini-games that emerged post-2000. “Even though extremely simple, many earned tens of millions of dollars per month back then.”
He doesn’t expect a blockbuster hit like Honor of Kings to emerge on TON in the short term. In his view, most users have only been onboarded for months; figuring out how to integrate Web3 meaningfully requires a long exploration period, and TON’s chain performance must keep evolving to support high-performance games.
Compared to PAKA’s broad “spray and pray” ecosystem positioning, Bing Ventures plans to focus on cultivating select projects.
Bruce Lan doesn’t want to passively wait for a killer app. Instead, he plans to proactively identify leading projects or platforms, collaborate with top VCs to incubate new ventures, and fill gaps in the TON ecosystem.
Bruce Lan said beyond direct investments, Bing Ventures operates a fund-of-funds investing in many European and American institutions. They’re now encouraging their portfolio companies to explore opportunities on TON and aim to influence more Western GPs and LPs to increase focus on mass adoption opportunities within the TON ecosystem.
Although the arrival of mass adoption remains uncertain, CGV Fund partner Shigeru believes the TON ecosystem might end the crypto market’s current state of “no mutual buying.”
He observes that past Web3 narratives often created cognitive gaps between East and West. For example, earlier this year, Bitcoin’s ecosystem heated up—but inscriptions lit up in the East while staying dark in the West, whereas runes sparked excitement in the West but not in the East.
The TON ecosystem, not fully reliant on token economics, could become a shared pathway for East-West consensus on mass adoption.
Yet in an ecosystem not solely driven by token investment, as new models emerge, crypto VCs must rethink their traditional token-investment habits and develop more suitable investment strategies.
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