TON may not be suited to some types of high-frequency tokens as DOGS airdrop falters

Until recently, the Toncoin (TON) chain worked without a glitch, scaling across thousands of meme tokens and micropayments. The network outages, where TON stopped producing blocks for hours, may expose the chain’s vulnerability to inefficiently designed assets. 

The Toncoin blockchain managed to handle more than 12M transactions per day on August 27 as the Dogs (DOGS) token started to be unlocked for early users. The Toncoin chain has handled similar transaction levels in the past. However, this is the first time that Toncoin has suffered two network outages in a single day.

After each outage, the TON team had to coordinate a restart of nodes to make sure all nodes had the same status of token balances.

Adam Cochran, an information science professional, comments on the possibility that Toncoin may be vulnerable to badly designed tokens, which create network congestion. He also suggested that Toncoin may actually not be as scalable in the case of some types of smart contracts as it processes and coordinates a limited number of transactions each minute. 

The Toncoin ecosystem consists of full nodes, archive nodes, validator nodes, and lite-server nodes, all having to coordinate the end status of transactions. One of the key ingredients for fast transactions is the way Toncoin handles its tokens, known as Jettons. Token balances and transfers happen between wallets, so most of the traffic on Toncoin does not even burden the nodes. 

Airdrop may be delayed for days even though DOGS is trading 

The DOGS token airdrops required interactions with a smart contract and multiple status changes to track token balances across wallets. DOGS is expected to reach an estimated 42M users, but it has faced up to a 99% failure rate in the initial stages.

The DOGS airdrop had relatively simple inclusion criteria, such as spending 0.2 TON on the Blum platform. Somehow, even platforms are unable to distribute DOGS tokens on time. 

On August 28, nodes had to manually restart and coordinate after the first network disruption. The inability to coordinate recalled previous cases on Solana when a high network load led to a consensus failure between nodes. During the current outage, Toncoin had to coordinate 175 validators spread across 22 countries. 

The Toncoin vulnerability was also known to counterparties, as Bybit warned of potential network congestion during the airdrop. As of August 29, Toncoin trackers reveal up to 107 transactions per second, with ongoing congestion due to the need to keep track of the end state of transactions. 

DOGS struggles cast doubts on upcoming airdrops

Previously, the largest event that caused Toncoin congestion was the distribution of Notcoin (NOT), one of the first high-profile airdrop assets on the network. At that time, Toncoin did not suffer an outage.

Since the launch of Notcoin, Telegram hosted multiple tokenless games with tap-to-earn features. The most high-profile project, Hamster Kombat, also proposed an upcoming airdrop, with expectations of a launch coming within weeks. 

Currently, even some of the Telegram-based games are prepared to report delayed services, as well as deposit and withdrawal delays. 

The network congestion and token problems may affect Hamster Kombat, as well as eventual airdrops by highly popular Tapswap and YesCoin. Some have even expressed doubts that Hamster Kombat can achieve its intended airdrop, given the stress test of the chain with DOGS.

DOGS launched on August 26, when trading first started. Trading volumes reached $1.7B in the initial days, despite the fact that most of the community had no access to on-chain tokens. DOGS is one of the few meme tokens that gained an immediate Binance listing, where nearly 37% of all volumes occurred on the DOGS/USDT pair. 

During the initial stages of the Toncoin outage, the network also lost more than $3.1M in liquidity. The loss came after a high-profile whale abandoned one of the larger TON pools, redirecting the funds into stablecoin.

After three days of reported congestion, TON still hovers near its usual trading range. TON traded at $5.59, flipping TRON for the ninth position based on market capitalization. 

The network congestion may lead to losses for users who still cannot access their DOGS token. Earlier and faster traders may crash the asset both on decentralized and centralized exchanges. The most active DOGS/TON pair saw 75% sellers and a minority of buyers. DOGS traded at $0.0014, after starting trading at $0.0016, still in the early stages of price discovery.