TL;DR

• Web2 companies have the largest opportunities in web3, because they have established distribution beyond any web3-native apps/platforms.

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We’ve seen a bit of saltiness online about Telegram’s TON coin breaking into the coveted ‘Crypto Top 10.’

Mostly because Telegram isn’t wholly crypto native (it’s a web2 app that’s now integrating web3 features), and is all of a sudden out-performing a bunch of entrenched crypto projects — but its rise makes total sense to us.

Now, this is going to sound weird at first — but hear us out…

It’s established web2 companies that have largest opportunities in web3.

Here’s an over simplified, left curve framework that we’ve concocted to explain it all…

When companies accrue value, it’s typically thanks to an advantage in one or all of these four interrelated ‘edge’ factors:

1. Time (It’s going to take other companies a hot minute to build/compete with them)

2. Talent (They’ve collected and retained the smartest folks)

3. Network (They have all the users)

4. Distribution (E.g. Why do so many small beverage companies sell to Coke? In order to tap their tightly held global distribution deals)

AI and crypto pose a threat to a good 3 out of 4 of these key factors.

AI is already increasing efficiencies for tech-focused businesses, lowering the time and talent required to build/grow/maintain a product.

While crypto networks are open, which means…

Damn, how do we explain this?

Remember when Instagram created Threads (the Twitter/X clone), and allowed anyone with an IG account to automatically port their IG followings over to Threads?

Instagram could do that because they owned both networks. But no single entity ‘owns’ any one crypto network. So if you build a popular web3 social app — competitors could come along and say:

“Hey, come use our app instead/as well. And don’t worry — all of your followers and content will come along with you to our new platform.”

Which makes distribution a bit of a super power in this new era of the internet.

And Telegram has distribution up the wazoo!

Anyone that builds games/apps on the TON network then has their creation distributed to Telegram’s 800M monthly active users (via its ‘Mini Apps’ feature).

For context:

The two major wallet apps on Ethereum and Solana are MetaMask and Phantom — which have a combined monthly active user base of 37M.

Which means with this single web3 integration, Telegram was able to outpace the combined distribution of two entrenched crypto-native apps by 20x.

Bonkers!