TRON cryptocurrency
What is TRON?
TRON is a blockchain platform focused on the gaming industry. Most decentralized (Web3) applications in the TRON ecosystem are games, including gambling and casinos.
TRON was originally conceived as an "Ethereum killer", and its developers sought to solve the current problems of the first generation of blockchains, including Bitcoin.
The first thing the TRON team sought to achieve was faster and cheaper transactions. At the time, the Ethereum network could only process up to 15 transactions per second. Because of this, users had to compete fiercely with each other to complete transactions. As a result, fees also increased, as miners favoured users who paid more for gas. At specific points, transaction fees reached and even exceeded $2.
The second problem to be solved was the consensus mechanism, which required ever-increasing energy-intensive resources to mine cryptocurrency. In addition, such a model carries considerable risks for the miners themselves. The TRON network implemented a Proof-of-Stake-based mechanism that offered coin steaking instead of mining, which requires the purchase of expensive hardware.
In addition, the TRON team made it easier to develop decentralized applications (DApps). The platform's ecosystem is not as advanced compared to the leading Ethereum or BNB Chain blockchains, but it provides all the necessary tools to work with DeFi:
- SUN and SocialSwap decentralized exchanges (DEX);
- JustLend credit or lending protocol;
- Blockchain games;
- Symbiosis cross-chain bridge for transferring assets between different networks.
Brief history
The TRON project was founded in 2014 by former Ripple representative Justin Sun. In 2017, the team created the TRON Foundation. That same year, the team placed TRX tokens for sale via ICO and raised $70 million.
The TRON network itself was launched in May 2018. That same year, the TRON Foundation acquired BitTorrent and later launched a network of the same name, whose members could receive BTT tokens for distributing files to other users.
Like many large blockchain projects, TRON was "caught in the crosshairs" of the US Securities and Exchange Commission (SEC), which accused Justin Sun and TRON Foundation of selling unregistered securities (TRX and BTT).
How TRON works
In many ways, the platform resembles Ethereum: TRON also has smart contracts, its own virtual machine (TRON Virtual Machine or TVM) and the TRC-20 token standard, and provides tools for developing decentralized applications (DApps) based on its network.
However, there is one significant difference: instead of the Proof-of-Work consensus on which Ethereum initially operated, TRON uses its own mechanism known as "delegated Proof-of-Stake" or Delegated Proof-of-Stake (DPoS).
The point is that the previously presented Proof-of-Stake (PoS) mechanism provided an opportunity to "stake" cryptocurrency and receive income from it only to a limited number of validators. For them, the networks set relatively high requirements, including the minimum amount of steaking, which can reach tens and, in certain cases, even hundreds of thousands of dollars. The DPoS mechanism allowed any users to delegate their tokens to validators for a small fee and also receive income from staking.
TRON features
The project is one of the earliest blockchains based on smart contracts, so it is closed-loop. Many later networks are built on and compatible with Ethereum technology, so EVM-compliant users can quickly transfer tokens between networks (Avalanche, Polygon, Arbitrum, Base) and use them in the same wallet (MetaMask, Coinbase, Rabby).
For the same reason, not many wallets support the TRON network. Most often, users of this network use the official TRONlink hot wallet, available as a plug-in and mobile app on iOS and Android.
What, then, lies behind the incredible popularity of TRON? The ecosystem of this project became actively developed due to fast and cheap transactions, standing out against Ethereum and the commissions, which were getting more and more expensive over time.
On the Ethereum blockchain, the first stablecoins were issued — tokens whose rate is pegged to the US dollar. The largest of them was the Tether stablecoin. TRON became one of the few blockchains available for USDT transactions, and users used it for cheap transfers of this stablecoin.
Few cross-chain bridges support the TRON network and those that do have little liquidity. Therefore, centralized exchanges (CEX) remain the most popular option for transferring assets from TRON to another network.
TRX cryptocurrency
TRONix was originally released on the Ethereum blockchain as an ERC-20 token, but in 2018, after the launch of the main network, the developers introduced their own TRC-20 standard, and TRX tokens migrated to the native blockchain, becoming essentially coins.
TRX is used to pay network fees as well as governance (DAO): coin owners can delegate their tokens and elect "super-representatives" who are essentially validators or, as they are called, block producers. The 27 candidates who receive the most votes become super-representatives and can receive staking revenue alongside their delegators.
For a long time, TRON remained one of the most popular networks due to the small fees for transferring stablecoins and other tokens. A key feature of TRON was that users could "freeze" for a while or "burn" their TRX coins to get the energy needed to make transactions. In this way, users could pay no fees at all.
However, since last year, commissions on the TRON network have increased significantly, forcing users to look for alternatives for cheap transfers of USDT and other tokens. To obtain power, it is now necessary to freeze or burn a fairly large amount of TRX. As a result, the platform's popularity has dropped significantly, and the number of active users has declined.
Nevertheless, this blockchain platform is still quite large:
- TRON ranks second in terms of blockchain assets (TVL) in the protocol after Ethereum with $7.7bn;
- According to information on the DeFi Llama website, the number of ecosystem users exceeds 1.5 million;
- TRX cryptocurrency ranks 10th in the CoinMarketCap ranking by capitalization at $8.3 billion.
In total, about 88 billion TRX have been issued and are traded on the market. However, cryptocurrency is inflationary; that is, it has no limit to the maximum number of coins and can be generated as much as you want. In such a case, price growth is only possible if there is a steady increase in demand for TRX.
TRX cryptocurrency reached its absolute maximum at $0.17 in January 2018 amid the first global hype around cryptocurrencies. During the bullrun in 2021, TRX failed to update the price high, but the price almost approached it, rising to $0.16.
However, the rate then began to decline, as with all cryptocurrencies, after the start of a bear market cycle. Since November 2022, the price of TRX has almost doubled and now stands at $0.09.
Expectations and outlook
TRON is inferior to its competitors in terms of development and may lose its leadership position in the near future. Many other projects, even not very large, are constantly in the news, regularly releasing updates and thus fuelling the interest of the audience themselves. If you google even diligently, you will see little news about TRON updates.
In comparison, over the last 3 years, Ethereum has released 10 major updates, moved to Proof-of-Stake and introduced a coin-burning mechanism, while Arbitrum has released two networks — Nitro and Nova — in the last year alone.
However, this did not prevent TRON from becoming a leader in the number of transactions with stablecoins such as USDT, USDC and TUSD. In addition, the project team released its own USDD stablecoin last year, which is rapidly gaining popularity, although it has raised some concerns due to the collapse of UST and a number of other stablecoins.
