What is cryptocurrency TRON (TRX)?
- Who and when TRON was created
- How TRON works
- What the TRON (TRX) cryptocurrency is for
- History of TRON development
- How TRON gained popularity thanks to USDT
- What projects are in the TRON ecosystem
- How reliable is the algorithmic USDD stablcoin
TRON (TRX) is a native cryptocurrency of the blockchain platform of the same name that powers decentralized applications. The TRON coin is among the top 20 crypto-assets by market capitalization.
TRON appeared in 2017 in China and was positioned as the “Ethereum killer. The project claimed simplified development of decentralized applications and support for smart contracts of other blockchains.
Despite its long development, the TRON ecosystem remains limited, although it includes several major projects, including decentralized finance (DeFi).
Who and when TRON was created
The blockchain platform TRON was developed under the leadership of a young Chinese entrepreneur, Justin Sun. Previously, he was a representative of Ripple in China and launched the popular mobile voice streaming app Peiwo.
In July 2017, Sun registered the nonprofit TRON Foundation in Singapore. A few months later, he founded the company in San Francisco, USA.
In August 2017, TRON held an ICO, which resulted in its team raising about $70 million. The project was positioned as a competitor to Ethereum and EOS. In the spring of 2018, the TRON test network was launched, and the main network was launched on May 31, 2018.
Justin Sun’s aggressive marketing and eccentric statements on social networks, which noticeably influenced the market quotes of the native TRON coin, were repeatedly criticized by the cryptocommunity.
The TRON project has been rebuked for being highly centralized and copying competitors. Researchers found that the project’s whitepaper released for the ICO contains a significant amount of plagiarized material from other blockchain projects, including Ethereum.
Justin Sun announced his departure from Tron at the end of 2021, saying he was stepping down from active management. In January 2022, the management reform of TRON was completed: the management of the project was transferred from the TRON Foundation to the decentralized Tron DAO.
How TRON works
There are three layers to the TRON blockchain architecture:
Core – consensus modules, smart contracts, TRON virtual machine (TVM) and account management;
Application layer – used by developers to create decentralized applications;
storage layer – designed to store network blocks, segmentation of blockchain data and blockchain state data.
The TRON blockchain uses the Delegated Proof-of-Stake (DPoS) consensus algorithm, which was first used by its competitor, the EOS project. Blocks are generated every 3 seconds and the network has a maximum performance of 2,000 transactions per second.
27 so-called super representatives – in fact, validators – are responsible for checking transactions and creating new blocks, which are selected from several hundred operators of nodes. The super representative who generated the next block and processed transactions receives 32 TRX. He can use all or part of the rewards to buy votes to keep control of the network.
Users who participate in TRX Staking by delegating their coins to super representatives can earn a return of about 4% (Staking Rewards data as of the end of August 2022).
There are a total of three types of nodes in the TRON blockchain:
- Supernodes, which are candidates for superrepresentatives;
- Full nodes, which translate transactions and synchronize with the blockchain;
- Solidity nodes, which synchronize blocks from full nodes and provide APIs for third-party applications to access the blockchain.
What the TRON (TRX) cryptocurrency is for
The native blockchain cryptocurrency is the TRON (TRX) coin. For the ICO in 2017, following the usual practice of the time, they issued an ERC-20 token of the same name in the Ethereum network. The 100 billion TRX issue was distributed as follows:
- 40% for public tokensale;
- 15% for a closed presale;
- 35% to the project’s reserve fund.
Later, all ERC-20 tokens were converted into TRX coins issued in the TRON blockchain.
TRX is the basic unit of settlement in the TRON blockchain. It pays transaction fees, as well as rewards for stacking and block validation by super representative nodes.
When TRX is blocked, users receive Tron Power (TP) tokens, which allow them to vote for superrepresentatives and for network development proposals in the decentralized management organization Tron DAO.
TRX cryptocurrency can be used as a means of payment and purchase, including many online services and prepaid plastic cards. The coin can be stored not only in the official TronLink wallet, but also in most popular cryptocurrency wallets, including Trust Wallet, Exodus, Coinbase Wallet, Trustee Wallet, etc.
By the launch of the TRON mainnet, the price of TRX had soared above 22 cents, but then declined consistently to about 1 cent. Once again, the value of the TRON cryptocurrency began rising in 2020 and reached 16 cents by the spring of 2021. During 2022, TRX’s price fluctuates around 6-8 cents per coin.
History of TRON development
Back in 2017, the TRON team adopted a roadmap for the project’s development over the next 10 years. It consisted of six eras:
- Exodus (2017-2018). Conducting tokenization, developing blockchain and creating a distributed file sharing system.
- Odyssey (2019-20). Launching the core network and implementing incentives to reward content creators.
- Great Voyage (2020-21). Opening up opportunities for ICOs on the Tron blockchain.
- Apollo (2021-23). Enabling content creators to issue their own TRC-20 tokens.
- Star Trek (2023-25). Creating a decentralized platform for gaming and prediction.
- Eternity (2025-27). Monetization based on community growth.
In general terms, this roadmap remains relevant to this day.
In the winter of 2019, Justin Sun acquired the decentralized streaming platform DLive to integrate with BitTorrent, which was then migrated to TRON and BTFS blockchain.
In August 2021, the TRON Foundation launched the $300 million TRON Arcade fund, which will invest in blockchain projects over the next three years in GameFi and games with the Play2Earn model.
In the fall of 2021, the Tron Foundation partnered with APENFT to launch a $100 million fund focused on NFT projects. It offers artists support and guidance, as well as advice on copyright and other legal aspects.
How TRON gained popularity thanks to USDT
One of the biggest successes of the TRON network was the April 2019 release of the popular USDT staplecoin, which at the time was only circulating on Ethereum and Omni networks.
Extremely low transfer fees made TRON-based USDT a very popular tool for moving value between centralized exchanges and private cryptocurrencies. The average cost of a USDT TRC-20 transfer is less than $1, while a Stablecoin transaction on the Ethereum network can cost more than $15-30.
By April 2022, the capitalization of USDT-TRON exceeded $41 billion, which was almost 50% of the total issuance of this staplecoin on all blockchains. Thanks in large part to the popularity of USDT, the total number of TRON accounts exceeded the 109 million mark by September 2022.
What projects are in the TRON ecosystem
Compared to competing blockchain platforms, TRON has a fairly sparse list of DeFi applications deployed on this network. According to Defillama, there are only 10 protocols in the network.
And the TRON ecosystem is largely centralized, as most of the tools and services are developed under the direction and control of the TRON Foundation.
Some of the largest DeFi services include:
- The JustLend lending protocol;
- SunSwap decentralized exchange;
- Stablecoin USDJ.
Together, these three protocols account for over 90% of the total blockchain liquidity in TRON.
Despite the small number of applications, TRON consistently ranks among the top five networks in terms of blocked liquidity.
How reliable is the algorithmic USDD stablcoin
In May 2022, Justin Sun’s announced USDD algorithmic stablcoin, pegged to the U.S. dollar, was released. The issuance of the asset began simultaneously in TRON, Ethereum and BNB Chain blockchains.
USDD is pegged to the dollar by the Tron DAO Reserve (TDR) fund formed with Alameda Research, Amber Group, Poloniex, Ankr and Mirana Ventures. The fund consists of highly liquid assets: the USDT and USDC stabelcoins, as well as bitcoin and TRX.
After the loss of the UST staplecoin’s peg, which caused the Terra ecosystem to collapse, the USDD team decided to increase USDD’s stability by introducing an excess reserve rate. Despite this, the stablecoin was still losing its peg to the U.S. dollar.
According to the website of USDD, as of the end of August 2022, the Stablecoin is more than 300% reserve-backed and its price is hovering around the $1 mark.
The issuance of USDD burns an equivalent value in TRX coins. By September 2022, more than 730 million USDD had been issued and nearly 9 billion TRX (9% of total coin supply) had been burned. The asset ranks among the top 10 stackablecoins by capitalization.