I, as I hope many of you, use Tron for all my USDT transfers between exchanges – why? Because it’s the cheapest and fastest option for us now. So; when I started looking at it to integrate it onto StakingRewards.com I didn’t really know much about it, but I definitely had a positive feeling about it.
One thing that always made me smile, is comparing the Lightbike scene in Tron Legacy to the speed at which transactions are made on the Tron Network. In all fairness, every now and again I am a bit annoyed at how fast transactions are made – where is my excuse to walk away from my desktop and make a nice cup of coffee. I myself do quite some on-chain trading in my spare time, so I am used to occasionally waiting up to 2 minutes or longer for an Ethereum transaction to get processed; giving me plenty of time to relax and get paranoid whether I made the correct transaction – with Tron; there is not enough time.
What is Tron
Tron, a Proof of Stake Layer 1 network, is currently most known for its transaction speed and very lively, energetic CEO – Justin Sun. If you have not yet watched our Staking Mondays Episode with Justin Sun; I urge you to have a look.
Not only is the Tron network fast, but as crazy as it sounds – you do not pay any transaction fees. I will dive into how this is possible later in this article.
Following in the footsteps of Ethereum, but wanting to break new ground; Tron’s aim is to become the blockchain for a decentralized internet, offering high throughput, scalability and availability for all the dApps on the Tron ecosystem. With the acquisition of BitTorrent, who some claim to be the foundation block
of decentralized blockchains, in July 2018, TRON further cemented their vision of a decentralized future.
You might be wondering why Tron was founded and what makes it special. In 2017, with the first mainstream crypto hype, it was fairly obvious that the likes of Ethereum and Bitcoin could not lead the way to a decentralized future when the throughput was so low, and transaction costs so high. Thus, the idea of Tron was born.
It took less than a year from the Tron Foundation being established, to the Mainnet Launch in May 2018, and the creation of the Genesis Block in June 2018.
Not long after the creation of the Genesis block, TRON announced its acquisition of BitTorrent, a peer-to-peer file sharing service, in July 2018. It was after this acquisition, that the Founder of BitTorrent Bram Cohen, announced he would leave BitTorrent to go found Chia, a less energy-intensive cryptocurrency, meant to rival Bitcoin.
By January 2019, TRON had a market cap of $1.6 billion. Creating a blockchain from scratch in less than a year seems like a miracle, and especially one that aims to be technologically better than the rest. So how did Tron accomplish this, you may ask?
To answer this question, we need to look a more in depth at who Justin Sun is, and where he came from.
Many of us will know who Justin Sun is; from his active Twitter Account with 31.million followers; to his countless appearances on podcasts such as our Staking Mondays Episode with Justin Sun, but who is he?
Justin was born on July 30th, 1990 in Xining, China. He holds an M.A. in East Asia Studies from the University of Pennsylvania and a B.A. in History from Peking University. At the age of 26, Justin was chosen by Jack Ma, founder of Alibaba Group, to study at Hupan University, China’s answer to Harvard Business School. He was the first Millenial to graduate from the university. In 2015, Sun was named CNTVs most noteworthy new entrepreneur, and was named in Forbes China 30 under 30 from 2015 to 2017.
Whilst Sun’s studies do not scream Technology, he was not a stranger to the FinTech sector. For one, he was the protege chosen by Jack Ma. Add to the mix the fact he was Ripples Chief Representative in China, and you have a recipe ripe for the making. His Ripple position put him in contact with the right people, who he would later on need to make Tron a reality.
So whilst the project seemed to start off strong, nothing is ever a smooth ride. Accusations of plagiarism plagued Tron in the first year, due to the similarities between their and Ethereum’s whitepaper as well as the discovery of multiple instances of code copied from other projects in the Tron code base. The TRON foundation denied these allegations stating that the translation from Chinese to English for their whitepaper was to blame for similarities.
In May 2019, HackerOne, a cyber security testing service, revealed that just a single computer could have brought the whole Tron network to a halt by performing a DDoS attack.
What makes Tron Tron?
With a transaction speed of up to 2,000 TPS (transactions per second), Tron is on par with the likes of PayPal and VISA. Visa claims to have a TPS of 24,000; but in reality does around 1,700 TPS; this is not to say that the VISA network is not capable of 24,000, but purely that the demand is not there.
However, demand for TRX transactions is also not there, looking at the following chart you can see that the realized transactions per second for Tron is not anywhere close to 2,000 and actually peaked at only 107 tps in July. Most recently it is hovering around 30 to 40 tps whilst XRP sits at around 10, ETH around 15 and BTC around 3 TPS.
A growing community
According to the Tron website, there are over 58 million accounts on the Tron Network, accounting for over 2.5billion transactions. The Tron English Telegram group has close to 150,000 members, 118,000 members on their Reddit page and 13,000 Members in their Discord. These numbers are BIG! and only growing by the day; however, compare this to their 1.1 Million followers on twitter, and now you really see the size of the Tron Community. Since the early days of Tron, they have had a huge following, who were praising (shilling) the Tron Network on all platforms. Not a day went by without seeing someone mention Tron and sharing their DD (Due Diligence) on r/Cryptocurrencies or Twitter.
So, now we have two different types of numbers that can explain why the Tron Network is booming; for one you have the insane transaction speed that puts other networks to shame and on the other you have the following and community to justify Tron’s currenct Market Cap of $6.6 Billion; which makes it the 30th most valuable cryptocurrency.
But you might ask yourself: What else can the Tron Network do; What dApps are available, why would I buy the TRX token?
Tron makes it really easy for anyone to find their way around the Tron ecosystem. It’s the first link on the menu bar on Tron’s official website. According to their website, there are currently 20 wallets that support the Tron Network, from hardware wallets such as Ledger, to their own wallet called TronLink.
The DEX advertised on the Tron Website is PoloniDex. If you have never used it, I understand. It is underwhelming. It currently ranks as the 88th biggest DEX according to CoinMarketCap, with a 24h Trading Volume of only $121,000 at the time of this writing. However, you have one other main option:
JustSwap is currently the biggest and most popular DEX on the Tron Network; with a TVL of close to $1.5 Billion and a daily volume of around $100 million. There are currently 17,111 trading pairs available, meaning that all your trading needs are covered.
JustSwap is part of the Just collection of dApps for the Tron Network. The other 3 dApps part of this collection are:
- JustLend lets you lend out your crypto tokens, similar to Aave and in return receive interest.
- It currently has a TVL of just over $2bill, compared to Aave’s $30bill TVL.
- JustStable has a TVL of close to $1.7bill, and is the decentralized finance system of the USDJ stablecoin.
- You can lend out your USDJ
- JustCrypto is the bridge that connects the Tron Network to other networks such as BTC, ETH and Doge.
In total the Just Network boasts a TVL of $8.4 billion, compared to the total TVL on the Tron Network of $11.4 billion. Believe it or not; but the Just Network has a Market Cap of only $165 million.
So, with the Just Network accounting for roughly 74% of all the TVL on Tron; it doesnt really leave much room for other dApps to shine, and according to dAppRadar.com there are no other dApps with a TVL even close to $100 million, which really raises the question:
What exactly is there to do on the Tron Network? When I was researching Tron, I asked in the official Tron Telegram group what one can do to interact with the Network. The answers were Stake Tron (which I’ll go into later in this article), Lend it out and Swap it. In the graphic below, you can see all of the dApps that live on the Tron Network, but most are not worth mentioning due to the low volumes.
Proof of Stake
Tron was one of the first major Proof of Stake networks to be implemented. The Tron Network works slightly differently to other PoS networks, in that it only has 27 block producers called Super Representatives. After that, there are 100 super partners.
Any account can apply to become a Super Representative candidate, and every account can also vote for a candidate. The top 27 candidates with the most votes become the Super Representatives, and the 28th to the 127th become the Super Partners. Super representatives generate blocks, package transactions and get block and voting rewards. SRs have the right to participate in the voting of TRON network parameters proposals. The 100 super partners can be awarded according to their voting rate.
To learn more about how to stake Tron check out our Tron Staking Guide.
Every account in the TRON network has the right to vote for SRs candidates. TRON Power (TP) is required to vote, and the amount of TP depends on the voter’s staked assets(TRX), 1 TP = 1 staked TRX.
An account loses the TP after release(unstake) the staked TRX, and votes for the ongoing and future round are invalid unless you stake TRX to get TP again.
Note that the TRON network only records your most recent vote, every new vote overwrites the old one.
Votes are counted every 6 hours, and roles are assigned for the top 128 Candidates as described above. TRON network burns 9999 TRX (worth around $1018.23 on 01/11/2021) from the account that applies to become a super representative candidate to prevent attacks.
- Super Representative Reward(Block Reward): The TRON network generates block every 3 seconds, with each block awarding 16 TRX to Super Representatives.
- Candidate Reward(Vote Reward): With every block produced, the top 127 share 160 TRX. The reward will be split by the votes each candidate receives. The voting rewards obtained by super representatives and partners will also be distributed to voters in accordance with the voting ratio of voters after deducting the commission ratio.
Each time a Super Representative finishes block production, rewards are sent to the sub-account in the superledger. Super Representatives can check, but not directly make use of this asset. A withdrawal can be made every 24 hours, transferring the reward from the sub-account to the Super Representative’s account.
To see the current reward rate check out our Tron Staking Page.
Currently the top 27 Super Representatives are not completely overpowered by Tron linked Validators, including the likes of Binance, StakeBowl and Krypto Knight. This shows that the network tries to be decentralized, rather than being run by Validators directly linked to the network. As with any PoS network, there is the risk that the top validators will bring in the most votes, as they are the most famous and therefore users will vote for them purely because of their brand. I am interested to see how much the 27 Super Representatives will change over the next few years, which will give us a better idea of how decentralized the network really is.
Personally, I am a big fan of the Tron Network, and up until I went on a deep dive into the ecosystem, I had only used it for transferring USDT from one exchange to another due to the lowest fees in the market. After my research, I will certainly be paying more attention to the growth of the dApps and the opportunities they will bring. With a network as popular as Tron and a cult-like following, I am sure that in the near future we will see an explosion of TVL which will bring great long term investment opportunities.
The JUST token, in my opinion, also seems like a good buy, when you compare it to Aave and Uniswap for instance. Aave has a TVL of $17.6 Billion with a market cap of $4.4 Billion meaning its TVL to MC ratio is 4. Uniswap has a TVL of $7 billion and a Market cap of $13 Billion, bringing its TVL to MC ratio to 0.54. Just has a TVL of $8.4 billion, and currently has a market cap of $110 million.
Even if we were to use a TVL to MC ratio of 10, which is less impressive than both Aave and Uni, we could see an increase in market cap of 800%. Of course, it is never this simple, and there are more things we should look at to gauge an investment opportunity, and seeing as I am not a financial advisor, I can only share my own thoughts and feelings on this topic.
So, to conclude; I think the Tron Network is a strong contender for long term viability within the Crypto World, from it’s fast transaction speeds to strong community. However, to really excel, I think this network needs to ensure that the Super Representatives change around, and people are incentivized to vote for the right candidate rather than the popular ones. It is also important for the ecosystem to build more dApps and encourage Tron holders to use them and grow their presence.