Basics
TRON (TRX) is the native cryptocurrency of the blockchain platform bearing the same name, which supports decentralized applications. It ranks among the top 20 cryptocurrencies by market capitalization. Launched in China in 2017 with ambitions to challenge Ethereum, TRON aims to simplify the development of decentralized applications and support smart contracts from other blockchains. Despite its prolonged development, the TRON ecosystem remains somewhat limited, although it includes several significant projects, particularly in decentralized finance (DeFi).
The Creation and Evolution of TRON
Founded by the young Chinese entrepreneur Justin Sun, TRON blockchain platform emerged from his previous role as Ripple's representative in China and creator of the popular voice streaming mobile app Peiwo. In July 2017, Sun established the non-profit TRON Foundation in Singapore, followed by a company in San Francisco, USA, a few months later.
In August 2017, TRON conducted an ICO that raised approximately $70 million, positioning itself as a competitor to Ethereum and EOS. The project's test net was launched in early 2018, with the main net going live on May 31, 2018.
Justin Sun's aggressive marketing tactics and bold social media statements significantly influenced TRON's native token market prices, drawing both attention and criticism from the crypto community. Critics pointed out TRON's perceived high centralization and allegations of plagiarizing content from other blockchain projects, including Ethereum, in its ICO whitepaper.
In late 2021, Justin Sun announced his departure from TRON, stepping back from active management. By January 2022, TRON underwent a governance overhaul, transitioning management from the TRON Foundation to the decentralized organization Tron DAO.
Understanding TRON's Blockchain Architecture
TRON's blockchain architecture operates across three distinct layers:
- Core layer includes consensus modules, smart contracts, the TRON Virtual Machine (TVM), and account management.
- Application layer utilized by developers to create decentralized applications.
- Storage layer designed for storing network blocks, blockchain data segmentation, and state data.
TRON employs the Delegated Proof-of-Stake (DPoS) consensus algorithm, first introduced by its competitor EOS. Blocks are generated every 3 seconds, with the network capable of processing up to 2000 transactions per second.
Transaction verification and block creation are managed by 27 "super representatives," validators selected from hundreds of node operators. Super representatives receive rewards of 32 TRX for generating blocks and processing transactions, which they can use to purchase votes to maintain network control. Users participating in TRX staking by delegating their coins to super representatives can earn around 4.29% yield (as of June 2024, according to Staking Rewards).
TRON's blockchain operates with three types of nodes:
- Super nodes, potential super representatives.
- Full nodes, transmitting transactions and syncing with the blockchain.
- Solidity nodes, syncing blocks from full nodes and providing APIs for third-party blockchain access.
The Utility of TRON (TRX) Cryptocurrency
TRON's native cryptocurrency is TRX, initially issued as an ERC-20 token on the Ethereum network for its ICO in 2017. A total of 100 billion TRX tokens were distributed as follows: 40% for public sale, 15% for private presale, and 35% allocated to the project's reserve fund. These ERC-20 tokens were later converted to TRX coins on the TRON blockchain.
TRX serves as the primary currency for transactions fees, staking rewards, and super representatives' block confirmation incentives in the TRON blockchain. Users locking TRX receive Tron Power (TP) tokens, enabling voting for super representatives and network development proposals within the decentralized governance of Tron DAO.
TRX is utilized for payments and purchases across various online services and through prepaid debit cards. It can be stored in multiple popular cryptocurrency wallets such as TronLink, Trust Wallet, Exodus, Coinbase Wallet, and Trustee Wallet.
Evolution of TRON: Milestones and Developments
Since 2017, the TRON team has outlined a decade-long roadmap consisting of six epochs:
- Exodus (2017-2018): ICO launch, blockchain development, and decentralized file exchange system.
- Odyssey (2019-2020): Mainnet launch and incentives for content creators.
- Great Voyage (2020-2021): ICO capabilities on the Tron blockchain.
- Apollo (2021-2023): Content creators can issue TRC-20 tokens.
- Star Trek (2023-2025): Decentralized platform for gaming and forecasting.
- Eternity (2025-2027): Community-driven monetization strategies.
This roadmap remains relevant today. In winter 2019, Justin Sun acquired the decentralized streaming platform DLive, integrating it with TRON blockchain and BTFS. In August 2021, TRON Foundation launched the $300 million TRON Arcade fund to invest in GameFi blockchain projects over the next three years. In fall 2021, in collaboration with APENFT, Tron Foundation launched a $100 million fund supporting NFT projects, offering artists guidance on copyright protection and legal matters.
The Rise of TRON Through USDT Adoption
In April 2019, TRON achieved a significant milestone with the launch of the popular stablecoin USDT, previously only available on Ethereum and Omni networks. The introduction of USDT on TRON was driven by its extremely low transaction fees, making it a preferred choice for value transfers between centralized exchanges and private crypto wallets. Before 2023, transferring USDT TRC-20 cost less than $1 on average, compared to $15-30 on the Ethereum network. However, Tron fees increased to $1-3.5 in 2023.
TRON Ecosystem: Key Projects and DeFi Presence
Compared to its competitors, TRON hosts a modest number of DeFi applications within its network, according to Defillama. Only 23 protocols operate in this ecosystem, which remains largely centralized under the guidance and control of the TRON Foundation.
Noteworthy DeFi services include JustLend lending protocol, decentralized exchange SunSwap, and the CDP JustStables. Together, these three protocols account for over 90% of the total locked liquidity in TRON. Despite the limited number of applications, TRON consistently ranks among the top five networks by locked liquidity volume.
Conclusion
TRON's journey from its inception to its current standing highlights its ambition to challenge leading blockchain platforms like Ethereum. Despite criticism for centralization and allegations of plagiarism, TRON has managed to build a robust ecosystem, particularly excelling in the DeFi sector. With continuous development and strategic initiatives, TRON remains a significant player in the cryptocurrency landscape.