What is TRON (TRX)?

Key points

• TRON (TRX) is the native cryptocurrency of the eponymous blockchain platform that hosts decentralised applications. TRON ranks among the top 20 cryptoassets by market capitalisation.
• TRON emerged in 2017 in China and was billed as an “Ethereum killer”. The project promised simplified development of decentralised applications and support for smart contracts from other blockchains.
• Despite years of development, TRON’s ecosystem remains limited, though it includes several large projects, including in decentralised finance (DeFi).

Who created TRON—and when

The TRON blockchain was developed under the direction of the young Chinese entrepreneur Justin Sun. He had previously served as Ripple’s representative in China and launched Peiwo, a popular voice‑streaming mobile app.

In July 2017, Sun registered the non-profit TRON Foundation in Singapore. A few months later he founded a company in San Francisco (US).

In August 2017 TRON held an ICO that raised about $70m. The project was positioned as a rival to Ethereum and EOS. A testnet launched in spring 2018, followed by mainnet on May 31, 2018.

Aggressive marketing and Justin Sun’s flamboyant social‑media pronouncements, which visibly affected the price of TRON’s native coin, drew frequent criticism from the crypto community.

TRON was accused of high centralisation and copying competitors. Researchers found that the project’s whitepaper released for the ICO contains a significant amount of plagiarism from materials of other blockchain projects, including Ethereum.

Justin Sun announced his departure from TRON at the end of 2021, saying he was stepping back from active management. In January 2022 governance reform was completed: the project’s control shifted from the TRON Foundation to the decentralised organisation TRON DAO.

How TRON works

TRON’s blockchain architecture is commonly described as having three layers:

• core — the consensus, smart‑contract, TRON Virtual Machine (TVM) and account‑management modules;
• application layer — used by developers to build decentralised applications;
• storage layer — for storing network blocks, segmenting blockchain data and maintaining state data.

The TRON blockchain uses a Delegated Proof‑of‑Stake (DPoS) consensus algorithm, first popularised by its competitor EOS. Blocks are generated every three seconds, and the network’s maximum throughput is 2,000 transactions per second.

Twenty‑seven so‑called “super representatives” — effectively validators chosen from several hundred node operators — verify transactions and create new blocks. A super representative that produces a block and processes transactions receives 32 TRX. The rewards can be directed wholly or partly to buying votes to retain control of the network.

Users who stake TRX, delegating their coins to super representatives, can earn around 4% (per Staking Rewards at the end of August 2022).

There are three types of nodes in the TRON blockchain:

• super nodes, which are candidates for super representatives;
• full nodes, which relay transactions and synchronise with the blockchain;
• Solidity nodes, which synchronise blocks from full nodes and provide APIs for third‑party applications to access the blockchain.

What the TRON (TRX) cryptocurrency is for

TRX is the native currency of the blockchain. For the 2017 ICO, in line with the practice of the time, the team issued an eponymous ERC‑20 standard token on Ethereum. The 100bn TRX supply was allocated as follows:

• 40% for the public token sale;
• 15% for the private presale;
• 35% to the project’s reserve fund.

Later all ERC‑20 tokens were converted into TRX coins issued on the TRON blockchain.

TRX is the unit of account on TRON. It pays transaction fees, as well as staking and block‑confirmation rewards to super‑representative nodes.

By locking TRX, users receive Tron Power (TP) tokens that let them vote for super representatives and for proposals to develop the network in the decentralised governing organisation Tron DAO.

TRX can be used as a means of payment for transfers and purchases, including across many online services and via prepaid plastic cards. You can store the coin not only in the official TronLink wallet but also in most popular crypto wallets, including Trust Wallet, Exodus, Coinbase Wallet, Trustee Wallet and the like.

Around mainnet launch, the TRX price jumped above $0.22, then slid to roughly $0.01. It began rising again in 2020 and reached $0.16 by spring 2021. Throughout 2022 the TRX price fluctuated around $0.06–0.08 per coin.

TRON’s development history

Back in 2017 the TRON team adopted a ten‑year roadmap comprising six phases:

• Exodus (2017–18). Token sale, blockchain development and creation of a distributed file‑sharing system.
• Odyssey (2019–20). Mainnet launch and incentives to reward content creators.
• Great Voyage (2020–21). Enabling ICOs on the Tron blockchain.
• Apollo (2021–23). Allowing content producers to issue their own TRC‑20 tokens.
• Star Trek (2023–25). Creating a decentralised platform for gaming and prediction.
• Eternity (2025–27). Monetisation based on community growth.

In broad strokes, this roadmap remains relevant today.

In the winter of 2019, to integrate with BitTorrent, Justin Sun acquired the decentralised streaming platform DLive, which was then migrated to the TRON blockchain and BTFS.

In August 2021 the TRON Foundation launched the $300m TRON Arcade fund, which over the next three years would invest in blockchain projects in GameFi and play‑to‑earn games.

In autumn 2021 the TRON Foundation, together with APENFT, launched a $100m fund focused on NFT projects. It offers artists support and guidance, as well as advice on copyright protection and other legal aspects.

How TRON gained popularity thanks to USDT

One of the network’s biggest successes was the April 2019 issuance of the popular USDT stablecoin, which had previously circulated only on Ethereum and Omni.

Extremely low transfer fees made USDT on TRON a very popular tool for moving value between centralised exchanges and private crypto wallets. The average cost to transfer USDT TRC‑20 is less than $1, whereas a stablecoin transaction on Ethereum can cost more than $15–30.

By April 2022 the market capitalisation of USDT‑TRON exceeded $41bn, nearly 50% of the stablecoin’s total issuance across all blockchains. Largely thanks to USDT’s popularity, by September 2022 the total number of TRON accounts topped 109m.

Which projects are in the TRON ecosystem

Compared with competing blockchain platforms, TRON has a fairly sparse list of DeFi applications deployed on the network. According to Defi Llama, only ten protocols operate there.

The TRON ecosystem is also heavily centralised, as most tools and services were developed under the supervision and control of the TRON Foundation.

Among the largest DeFi services are:

• the lending protocol JustLend;
• the decentralised exchange SunSwap;
• the USDJ stablecoin.

Together these three account for over 90% of the total value locked on TRON.

Despite the small number of applications, TRON consistently ranks among the top five networks by total value locked.

How reliable is the USDD algorithmic stablecoin?

In May 2022 the algorithmic stablecoin USDD, pegged to the US dollar and announced by Justin Sun, was launched. Issuance began simultaneously on the TRON, Ethereum and BNB Chain blockchains.

The USDD peg is maintained by the Tron DAO Reserve (TDR), formed with the participation of Alameda Research, Amber Group, Poloniex, Ankr and Mirana Ventures. The fund consists of highly liquid assets: the USDT and USDC stablecoins, as well as bitcoin and TRX.

After the UST stablecoin lost its peg — which caused the Terra ecosystem to collapse — the USDD team sought to increase resilience by introducing over‑collateralisation. Despite this, the stablecoin still lost its peg to the US dollar at times.

According to the USDD website, at the end of August 2022 the stablecoin was backed by reserves of more than 300%, and its price oscillates around $1.

When USDD is issued, an equivalent value in TRX coins is burned. By September 2022, more than 730m USDD had been minted and nearly 9bn TRX burned (9% of the coin’s total supply). The asset ranks among the top ten stablecoins by capitalisation.