TRON is a layer-1 blockchain founded by Justin Sun in 2017. Its native token is TRX. The project started with a focus on entertainment and content sharing, but its main use today is moving stablecoins, above all Tether's USDT. The TRON network site is the project's official home.
A Short History
TRX was first issued in 2017 as an ERC-20 token on Ethereum. TRON launched its own mainnet in mid-2018, and holders swapped their Ethereum-based tokens for native TRX. In the same year, TRON acquired the file-sharing company BitTorrent.
The TRON Foundation, the organization that originally led development, announced its dissolution in December 2021. The network now presents itself as community-governed under the name TRON DAO. Justin Sun remains its most visible public figure.
How TRON Works
TRON uses Delegated Proof of Stake (DPoS). TRX holders stake their tokens and vote for block producers called Super Representatives. The 27 candidates with the most votes produce blocks in turn, and the voting results are refreshed every six hours. Super Representatives earn block rewards, and many share part of those rewards with the people who voted for them.
A new block is produced about every three seconds. With only 27 block producers, the network confirms transactions quickly and cheaply. The tradeoff is a much smaller validator set than Ethereum or Bitcoin.
Smart contracts on TRON run in the TRON Virtual Machine, which is compatible with Ethereum's EVM. Developers write contracts in Solidity, the same language used on Ethereum. Token standards mirror Ethereum's as well: TRC-20 is the TRON counterpart of ERC-20.
Energy and Bandwidth
TRON does not use a simple gas fee. It uses two resources, described in the TRON developer documentation.
- Bandwidth: consumed by every transaction, based on its size in bytes. Each account gets a small free daily allowance.
- Energy: consumed by smart contract execution, which includes sending TRC-20 tokens such as USDT.
Users can stake TRX to obtain Energy and Bandwidth. If an account does not have enough of a resource, the network burns TRX to cover the cost. This is why sending USDT from a wallet that holds no TRX fails: the wallet needs TRX, or staked resources, to pay for the transfer. Unstaking TRX takes 14 days.
What TRX Is Used For
- Paying for transactions when Energy or Bandwidth runs out
- Staking to obtain network resources
- Voting for Super Representatives and earning voting rewards
- Collateral and trading pairs in TRON-based DeFi applications
TRX has no fixed maximum supply. New TRX is issued as block and voting rewards, and TRX is burned as fees. Whether total supply grows or shrinks in a given period depends on how much network activity there is.
Stablecoin Settlement
TRON's largest role is as a network for USDT. A large share of all USDT in circulation is issued on TRON as a TRC-20 token, and TRON and Ethereum are the two biggest networks for the stablecoin.
The reason is practical. Transfers confirm in seconds and usually cost less than on Ethereum's main chain. Most major exchanges support USDT deposits and withdrawals on TRON. That has made it a common choice for moving dollars between exchanges, and for remittances and payments in countries where people use stablecoins as a substitute for dollar bank accounts.
TRON also hosts USDD, a stablecoin launched in 2022 by the TRON DAO Reserve. It started with an algorithmic design, traded below its one dollar target for a period in 2022, and later moved to an over-collateralized model.
DeFi on TRON
The main decentralized exchange is SunSwap, which began as JustSwap and was later rebranded. JustLend is the largest lending market. Activity in these applications is closely tied to stablecoin balances on the network.
Criticisms and Risks
- Centralization: 27 block producers is a small set, and votes are concentrated among a limited number of large holders.
- Key-person risk: the project's reputation is closely tied to Justin Sun. In March 2023 the US Securities and Exchange Commission filed a civil case against Sun and related companies, alleging unregistered sales of TRX and BTT and manipulative wash trading. The allegations were contested, and readers should check the current status of the case.
- Dependence on USDT: a large part of TRON's activity comes from one stablecoin. A change in Tether's issuance policy would affect the network directly.
- Freezing: Tether can freeze USDT at specific addresses, and it has done so on TRON at the request of law enforcement.
- Illicit use: low fees have also attracted scammers and other bad actors, which brings regulatory attention.
Common Mistakes
- Sending USDT on the wrong network. A TRC-20 withdrawal sent to an address on another chain can be lost. TRON addresses start with the letter T.
- Holding no TRX. Without TRX or staked Energy, a wallet cannot move its TRC-20 tokens.
- Approving unknown contracts. As on Ethereum, a malicious token approval can let a contract drain a wallet.
Nothing in this article is financial advice.
Key TRON Facts
- Founded: 2017 by Justin Sun
- Mainnet: launched in 2018
- Consensus: Delegated Proof of Stake with 27 Super Representatives
- Block time: about 3 seconds
- Token standard: TRC-20
- Fee model: Energy and Bandwidth, with TRX burned when resources run short
Track on CoinMarketGuy
The TRON price page shows the live TRX price, market cap, circulating supply and chart. The exchange list covers platforms where TRX trades, and the converter turns a TRX amount into dollars or other coins.