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Tron, a DeFi alternative to Ethereum, commands over 11% of the total value locked (TVL) in the DeFi industry. TRX, Tron’s native token, ranks among the top 10 cryptocurrencies with a market cap of $7.15 billion and a Year-to-Date (YTD) return of 45.5%.
The good side is Tron’s investment ecosystem’s growth due to robust protocol interoperability, which attracts investors seeking crypto diversification.
The downside is the uncertainty surrounding the long-term viability of crypto investments, including Tron, regardless of their initial promise.
What You Need to Know About Tron
Tron, created in 2017 by Justin Sun, serves as an Ethereum alternative with a vision to redefine the internet. It has attracted a global network of investors and developers, primarily focusing on China, and is often referred to as “Asian Ethereum.”
Unlike other blockchains, Tron emphasizes decentralized applications (dapps), smart contracts, tokens, and delegated proof-of-stake consensus (DPoS), drawing inspiration from previous projects. Notably, Tron gained recognition for its compatibility with Ethereum.
In 2018, the Tron Foundation acquired BitTorrent, a peer-to-peer networking pioneer, resulting in the launch of the BitTorrent token (BTT) on the Tron blockchain in 2019.
Originally an Ethereum-based token, Tron migrated to its own network in 2018. Tron’s architecture comprises three layers.
Top 5 Tron Protocols Ranked by Total Value Locked:
JustLend
JustLend, exclusively supported by the TRON network, is a decentralized lending protocol facilitating the borrowing and lending of digital assets like TRX, Bitcoin, Ethereum, and stablecoins.
The platform operates through pools with algorithmically determined interest rates, offering users an automated and risk-controlled environment for token supply and borrowing. Noteworthy features include smart contract-based auto-matching of orders, real-time lending and borrowing, and automatic liquidation triggered by falling collateral values.
Interest accrual happens at each TRON block generation (approximately every 3 seconds), with the protocol issuing jTokens backed by supplied assets, allowing holders to earn interest.
As of now, JustLend stands as the sixth-largest DeFi ecosystem, boasting a Total Value Locked (TVL) of approximately $3.8 billion.
JustStable
JustStable, an ecosystem built on the Tron blockchain, centers around its stablecoin, JustStable (USDJ). This platform, along with JustLend, operates within the broader JUST DeFi ecosystem, established by Tron founder Justin Sun in 2020.
USDJ, the stablecoin, maintains a peg to the US dollar and serves as the primary asset for JustStable. The platform acts as a lending hub, issuing the stablecoin based on multiple collaterals. Users can borrow stablecoins from JustStable to engage in yield farming and trading activities. USDJ is specifically generated through collateralized debt positions (CDPs).
Presently, these CDPs hold over $1.2 billion worth of cryptocurrencies, enabling the generation of the stablecoin.
SUN
SUN was created to bolster TRON’s DeFi ecosystem and has undergone multiple iterations. JustLend remains its primary use case, while the ecosystem also includes a separate stablecoin swap app and a decentralized autonomous organization (DAO) on TRON.
The eponymous native token plays a crucial role in platform management, supporting buybacks, burn rewards, and liquidity provider incentives, among other functions.
SUN.io utilizes various transaction protocols to establish a comprehensive DEX ecosystem that prioritizes superior functionality, profitability, and security. Additionally, SUN’s burn mechanism and the voting rights of SUN token holders contribute to fostering a self-sustaining ecosystem.
UniFi Staking
Unifi Staking is a component of the Unifi Protocol, a multi-chain DeFi ecosystem featuring a DEX (uTrade), cross-chain bridge (uBridge), and staking (uStake) functionalities.
Operating on five blockchains, including Tron, Unifi utilizes a delegated proof-of-stake (DPoS) staking mechanism to incentivize security through staking rewards. Currently, there are nearly 5,600 delegators participating in Unifi Staking, collectively staking UNFI tokens worth over $5 million, with an estimated annual percentage yield (APR) of 5.4%.
SocialSwap
SocialSwap.io functions as a DEX aggregator catering to the Tron ecosystem, providing support for staking and liquidity mining functionalities. The native token, SST, facilitates its operations, with a total supply of 1 billion tokens.
Notably, a standout feature of SocialSwap.io is the transaction fee refund pool, which covers swap-associated costs. Moreover, the platform prioritizes security through rigorous scrutiny of its contracts via two separate audits. Additionally, a cross-chain solution is in development.
Users can actively engage with various pools for staking and have the opportunity to participate in weekly update calls with co-creators. Moving forward, SocialSwap.io aims to introduce live chart tracking and automatic token swapping at predetermined prices on the Tron blockchain.
Lessons for Investors
In conclusion, Tron has established itself as a noteworthy Ethereum alternative, garnering a substantial user base, particularly in Asia, and securing a significant share of the DeFi market. However, the dominance of the JUST ecosystem on Tron raises concerns about its long-term diversification and growth prospects.
As of June 2023, TRX is among the top 10 largest cryptocurrencies, priced at $0.07, with a market cap exceeding $6.6 billion. Although the token has experienced fluctuations, it has generally shown a narrower range compared to other cryptocurrencies, reaching its peak in 2018 at over $0.17.
Tron’s compatibility with Ethereum and its ability to facilitate efficient transactions make it an appealing investment option. However, due to the limited availability of data from the Tron blockchain, conducting thorough research becomes essential, particularly concerning its DeFi protocols.
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