What is TRON?

TRON is a decentralized open-source protocol founded by Justin Sun in 2017. It is a blockchain-based operating system, aiming to decentralize the Web and build infrastructure for Dapps. The TRON protocol has become one of the most widely used decentralized operating systems in the world with its efficient network, scalability, and extremely low transaction costs. It also provides better compatibility for Ethereum smart contracts through an innovative and pluggable smart contract platform.

With blockchain and distributed storage technology, TRON has built an entertainment system around the world with free content. The system allows users to publish, store, and own data freely while allowing subscriptions and pushing content by releasing, circulating and trading the digital assets in an autonomous decentralized manner.

How does TRON work?

Similar to Ethereum, developers can build applications based on the TRON protocol, and nodes are responsible for packaging transactions and generating blocks to maintain the operation and stability of the network. TRON differs from Ethereum in that TRON improved the PoS mechanism and proposed DPoS (Delegated Proof-of-Stake).

Holders of TRX, native token of TRON, have the right to vote for 27 Super Representatives (SR), who are responsible for maintaining the network, packaging transactions and generating blocks. In return, they get TRX as rewards.

How to become a super representative

In the TRON network, all accounts can apply to become or vote for super representative candidates. The top 27th with the most votes become super representatives and have the right to package transactions and generate blocks. The 28th to the 127th are superpartners, and the rest are super representative candidates. Votes are counted every 6 hours. That is to say, the super representatives are updated every 6 hours.

Voting and reward mechanism

To be qualified for voting, every account should hold TRON tokens (TRX) first. You can get TRON Power (TP) by freezing TRX. 1 TP = 1 frozen TRX. The more TP a candidate gets, the higher the ranking will be. After unfreezing the TRX, the corresponding amount of TP of an account will also be lost, and the votes for the ongoing round will be invalid.

Each time a block is generated in the TRON network, TRX rewards will be distributed to the accounts of SR and partners. The rewards come from two parts:

1. Block rewards: SRs will get 16 TRX for every block generated. The SR will set aside some of his rewards and distribute the rest to his voters according to the commission ratio.
2. Vote rewards: SRs and partners will get 160 TRX for every block generated. They will allocate the rewards according to the number of votes they received. Similarly, SRs and partners will also distribute the rewards to voters in accordance with the voting ratio of voters after deducting the commission ratio.

The commission ratio here refers to the ratio SRs and partners will set aside for themselves. The default ratio is 20% and can be modified by SR and partners. The lower the ratio, the more rewards voters who vote for the SR will get. Candidates can set a lower ratio to attract more votes.

Block rewards calculation

The TRON network generates a block every 3 seconds and the reward of each block is 16 TRX. 28,800 blocks are generated every day, corresponding to 460,800 TRX rewards. Since 27 SRs generate blocks in turn, assuming that SR adopts the default commission ratio of 20%, then the rewards an SR and a voter receives per day are:

1. Daily reward of an SR=460,800/27*20%=3,413 TRX
2. Daily reward of an SR voter=460,800/27*80%=13,653 TRX

Vote rewards calculation

As mentioned above, SRs receive 160 TRX for every block generated, which corresponds to 4,608,000 TRX per day. Take the default commission ratio as an example, vote rewards are calculated as follows:

SR or partner rewards = 4,608,000 SR votes or partner votes / total of SR votes and partner votes 20%

SR and partner voter rewards = 4,608,000 SR votes or partner votes / total of SR votes and partner votes 80% * (total votes for the entire network / SR votes or partner votes)

TRX and TRON Tokenomics

TRX is the native token of TRON, with a total issuance of 100 billion. In 2017, TRON raised $70 million through an ICO (Initial Coin Offering) of TRX. Following TRON Mainnet launch in June 2018, the price of TRX had been rising steadily. However, in the dull market from 2018 to 2020, the price of TRX did not change too much. Starting from 2021, the market began to rise and many popular apps were created in sectors of DeFi, Gamefi, and NFTs. The TRX price has also soared following the trend, which peaked at $0.18 and currently stabilizes at around $0.07.

TRX is mainly produced by participating in the maintenance of the network. 460,800 TRX are produced per day through this method. There are another 4,608,000 TRX produced through voting per day. TRX entitles holders to use resources of the TRON network .

Resource rights

Transactions or interactions on TRON will consume its resources. There are 3 types of resources on the TRON network: storage, bandwidth and energy. Thanks to TRON’s unique memory model, storage resources on TRON do not need to be purchased, while bandwidth and energy resources are linked with TRX. Bandwidth is the unit that measures the size of the transaction bytes stored in the blockchain database. The larger the transaction, the more bandwidth resources will be consumed. Energy is the unit that measures the amount of computation required by TVM (TRON Virtual Machine) to perform a specific operation on the TRON network. Since smart contract transactions require computing resources to execute, each smart contract transaction requires to pay for the energy fee.

Bandwidth Points
TRON network provides 1,500 free bandwidth for each account per day to ensure the smooth operation of the network. When the available bandwidth is insufficient, TRX needs to be burned to pay for Bandwidth Points. More bandwidth can be obtained by staking TRX.

The priority of account bandwidth is: 1) Transaction initiator’s bandwidth obtained by staking TRX; 2) Free bandwidth; 3) If the transaction initiator does not have sufficient bandwidth, TRX will be burned to pay for the bandwidth of the transaction.

In addition to queries, all transactions consume bandwidth. For example, if Bob initiates a transfer to Alice, then Bob needs to pay a certain amount of bandwidth to make the transfer succeed. If there is no sufficient bandwidth, he needs to burn TRX to pay for this fee. This is similar to the gas fee on Ethereum.

Energy
The execution of each instruction of the smart contract consumes a certain amount of energy while running. The more complex the contract, the more energy it consumes. When the contract is executed, Energy is calculated and deducted according to instruction one by one. When the available Energy of the account is insufficient, TRX needs to be burned to pay for the corresponding Energy. Unlike bandwidth, there is no free Energy and it can only be obtained by staking TRX.

Token issuance is the main application scenario of Energy. This is because the issuance of tokens on TRON needs to create smart contracts, and the creation and interaction of smart contracts will consume Energy. If you do not have enough staked TRX to obtain Energy, you need to burn TRX.

The History and Realization Path of TRON

TRON Protocol, created in 2017, has grown into a leading public chain by market cap after five years of development. Its development timeline is as follows:

July 2017: TRON Foundation was established in Singapore;
December 2017: TRON launched its open-source protocol;
June 25, 2018: The genesis block was created with the consensus of TRON community;
July 24, 2018: TRON successfully completed the acquisition of BitTorrent and all its products, and incorporated them into TRON’s ecosystem;
August 23, 2018: The first 27 super representatives of TRON were born;
August 30, 2018: The TRON Virtual Machine (TVM) was officially launched;
October 2018 : TRON’s decentralized application store DappHouse was established;
January 28, 2019: The BitTorrent (BTT) sale on Binance Launchpad ended in 14 mins and 41s.

The realization of the entire system of TRON is expected to take 8-10 years, involving 6 steps. Specifically, the path is as follows:

1. Exudos. A mechanism of uploading, storage and distribution based on peer-to-peer and distributed content. In this phase, TRON provides users with a completely free platform for data publishing, storage and dissemination, based on the distributed storage technology represented by IPFS.

2. Odyssey. Economic incentives empower the content ecology. The blockchain technology establishes a mechanism for content creation, distribution, and dissemination that are fully competitive and provide fair returns.

3. Great Voyage. It solves the three major problems of revenue measurement, bonus distribution and supporter management, and realizes a major transition from “fan economy” to “fan finance”.

4. Apollo. All content producers in the TRON system can issue their own tokens to realize the free flow of value.

5. Star Trek. The traffic on the TRON content platform makes it possible to build a decentralized online gambling platform. Developers can freely build these platforms through TRON to provide fully autonomous gambling market prediction functions.

6. Eternity. TRON provides the possibility to build a decentralized online game platform. Developers can freely build game platforms through TRON and realize crowdfunding for games, and provide common investors with the possibility to invest in the games.

Main Application Scenarios of TRON

As an early public chain, TRON has ranked among the top 15 public chains by market cap in the world, according to CoinMarketCap. Benefiting from its high throughput, scalability, reliability and low transaction fees, TRON has created a variety of applications in fields of credit card payment, decentralized transactions, games, wallets, etc. For example, the credit card Spend supports TRX payment, TRON ATM supports TRX online transfer, and the social networking app Peiwo supports virtual gifts with TRX.

TRC-20

TRC-20 is a set of contract standards developed by TRON for issuing tokens. Contracts written in compliance with this standard are considered to be TRC-20 contracts. It is most widely used by USDT, a token issued by Tether based on the TRC-20 protocol. As of August 1, 2022, Tether has issued a total of 66.36 billion USDTs, of which 32.313 billion are issued based on the Ethereum ERC-20 protocol and 32.13 billion are issued based on TRC-20.

DEX - SunSwap

SunSwap, an important application in the DeFi sector, is TRON’s first decentralized token exchange protocol. It allows users to make instant exchanges between any TRC-20 tokens and make system pricing conveniently. It does not charge any commission fees. The main function of SunSwap is token transactions in the TRON ecosystem. Users can obtain mining rewards by becoming a liquidity provider or through trading. At present, the TVL of SunSwap is $800 million.

Stablecoin - USDD

USDD, or Decentralized USD, is a decentralized over-collateralized stablecoin. TRON DAO Reserve is its custodian and is responsible for stabilizing its exchange rate. It is decentralized, over-collateralized, and chain-agnostic.

USDD is secured by the over-collateralization of several mainstream digital assets, including BTC, USDT and TRX, with a collateral ratio of 130% or above. USDD can be circulated simultaneously on networks such as TRON, Ethereum, and Binance Smart Chain (BSC). Currently, the total value of its collateralized assets is $2.315 billion, the total issuance of USDD is 725 million, and the collateral ratio is 319.11%.

Lend - JustLend

JustLend is the first official lending platform on TRON, which allows users to borrow, lend, and deposit assets to earn interest. At the time of writing, its total deposit and lending volume is $3.818 billion while deposit volume is $3.6 billion and lending volume is $217 million.

Dafatcat

Dafatcat is a platform for prize-linked savings accounts that functions like a traditional savings product, but it has the additional benefit of giving users the opportunity to participate in sweepstakes for prizes. All deposited assets will generate a certain amount of revenue, which will be randomly awarded to depositors as prizes. Currently, Dafatcat has 8,460 users and a TVL of $17.6 million.

WINK

WINK is a video game platform on TRON that provides users with a thrilling gaming experience. It is the world’s first permissionless video game platform with 1,240 users and a TVL of US$7.31 million currently.

Controversies faced by TRON

Accused of plagiarizing Ethereum

TRON uses basically the same network structure as Ethereum, such as its decentralized applications (dApps), token protocols, etc. TRON is compatible with smart contracts written in Solidity on Ethereum. When a contract is completed, it would be deployed on the TRON public chain and executed automatically on each node.

Vitalik, the founder of Ethereum, once publicly criticized TRON for stealing Ethereum codes, saying that “Ctrl+C+Ctrl+V much higher efficiency than keyboard typing new content”.

Poor security & pseudo-decentralization

TRON adopts the DPoS consensus algorithm and selects 27 super representatives through voting to package transactions and maintain network security. It is believed that, though every account can become a super representative candidate, the opportunity to be selected is monopolized by whales. In other words, super representatives are almost cut and dried before each voting, and the majority of the network revenues goes to the whales. Moreover, since there are only a small number of nodes maintaining network security, which is no different from a centralized database, ledger data is at risk of being tampered with.

About Justin Sun

For most of us, Justin Sun is much more well-known than TRON, which is mainly due to his enthusiasm for hype.

Justin Sun’s Experience

Justin Sun graduated from Peking University with a Bachelor’s degree and then got a Master’s degree at The University of Pennsylvania. He is an entrepreneur on the Forbes 30 Under 30 Asia 2017 list, a member of Davos Global Shapers 2014, as well as the only millennial in the first batch of graduates at Jack Ma’s Hupan University.

In 2010, Sun founded Peking University Western Learning Society and served as the president;
In 2014, Sun was awarded as a Davos Global Shaper;
In 2015, Sun led Ripple to reach a partnership with many financial institutions, including Shanghai Huarui Bank;
In 2016, Sun was elected as a member of the Executive Committee of Davos Global Shapers Beijing Hub;
In 2016, Sun launched the audio finance program “The Revolution to Freedom of Wealth”;
In 2016, Sun was selected as a member of the 14th Guangzhou Panyu District Committee of the Chinese People’s Political Consultative Conference;
In 2017, Sun was elected as the first batch of global youth leaders by Chang An Club, founded by Lihua Chen;
On March 15, 2017, Sun’s book “Brave New World” was published in mainland China, making him the only entrepreneur on Chinese Writers Rich List;
In December 2019, Sun’s Sina Weibo account was suspended.

The Charity Lunch with Warren Buffett

In June 2019, Justin Sun won the opportunity to have a charity lunch with Buffett with the highest bid of $4.567 million. On July 23, 2019, Justin Sun announced on Twitter that his lunch with Buffett was postponed for 2 days due to kidney stones. Soon, Chinese media alleged that Justin Sun was controlled by the public security organs in China based on charges of suspected illegal fundraising and money laundering, and was not allowed to leave the country. On the same day, Sun tweeted a live video from his home in San Francisco to disprove rumors.

During that period, Justin Sun can be seen in a variety of hot topics, which was subsequently criticized by regulatory authorities. On July 25, 2019, Justin Sun posted an apology on Weibo, China’s Twitter-like social media platform, expressing his regrets for undesirable hype and marketing.

Justin Sun and WSB

In January 2021, the WSB community called upon retail investors to buy GME stocks to fight against Citron Research, a well-known short-seller on Wall Street, which escalated the situation. Justin Sun chased WSB’s clout by claiming to buy $1 million worth of $GME (and later claimed to buy an additional $10 million) on January 29, 2021. Some users from the WSB community also tweeted that the Asian billionaire was backing them. This drove the price of TRX spiking by more than 30%.

Launched USDD after the LUNA Collapse

After the LUNA collapse, Justin Sun announced the launch of the TRON-based algorithmic stablecoin USDD on May 5, 2022. He also initiated the establishment of the TRON DAO Reserve, a management mechanism to maintain USDD price stability, adjust supply and demand, improve liquidity, and avoid the death spiral.

Purchased Tencent’s NFT platform Huanhe

In an era where NFT booms, digital collections in China are also developing rapidly. Tencent’s digital collectible platform Huanhe, as one of the first batch of NFT platforms in China, has attracted a large number of users with great popularity in the Chinese market. Not long ago, it was reported that Tencent was going to close Huanhe, arousing panic in this space. On July 21, Justin Sun tweeted that TRON DAO Reserve was to acquire Huanhe.

Conclusion

TRON, as a public chain founded in 2017, has been live for 5 years. With an efficient network, scalability and extremely low transaction costs, TRON stands out from those with poor network performance and high transaction costs. Also, due to the founder Justin Sun’s exceptional marketing skills, this platform has become a leader among all public chains. However, with the emergence of other projects such as Solana, AVAX, ATOM and Ethereum Layer 2, the core advantages of TRON are being undermined and the competition in the public chain sector will only be fiercer. Anyway, TRON is expected to usher in a more promising future!