Summary of key points
TRON achieved positive growth in a number of key indicators in the first quarter, including market capitalization (+15%), protocol revenue (+7%), DeFi TVL (+25%), stablecoin market capitalization (+8%) and average daily trading volume of decentralized exchanges (+142%).
TRONs protocol revenue in the first quarter reached US$128.1 million, a record high, second only to Ethereum and Bitcoin.
The total value of TRX staked in the first quarter rose 15% quarter-on-quarter to $5.6 billion.
The market value of TRON’s USDT exceeded $50 billion in the first quarter, reaching $52.1 billion at the end of the quarter (up 12% from $46.3 billion in the previous quarter). Nearly 53% of USDT in the market is circulating on the TRON network.
TRON announced in February that it was developing a Bitcoin L2 solution with the goal of creating a unified ecosystem that integrates TRON, BitTorrent, and the Bitcoin network.
About Wavelength TRON
TRON (TRX) is a public open source blockchain network that uses the Delegated Proof of Stake (DPoS) mechanism. The network maintenance personnel are determined through an election mechanism. TRX staking users vote for their favorite super representative candidates on the chain. The election is held every 6 hours. The top 27 candidates with the highest number of votes in each round will become super representatives and take turns to produce blocks. The TRON Virtual Machine (TVM) empowers applications on its network, using the energy + bandwidth model instead of the gas fee similar to the Ethereum Virtual Machine (EVM). The gas fee consumed by transactions is called bandwidth, and the handling fee consumed by calling smart contracts is called energy. Energy or bandwidth is consumed when making smart contract calls or transactions. These two resources can be obtained by staking or burning TRX. TVM is compatible with EVM, which can help developers execute smart contracts at a lower price.
Key data
Financial Overview
Market Cap and Revenue
TRXs circulating market value further increased in the first quarter, achieving five consecutive quarters of growth. By the end of the first quarter, TRXs market value increased from US$9.4 billion in the previous quarter to US$10.7 billion, a month-on-month increase of 15%. However, TRXs market value ranking among all types of tokens (excluding stablecoins) dropped by 4 places, from 10th to 14th. Although TRXs performance in the first quarter was not as good as other high-market-cap tokens, its market value increased by an astonishing 82% compared to last years US$5.9 billion. In addition, due to the deflationary nature of TRX, its price growth also stems from the reduction in market circulation.
TRON uses a resource model to execute on-chain transactions. The basis of this model is to issue bandwidth and energy to staking users. As long as the staking user obtains enough resources, they can use these resources to transfer tokens and execute smart contracts for free. If the computing power called by the user exceeds the resources they have obtained, they must pay TRX fees. In addition, all TRX used to pay transaction fees will be destroyed, which also constitutes a source of income for TRON.
After setting a new record for protocol revenue in the fourth quarter of last year, TRON set another record in the first quarter, with its protocol revenue increasing from $119.4 million to $128.1 million, a 7% increase. TRONs revenue performance in March was particularly eye-catching, with 398.5 million TRX destroyed (worth $51.5 million), setting a new monthly high for protocol revenue. Protocol revenue denominated in TRX fell slightly from $1.2 billion in the previous quarter to $1 billion, a 14% decrease from the previous quarter. In terms of fee income, TRONs performance in the first quarter ranked third in the entire network, second only to Ethereum ($1.2 billion) and Bitcoin ($291 million).
Supply data
The circulation of TRX is affected by two factors: TRX destruction and TRX rewards. All transaction fees paid in TRX will be destroyed, resulting in deflationary pressure on the TRX supply. In addition, a portion of TRX is distributed as rewards to stakers and block producers, and the daily minting of this portion of TRX is about 5.06 million. Therefore, as long as the daily destruction of TRX exceeds 5.06 million, its circulation will decrease over time.
As mentioned above, TRX is one of the few deflationary L1 network tokens. The circulation of TRX decreased from 88.2 billion to 87.7 billion in the first quarter.
Newly minted TRX is distributed as rewards to stakers and block producers. TRON encourages users to participate in TRX staking through a series of incentives:
Block Rewards - As a reward, TRON Super Representatives will receive 16 TRX for each block produced (which will be adjusted according to the on-chain governance rules). After the block is produced, the Super Representative retains part of the reward according to the set commission ratio, and the remaining TRX is distributed to the voters.
Voting Rewards - Super Representatives ranked 28-127th in votes will become Super Representative Partners in the next round. Although Partners do not participate in block production, they can still receive voting rewards, and users who stake TRX and vote for them will also receive corresponding rewards. For each block generated, Super Representatives and Super Representative Partners will share 160 TRX according to the proportion of TRX votes received.
Network Overview
Usage
The average daily transaction volume this quarter was roughly the same as the previous quarter, down 1% from the previous quarter, from 4.9 million to 4.8 million. It is worth noting that the average daily transaction volume is still lower than the same period last year (the average daily transaction volume in the first quarter of 2023 was 7.1 million). In addition, the average daily active address number remained stable both year-on-year and month-on-month. The average daily active address number in the first quarter was 1.5 million, up 4% from the previous quarter.
After two quarters of decline, the average daily number of new addresses increased by 2% in the first quarter from 184,500 to 187,800. About 12% of the active addresses in the first quarter were new addresses, which remained stable from the previous quarter. In the past year, the number of new addresses added daily in the TRON network was about 195,000.
The main transactions on the TRON network are still TRX transfers and USDT transactions, accounting for more than 76% of the total number of transactions in the first quarter. However, the average daily number of transactions in both categories decreased slightly from the previous quarter. The average daily transfer of TRX decreased by 1% from the previous quarter to 1.9 million transactions; the average daily transfer of USDT also decreased by 1% from the previous quarter to 1.8 million transactions. The average daily transaction in the other category increased the most quarter-on-quarter, up 5% to 842,100 transactions. Other transactions include account creation, SR account creation, account permission update, proposal initiation, and other non-smart contract operations on the network.
The main activities of daily active addresses are wallet transfers and stablecoin transfers. On average, 1 million addresses make a wallet transfer every day (up 5% month-on-month), accounting for 65% of daily address activity. In terms of stablecoin transfers, an average of 557,800 addresses trade stablecoins every day (down 2.5% month-on-month), accounting for 37% of daily address activity. In percentage terms, the two categories with the largest month-on-month increases are centralized exchanges (37,200 daily active addresses) and DeFi (2,000 daily active addresses), up 93% and 31% respectively.
Security Decentralization
TRON uses the Delegated Proof of Stake (DPoS) election mechanism and the Practical Byzantine Fault Tolerance (PBFT) consensus algorithm to maintain the security of its network. DPoS elections are held every 6 hours, and the 27 elected Super Representatives (SRs) take turns to produce blocks. Users who want to participate in running TRON nodes can pay 9999 TRX to become a Super Representative candidate.
Relying on only 27 super representatives to protect the network may be questioned as having certain centralization risks, but at the end of the first quarter, more than 412 super representative candidates received votes, compared to 400 in the fourth quarter of 2023. This shows that the number of super representative candidates is growing, which will encourage voters to cast their votes for new candidates. In addition, no super representative received more than 10% of the total votes. In the recent election vote, Binance Staking received the most votes, winning 4.3 billion votes out of 44.5 billion votes (9.8% of the votes).
Although there may be many benefits to using democratic voting to generate blocks and continuously increasing the number of super representative candidates, it is impossible to completely avoid the risk of centralization. Indicators such as the diversity of node geographical locations may also affect the degree of centralization of the network.
Many Layer 1 networks have the problem of too much node concentration. Due to geopolitical risks, laws and regulations, natural behavior, etc., deploying too many nodes in the same location may affect the health of the network.
As of the end of the first quarter, the TRON network had 7,386 nodes in 79 regions around the world, with the largest number of nodes in Europe, accounting for approximately 39% of the total.
Currently, users can stake TRX on TRON through Stake 2.0. Stake 2.0 (TIP-467), a new staking mechanism, was launched in April 2023. It distinguishes low-frequency staking operations from high-frequency resource proxy operations through a new protocol layer. At the same time, users can proxy resources again without unstaking, which improves resource utilization. It is worth noting that all TRX stakes after the upgrade are carried out through Stake 2.0, but the TRX previously staked by users through Stake 1.0 is still valid. The TRX staking rate (the proportion of TRX staked to the total circulation) in both modes remained basically unchanged this quarter, with only a slight decrease to 52%. In addition, more and more Stake 1.0 users switched to Stake 2.0 this quarter. As of the end of this quarter, the TRX staked on Stake 2.0 increased by 3% quarter-on-quarter to 14.8 billion, while the TRX staked on Stake 1.0 decreased by 3% quarter-on-quarter to 30.8 billion. At the end of the first quarter, the total TRX staked reached 45.7 billion, a decrease of 1% quarter-on-quarter. In US dollar terms, the total value of TRX staked this quarter increased by 15% quarter-on-quarter, from US$4.9 billion to US$5.6 billion. As of the end of this quarter, the US dollar value of staked assets on TRON ranked 10th among all Proof of Stake (PoS) networks.
For a malicious actor to manipulate the network by controlling two-thirds of the nodes, they would need to control 18 of the 27 super representatives. This means they would need to control two-thirds of the total stake, which stood at 30.5 billion TRX ($3.7 billion) at the end of the quarter.
The gas fee consumed by transactions is called bandwidth, and the handling fee consumed by contract calls is called energy. Users can stake TRX to obtain corresponding resources:
Bandwidth obtained by account pledge = (number of TRX pledged for bandwidth / total number of TRX pledged for bandwidth in the entire network * 43,200,000,000)
Energy obtained by staking an account = (the amount of TRX pledged to obtain energy / the total number of TRX pledged to obtain energy in the entire network * 90,000,000,000)
In the first quarter, the vast majority of TRX staked by users was used to obtain bandwidth. The staked amount in the first quarter decreased from 39.8 billion to 38.9 billion, a decrease of 2% from the previous quarter. In terms of energy stake, the total amount of TRX staked increased from 6.2 billion to 6.7 billion, an increase of 8% from the previous quarter. The staked amount corresponding to each type of resource is related to its consumption trend. Daily bandwidth consumption decreased from 1.5 billion to 1.4 billion, a decrease of 1% from the previous quarter; daily energy consumption decreased from 77.7 billion to 77 billion, a decrease of 1% from the previous quarter.
Development progress
In the second half of the first quarter, the TRON mainnet was upgraded to GreatVoyage-V4.7.4 (Bias), which is a mandatory upgrade. The new version supports gRPC reflection services and calls interfaces using the gRPCurl tool, aiming to simplify the interaction between users and nodes. The Bias version aims to reduce the difficulty of TRON core protocol development, so the Gradle dependencies are refactored and duplicate statements are deleted to make module dependencies more concise and clear. In addition, this upgrade also aims to enhance the stability and throughput performance of the network consensus, and especially to increase the withdrawal speed of voting rewards by optimizing the proposal TIP-635, thereby improving the transaction processing speed (TPS) of the network.
On March 19, AWS (Amazon Web Services) integrated with the TRON network, and users can now run TRON full nodes on AWS.
Ecosystem Overview
DeFi
TRON’s TVL (total locked value) broke the 11-digit mark in the first quarter, increasing from $8.1 billion to $10.1 billion, a 25% increase from the previous quarter. As of the end of the first quarter, TRON was still the second-highest TVL network, nearly $3 billion ahead of the third-ranked BNB Chain (whose TVL is currently $7.2 billion). In addition, TVL denominated in TRX also achieved an 8% quarter-on-quarter increase from 76.4 billion to 82.5 billion. This trend shows that the rise in TRX prices and capital inflows have driven the growth of TVL denominated in US dollars.
The top three TVL protocols on TRON are JustLend DAO, JustStable, and SUN. This quarter, the TVL of the JustLend DAO protocol increased by 20% (US$1.3 billion) from US$6.5 billion to US$7.8 billion; of which the growth driven by borrowing reached US$16.2 million, accounting for 1% of the total increase. The increase in token prices and deposited assets were the main reasons for the increase in TVL of the JustLend DAO protocol this quarter. As of the end of the first quarter, JustLend DAOs TVL accounted for 77% of the entire TRON, a decrease of 4% from the previous quarter. The TVL of the collateralized debt position (CDP) protocol JustStable increased by US$190.5 million this quarter to US$1.4 billion, an increase of 16%. TVL assets on JustStable are all TRX. In addition, the amount of TRX deposited to JustStable was basically the same as the previous quarter, at 11.6 billion TRX; this means that the increase in TRX prices has driven the growth of the JustStable protocol TVL.
The SUN platform performed well in the first quarter, with its TVL increasing from $390.6 million to $583.7 million, a 49% increase from the previous quarter. The SUN platform consists of three AMMs (automatic market maker protocols): V1, V2, and V3. As of the end of the first quarter, V1s TVL was $319.7 million (55%), V2s TVL was $136.4 million (23%), and V3s TVL was $107.7 million (18%). In addition, the TVL of the SUN platform accounted for 6% of the overall TRON, a 20% increase from the previous quarter. JustLend, JustStable, and SUN platforms together account for 97% of the TVL of the TRON DeFi ecosystem.
BounceBit, a Bitcoin restaking project, launched its mining project Points Paradise on multiple chains in the first quarter. By the end of the quarter, the project had received $314.6 million in deposits on TRON.
Due to the recent Meme Coin Frenzy and the return of the bull market, most networks have seen more active on-chain activities, and Tron is no exception. Trons DEX (decentralized exchange) trading volume has achieved the largest quarter-on-quarter growth in a year. The average daily DEX trading volume increased from $11.3 million to $27.2 million, a month-on-month increase of 142%. Specifically, Trons DEX trading volume reached $1.2 billion in March, the second highest peak since the record of $1.9 billion in June 2022.
SUN contributes almost all of the DEX trading volume on TRON. In June 2023, SUN introduced centralized liquidity (CL) AMM to its product SunSwap V3. During the first quarter, more than half of the transactions on the SUN platform were processed by SunSwap V3, which was a first. In the first quarter, SunSwap V3s trading volume reached $1.6 billion, accounting for about 64% of TRONs total DEX trading volume in the first quarter ($2.5 billion).
Stablecoins
TRON stablecoins continued their strong performance in the first quarter, with market cap increasing by 8% quarter-on-quarter, from $49.3 billion to $53.1 billion. USDT dominates TRON stablecoins, with a 98% market share, up 4% quarter-on-quarter. TRON’s USDT market cap surpassed the $50 billion mark, reaching $52.1 billion at the end of the quarter, compared to $46.3 billion in the previous quarter, up 12% quarter-on-quarter. In addition, TRON owns approximately 53% of the total USDT in circulation.
Aside from USDT, the only stablecoin to see a quarter-over-quarter increase in market cap was USDD: up 3% to $725.9 million. USDC’s market cap fell 48% quarter-over-quarter, from $282.7 million to $148.5 million. The downward trend was triggered by Circle’s announcement that it would stop issuing new USDC on Tron. Users holding USDC on Tron can transfer their tokens to other chains by February 2025.
RWAs
TRON announced the launch of its first real-world asset (RWA) platform, stUSDT, in the third quarter of last year. Users stake USDT to obtain voucher tokens, stUSDT. These USDTs staked in the stUSDT-RWA contract will be used to invest in real-world assets, such as highly rated short-term government bonds. Users will continue to receive returns on these assets through the rebase mechanism, and the amount of stUSDT in their wallets will automatically grow to reflect their share of the generated returns.
The TVL of stUSDT on TRON exceeded $2 billion in the fourth quarter of last year, but fell 39% month-on-month to $1.3 billion in the first quarter of this year. Despite this, stUSDT is still the only RWA protocol with a TVL of over $1 billion besides Maker RWA and Ethena. As of March 31, TRON stUSDT has distributed more than $48 million in revenue, with a reward rate of 3.22%.
Ecological growth
TRON DAO continues to implement strategies to expand its ecosystem. In addition to focusing on stablecoins, it has also launched the TRON DAO Fund project, a $100 million artificial intelligence development fund, and continues to host TRON hackathon events.
TRON DAO launched the sixth season of the hackathon in the first quarter, with a total prize pool of $650,000, covering five tracks: Web3, Artistry, DeFi, Builder, and Integration. The competition also invited Ankr, ChainGPT, AITECH, etc. as top sponsors, and registration will continue until May 7.
One of TRONs key plans for the first quarter is to continue to enter the Bitcoin ecosystem. On February 15, Justin Sun announced that TRON will launch a Bitcoin Layer 2 solution, aiming to connect the Bitcoin ecosystem to TRONs $53.1 billion stablecoin fund pool (data at the end of the first quarter) in a secure way. TRONs Bitcoin Layer 2 solution roadmap includes the following three parts:
1. Alpha phase - using cross-chain technology to integrate different TRON tokens into the Bitcoin ecosystem. TRON DAO Ventures also plans to invest in user-friendly wallets and tools to help users simplify their Bitcoin experience.
2. Beta phase - Establish extensive partnerships with other protocols and project teams to jointly create Bitcoin Layer 2 solutions. In this phase, TRON announced in February that it had reached a cooperation with Bitcoin Layer 2 project Merlin Chain, aiming to release new momentum for TRON ecosystem growth through cross-chain capability building and new DeFi opportunities.
3. γ Phase - Building a Layer 2 solution that integrates TRON, BitTorrent, and Bitcoin networks, which is also the final stage of the roadmap.
Conclusion
Over the past year, TRON has achieved remarkable results, achieving quarterly growth in key areas and indicators, and setting a new record for protocol revenue for the second consecutive quarter ($128.1 million). Due to TRONs high revenue, TRX is one of the few deflationary network tokens in the crypto market, and its market value increased quarter-on-quarter last year, which can also prove this.
The success of TRON is closely related to the growth of USDT business. By the end of the first quarter, the market value of USDT on TRON reached 52.1 billion US dollars, a 12% increase from the previous quarter. TRON has expanded the use of USDT around the world with its low fees and fast transfer speed. By the end of the first quarter, 53% of USDT in the market was circulating on the TRON network.
In the future, TRON will integrate with Bitcoin to expand the ecosystem. By developing Bitcoin Layer 2 solutions, investing in user-friendly wallets and tools, and collaborating with existing Bitcoin projects, TRON is committed to building an ecosystem that integrates TRON, BitTorrent, and the Bitcoin network.
Full report:
https://messari.io/report/state-of-tron-q1-2024
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