TRON had positive growth across many key metrics in Q2, including market cap (+1%), average daily transactions (+29%), average daily active addresses (+31%), and stablecoin market cap (+9%).
Despite a slight dip (-8% QoQ), revenue in USD for Q2 was $117.5 million. The only networks with more revenue were Ethereum and Solana.
Total staked in USD was up 3% QoQ to $5.8 billion. By the end of Q2, TRON had the eighth-highest amount of dollar value of funds staked.
USDT on TRON finished the quarter at $57.1 billion (up 10% QoQ from $52.1 billion). Approximately 53% of all USDT in circulation is on TRON.
Winners for the Grand Hackathon Season 6 were announced in June. The hackathon attracted over 1,000 participants and awarded up to $650,000 in prizes, with $500,000 in TRX and $150,000 in energy to winning teams across five different tracks, including Web3, Artistry, DeFi, Builder, and Integration.
Primer
TRON (TRX) is a public open-sourced blockchain network using a Delegated-Proof-of-Stake (DPoS) mechanism. It utilizes an election mechanism that determines who maintains the network. All TRX stakers vote onchain on which candidates they want to become Super Representatives. In each epoch, the top 27 most voted-for candidates become Super Representatives within the active set and take turns producing blocks. An election occurs every six hours.
The TRON Virtual Machine (TVM) powers applications on the network and uses “Energy” and “Bandwidth” instead of gas, like its Ethereum Virtual Machine (EVM) counterpart. Bandwidth is gas spent on transactions whereas Energy is gas spent on smart contract calls. Energy and Bandwidth can be acquired by staking TRX or by burning TRX to pay for the Energy/Bandwidth required to execute a smart contract call or transaction. The TVM is EVM-compatible and offers developers affordable and fast smart contract execution.
TRX’s circulating market cap increased again in Q2, marking six straight quarters of QoQ gains. By the end of Q2, TRX’s market cap had increased to $10.9 billion, up 1% QoQ from $10.8 billion. Additionally, TRX outperformed other large-cap cryptocurrencies as its market cap amongst all tokens (excluding stablecoins) rose 4 spots from 14 to 10. Year-to-date, TRX’s circulating market cap is up 14%. Notably, since TRX is a deflationary token, its price increased by more than just the circulating market cap due to a decrease in circulating supply.
TRON utilizes a resource model to execute transactions onchain. To summarize, the resource model is based on distributing Bandwidth and Energy to stakers. As long as stakers have acquired enough resources, they can use those resources to transfer tokens and execute smart contracts for free. Users must cover transaction fees with TRX if they utilize more computing power than their resources. Furthermore, all TRX used to pay transaction fees is burned. As such, revenues for TRON are derived from the TRX token burns coming from transaction fees.
After setting a record quarter in terms of USD revenue in Q1, USD revenue saw a slight dip in Q2, decreasing 8% QoQ from $128.1 million to $117.5 million. Revenue in TRX was also down, falling 5% QoQ to 1.0 billion. TRON ranked #3 across all smart contract platforms in revenue in Q2. The only networks with more fees in Q2 were Ethereum ($490.7 million) and Solana ($150.9 million).
Supply Dynamics
The circulating supply of TRX is affected by two parameters: TRX that is burned and TRX that is rewarded. All transaction fees paid in TRX are burned, leading to deflationary pressure on the supply of TRX. Additionally, new TRX enters the circulating token supply as rewards for stakers and block producers. These rewards work out to roughly 5.06 million TRX minted per day. Therefore, the circulating supply of TRX will decrease over time as long as more than 5.06 million TRX is burned daily.
As previously mentioned, TRX is one of the few deflationary Layer-1 network tokens. In Q2, the supply of TRX decreased from 88.2 billion to 87.7 billion. After annualizing this decrease in circulating supply, TRX has an annualized inflation rate of -2.4%. Annualized inflation was up QoQ, increasing 8% from -2.6%.
New TRX is minted as rewards for stakers and block producers. TRON incentivizes participants in its staking mechanism through a combination of the following:
Block Reward - Super Representatives earn 16 TRX for each block produced (subject to change through onchain governance). After producing a block, the Super Representative’s chosen commission ratio is kept, while the remaining TRX is distributed amongst the representative’s associated voters.
Vote Reward - The 28th to 127th most voted-for Super Representatives become Super Representative Partners for the next epoch. While partners do not participate in block production, they still receive voting rewards, as well as the TRX stakers that voted for said partners. For every block produced, 160 TRX is rewarded to Super Representatives and Super Representative Partners in proportion to their respective TRX stakers’ votes.
The annualized real yield for staking slightly decreased in Q2, down 2% QoQ from 7% to 6.9%. This decrease was due to less TRX being burned in Q2.
Network Overview
Usage
TRON was one of the few smart contract platforms that saw increasing levels of onchain activity (transactions, active addresses, new addresses, etc.) in Q2. Average daily transactions increased 29% QoQ from 4.8 million to 6.3 million. June had the most transactions (202.6 million) of any month in 2024. Average daily active addresses grew 31% QoQ from 1.5 million to 2.0 million.
Average daily new addresses increased for the third straight quarter, up 12% QoQ from 177,200 to 198,000. Approximately 10% of all active addresses in Q2 were new addresses, down 17% QoQ. Year to date, around 11% of all active addresses have been new addresses.
Wallet transfers and stablecoins transactions continued to represent the bulk of transactions on TRON, combining for over 78% of transactions in Q2. Additionally, both individual categories saw QoQ increases in daily average transactions. Wallet Transfers were up 46% QoQ to 2.8 million, and stablecoin transfers were up 12% QoQ to 2.0 million. “Other” transactions had the biggest QoQ increase, up 50% QoQ to 1.3 million. “Other” transactions include account creation, SR account creation, account permissions update, proposal initiation, and other non-smart contract interactions on the network.
Wallet transfers and stablecoins have historically dominated average daily active address activity on TRON. Q2 was no different as an average of 1.4 million addresses conducted a wallet transfer per day (+42% QoQ), representing 58% of daily active address activity. As for stablecoin transactions, an average of 630,300 addresses conducted a stablecoin transaction per day (+13% QoQ), representing 28% of daily active address activity. All other tracked categories for average daily active addresses had QoQ decreases.
Security and Decentralization
TRON uses a Delegated Proof-of-Stake (DPoS) election mechanism and the Practical Byzantine Fault Tolerance (PBFT) consensus algorithm to secure the network. A DPoS election occurs every six hours, in which 27 Super Representatives (SRs) take turns producing blocks. Those who wish to run a node on TRON can pay 9,999 TRX to become an SR candidate.
There may be centralization concerns about having only 27 SRs participating in securing the network. But, at the end of Q2, over 416 SR candidates (up from 412 in Q1’24) received votes. This increasing diversity of candidates helps mitigate centralization concerns and promotes a more distributed governance model, enhancing the network's resilience and security. The growing number of SR candidates should challenge the voting population to distribute votes to new candidates. Additionally, no singular entity received more than 10% of all votes. The entity with the most votes was Binance Staking, which received 3.7 billion votes out of 44.5 billion votes in the most recent election (8.4% of all votes). Additionally, Google Cloud was onboarded as a Super Representative Candidate in May. As of writing, it has the 23rd most votes of any singular entity (1.2 billion).
Although there may be some benefits to a democratic voting system for block production and a growing set of SR candidates, neither feature fully does away with centralization risks. Metrics such as the geographic diversity of nodes may also factor into a network’s level of centralization. As of Q2 end, 7,474 TRON nodes were distributed across 76 different geographic locations around the globe, with the highest concentration in Europe (~45%). Many Layer-1 networks struggle with the geographical concentration of their nodes. Too many nodes in the same location could jeopardize the health of a network due to geopolitical risks, regulations, and acts of nature, among other reasons.
To stake TRX on TRON, users can choose between Stake 1.0 and Stake 2.0. The new staking mechanism, Stake 2.0 (TIP-467), went live in April 2023. It implemented a new layer to separate low-frequency staking operations and high-frequency resource delegating operations. Stake 2.0 also introduced resource re-delegating without unstaking and improved resource utilization. Of note, all newly staked TRX is staked via Stake 2.0, but any TRX previously staked via Stake 1.0 remains valid.
Across both staking options, the staking ratio (the proportion of TRX’s total supply actively being staked) essentially remained the same, increasing slightly to 53% in Q2. Additionally, more users continued to switch to Stake 2.0 over 1.0 in Q1. Stake 2.0 ended the quarter with 15.8 billion TRX staked (+6% QoQ), whereas Stake 1.0 finished with 30.5 billion TRX staked (-1% QoQ). In sum, 46.2 billion TRX was staked at the end of Q2, an increase of 1% QoQ. In USD, however, total staked was up 3% QoQ from $5.6 billion to $5.8 billion. Compared to other PoS networks, TRON had the eighth-highest dollar value of funds staked by the end of Q2.
In order to take over the network through a two-thirds attack, a malicious actor would need to control 18 of the 27 SRs, or essentially two-thirds of the total stake. At the end of the quarter, this threshold was 30.8 billion TRX ($3.8 billion).
Bandwidth is the gas spent on transactions while energy is the gas spent on contract calls. Users can stake TRX to acquire either resource accordingly:
The amount of bandwidth obtained from an account’s stake = (the amount of TRX staked for obtaining bandwidth / the total amount of TRX staked for obtaining bandwidth in the whole network * 43.2 billion)
The amount of energy obtained from an account’s stake = (the amount of TRX staked for obtaining energy / the total amount of TRX staked for obtaining energy in the whole network * 90.0 billion)
The vast majority of TRX on TRON is staked for bandwidth. Notably, the amount staked for bandwidth was down 1% QoQ from 38.9 billion to 38.6 billion. As for energy, staking increased 14% QoQ from 6.7 billion to 7.6 billion. The amount staked for each resource is correlated with consumption. Daily bandwidth consumption was up 29% QoQ from 1.4 billion to 1.8 billion, and daily energy consumption was up 9% QoQ from 77.0 billion to 84.0 billion.
Technical Developments
TRON underwent two major updates in Q2:
On April 3, TRON mainnet was upgraded to GreatVoyage-V4.7.4 (Bias). Bias is a mandatory upgrade that aims to simplify user-node interactions by supporting gRPC reflection service and the use of the gRPCurl tool for interface calls. The Bias version plans to reduce the complexity of TRON core protocol development. It introduces clearer module dependencies by restructuring Gradle dependencies to eliminate duplicate statements. Additionally, the update seeks to enhance the network's consensus stability and throughput performance. Notably, it includes faster vote reward withdrawals, facilitated by an optimization initiative (TIP-635). The initiative is expected to also enhance the network's transaction processing speed (TPS).
On June 15, TRON mainnet was upgraded to GreatVoyage-V4.7.5 (Cleobulus). Cleobulus is a mandatory upgrade that adjusts the energy cost for SUICIDE and VOTEWITNESS opcodes in TVM. It also improves the check logic of block messages with more strict checks and limits the size of account creation transactions to less than 1,000 bytes. This upgrade also tunes the check logic of transaction size to less than 500 kb including Result and guarantees size consistency of the Result and Contract in transactions. There were several other improvements made: race conditions for fetchBlockInfo and syncBlockToFetch were fixed; block production logic was optimized by checking the miner state after obtaining block locks; redundant code was removed; and cleanUp() was replaced with invalidateAll() in a cache to remove all entries.
Ecosystem Overview
DeFi
TVL on TRON dipped in Q2, falling 23% QoQ from $10.1 billion to $7.8 billion. Despite this drop in TVL, TRON remained the second-highest network by TVL, beating out third-place BNB Smart Chain ($5.5 billion) by $2.3 billion. In addition to TVL in USD, TVL denominated in TRX also saw a QoQ decrease, down 24% QoQ from 82.2 billion to 62.6 billion. This dynamic indicates that capital outflows drove the TVL decrease in USD.
The top three protocols by TVL on TRON are JustLend, JustStables, and SUN. JustLend, the largest protocol by TVL, saw its TVL fall 26% QoQ from $7.8 billion to $5.8 billion ($2.0 billion increase). Of this decrease, $34.3 million was driven by a net decrease in borrows (2% of the QoQ decrease). The majority of JustLend’s TVL decreases in Q2 were driven by the price depreciation of BTC, as BTCBrepresents over 90% of JustLend’s TVL. By the end of Q2, JustLend’s TVL dominance was 74% (down 3% QoQ).
JustStables, a collateralized debt position (CDP) protocol, had a TVL increase of 2% QoQ (up $0.03 billion to $1.45 billion). All TVL on JustStables is in the form of TRX tokens. Additionally, the amount of TRX deposited on JustStables essentially remained flat QoQ (11.6 billion TRX), meaning that the TVL increase was due to the price appreciation of TRX. Because of this price increase, JustStables TVL dominance was up 33% QoQ to 19%.
After an impressive Q1, SUN’s TVL pulled back slightly, decreasing from $583.7 million to $542.4 million, a 7% QoQ decrease. SUN consists of three different AMMs (V1, V2, and V3). By the end of Q2, V1 TVL was $289.7 million (53% of TVL), V2 TVL was $126.9 million (23% of TVL), and V3 TVL was $108.1 million (20% of TVL). Additionally, SUN’s TVL dominance increased to 7% (up 20% QoQ). In sum, JustLend, JustStables, and SUN represented 99% of DeFi TVL on TRON.
Finally, a Bitcoin re-staking project, BounceBit, launched a farming project on multiple chains in Q1 (Points Paradise). At the end of Q1, this farm had attracted $314.6 million in deposits on TRON. In early May, this BounceBit’s farming project ended on TRON as its mainnet launched shortly afterwards. Bouncebit accounted for nearly 14% of TRON’s TVL decrease in Q2.
In Q1, DEX activity reached its highest levels on TRON in several years due to a “Memecoin Mania” and the resurgence of a bull market. As for Q2, average daily DEX volume decreased slightly QoQ, down 3% QoQ from $27.2 million to $26.4 million. Despite this QoQ decrease, DEX activity remained elevated on TRON as average daily DEX volume was up 128% YoY from Q2’23’s average of $11.5 million.
Essentially all DEX volumes on TRON occur on SUN. In June 2023, SUN introduced a concentrated liquidity (CL) AMM to its product suite (SunSwap V3). Q1’24 marked the first time since SunSwap V3’s introduction that the majority of volume on SUN was routed through the V3 AMM. This trend continued in Q2, with SunSwap V3 accounting for $2 billion in volume, approximately 67% of all DEX volume on TRON in Q2 ($2.4 billion).
Stablecoins
Q2 marked another strong quarter from stablecoins on TRON. Stablecoin market cap increased 9% QoQ from $53.1 billion to $58 billion. USDT accounts for the vast majority of stablecoins on TRON, boasting a market share of 98% (flat QoQ). The market cap of USDT on TRON ended the quarter at $57.1 billion (up 9% QoQ from $52.1 billion). Additionally, approximately 53% of all USDT in circulation is on TRON (flat QoQ).
Two other stablecoins on TRON had QoQ increases in Q2. The second largest stablecoin on TRON, USDD, was up 1% QoQ from $725.9 million to $729.9 million. USDD’s market share, however, decreased by 8% QoQ to 1%. The biggest QoQ gainer in percentage terms was TUSD, which was up 29% QoQ from $69.3 million to $89.1 million.
The only stablecoin with a QoQ decrease was USDC, which was down 49% QoQ from $148.5 million to $76.1 million. This drop is due to Circle announcing that it will no longer be issuing new USDC on TRON. USDC holders on TRON can transfer until February 2025.
During Q2, the Grand Hackathon Season 6 attracted over 1,000 participants. It also awarded $650,000 in prizes, with $500,000 in TRX and $150,000 in energy going to winning teams across five different tracks, including Web3, Artistry, DeFi, Builder, and Integration. Top-tier sponsors for Season 6 include Ankr, ChainGPT, and AITECH.
Judges selected the following first-place qualifiers for Season 6:
Each of the aforementioned teams received a first-place prize of $25,000 in TRX. Furthermore, the community selected the following first-place qualifiers for Season 6:
Each of the aforementioned teams received a community-pick prize of $7,000 in TRX. Some teams even qualified for a prize across all five tracks.
Other ecosystem developments in Q2 include:
May 24 - Cross-chain messaging application, LayerZero, went live, connecting TRON to 65+ blockchain networks.
May 29 - TRON announced a collaboration with Fears Off, a leading cryptosecurity firm. This collaboration aims to enhance the safety and security of TRON and its ecosystem.
June 5 - TRON partnered with DLive and APENFT to create Streamer Academy, a platform for supporting streamers. Users can register for the academy here.
One of TRON’s major initiatives for 2024 is to continue expanding into the Bitcoin ecosystem. In Q1, Justin Sun announced that TRON will be developing a Bitcoin Layer-2 solution. Its goal would be to create a secure way for the Bitcoin ecosystem to access TRON’s pool of stablecoin capital ($58 billion by Q2 end). The roadmap for TRON’s Bitcoin Layer-2 solution has three parts:
Road Map Stage α - This stage involves integrating various TRON-based tokens into the Bitcoin ecosystem via cross-chain technology. Also, TRON DAO Ventures plans on investing in user-friendly wallets and tools to help simplify the user experience on Bitcoin.
Road Map Stage β - This stage involves various partnerships and collaborations with other protocols and projects building Bitcoin Layer-2 solutions. As a part of this stage, TRON announced a new partnership with Bitcoin Layer-2 project Merlin Chain in February. The partnership aims to unlock new growth for the TRON ecosystem by driving cross-chain capabilities and new DeFi opportunities.
Road Map Stage γ - This final stage involves developing a Layer-2 solution that incorporates the TRON, BitTorrent, and Bitcoin networks.
Closing Summary
Q2'24 was a period of both progress and challenges for TRON. Despite a dip in USD revenue and TVL, TRON's circulating market cap increased for the sixth consecutive quarter. Key upgrades, notably GreatVoyage-V4.7.4 and V4.7.5, enhanced network stability and performance. Network activity was robust, with significant increases in daily transactions, active addresses, and new addresses. Wallet transfers and stablecoin transactions remained dominant.
Ecosystem growth was supported by initiatives like the TRON Grand Hackathon Season 6, TRON DAO Grants Program, and a new partnership with LayerZero. These efforts expanded TRON's ecosystem and capabilities. Looking ahead, TRON aims to integrate with the Bitcoin ecosystem through its Bitcoin Layer-2 solution, leveraging its stablecoin capital to enhance cross-chain capabilities and DeFi opportunities. With these advancements, TRON is well-positioned for continued growth and resilience in the evolving crypto landscape.
This report was commissioned by Tron Network Limited. All content was produced independently by the author(s) and does not necessarily reflect the opinions of Messari, Inc. or the organization that requested the report. The commissioning organization may have input on the content of the report, but Messari maintains editorial control over the final report to retain data accuracy and objectivity. Author(s) may hold cryptocurrencies named in this report. This report is meant for informational purposes only. It is not meant to serve as investment advice. You should conduct your own research and consult an independent financial, tax, or legal advisor before making any investment decisions. Past performance of any asset is not indicative of future results. Please see our Terms of Service for more information.
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AJC is a Research Manager at Messari for the Enterprise team. His primary focuses are on Bitcoin and Consumer. Prior to joining Messari, AJC wrote an independent crypto blog.
AJC is a Research Manager at Messari for the Enterprise team. His primary focuses are on Bitcoin and Consumer. Prior to joining Messari, AJC wrote an independent crypto blog.
