TRON (TRX) Goes for Flash Rally Near Three-Month High
TRON (TRX) broke out after a recent correction, regaining the $0.07 level. TRX is now close to a three-month high close to $0.08, showing the asset is still capable of sudden expansion. TRX also bounced from a dip to only $0.05, having established a usual range.
TRX has failed to fulfill long-term expectations of being a higher-priced asset, following the example of Cardano (ADA). TRX has three times the token supply of ADA, but has not broken far above $0.20 at the peak of the 2017 bull market. However, the TRON network has become influential enough, tapping interest in games and gambling.
Why TRX Gains Value
The TRON network still carries a significant part of the supply of Tether (USDT). Over 41.7B USDT tokens, 50% of the total supply, are carried through the TRON network.
The TRON network boasts of more than 88M accounts created, with high activity among top apps. The network also pays out passive income through delegation and node operation. TRON also appeals to the Chinese community, offering USDT liquidity and decentralized tools to move value.
TRX Becomes Deflationary
Despite its significant supply, TRON is also scheduling token burns to absorb some of the generated assets. In the past months, the network actually turned deflationary.
Additionally, TRX tokens are locked for staking in support of the network and in DeFi protocols. The total value locked on TRON is above $9B, competing with the likes of Terra (LUNA) and Solana (SOL). The TVL on TRON is self-reported, while DeFi Llama aggregates $4.1B in notional value in TRON-based protocols.
JustLend is the top DeFi lending app on TRON, with a dominance of 41.1% of the market. SunSwap, the TRON-based decentralized exchange, is among the leading dApps. However, the list of projects aggregated by DeFi Llama is relatively short, and building on TRON is restricted.
TRON also appeals to the Chinese community, rarely breaking out into new trend to gain Western users. Games and gambling apps make a large part of TRON’s usage, and the platform has a separate ecosystem of decentralized markets and games.
TRON decentralized games are also reporting much smaller activity compared to Ethereum (ETH) and other blockchains. The network also carries NFT items, some of which are now almost forgotten, like the first attempt at launching TRON Dogs.
Is TRON Evolving into New DeFi Hub
TRON is one of the networks with highly active development. The most recent move is to repeat the attempt of Terra (LUNA) to build an algorithmic stablecoin. If backed in TRX, this may increase the asset scarcity and lead to a new price tier.
However, some traders are skeptical of the ability of TRON to offer risk-free growth and passive income from a stablecoin. USDD, the native dollar-priced asset, will be backed by reserves of TRX and $10B in other types of collateral.
To counter those accusations, the TRON project is also copying Terra in its approach to building a collateral. The TRON DAO, a decentralized decision-making body, will boost its reserves to be able to build larger DeFi structures.
The biggest problem of decentralized projects is to prevent flash crashes. DeFi went through many liquidation cycles before setting better safeguards, surviving better during more significant price swings. Recently, Waves (WAVES) had a problem after launching the USDN stablecoin with a single-asset collateral. A crash in the WAVES price also led to USDN losing its dollar peg.
The trend of following Terra has created multiple DAO structures with the goal of issuing their own liquidity. Those structures may benefit some networks, but prove too risky or unsustainable.
TRON is relatively late to the game, with multiple TERRA clones and stablecoins already offering passive income. The organizations may work during a reasonable bullish market, especially those with BTC collaterals. For skeptics, issuing those new assets is a tool to acquire free BTC, while saddling holders with the risk.
Despite this, the usage of stablecoins on TRON gives hopes about USDD. The TRON-based USDT token is extremely active, with more than $10B in daily value transferred. TRON also saves time and transaction fees, as the usual Ethereum-based USDT may take minutes or sometimes hours to clear a transaction.
USDD will work not by being backed with actual USD. The asset will be pegged to the dollar value of TRX, meaning it can always be exchanged for $1 worth of TRX. This new settlement will mop up some of the USDT generated.
The launch date for the new stablecoin will be May 5, and USDD will also have its versions on Ethereum and Binance Smart Chain for convenience. USDD will not be traced, will be issued without KYC and will work as a decentralized tool for transferring value.
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