Summary of key points

• During the third quarter, many indicators of TRON maintained positive growth, including market capitalization (+ 24%), revenue (+ 29%), DeFi TVL (+ 4%), stablecoin market value (+ 3%) and average daily trading volume of decentralized exchanges (+ 150%).

• In the third quarter, TRON's revenue reached US$151.2 million, a record high. Revenue denominated in TRX increased from 996 million in the previous quarter to 1.05 billion, a month-on-month increase of 6%.

• TRON's first meme distribution platform SunPump was launched in the third quarter. The platform performed well, deploying more than 89,000 projects in less than two months after its launch.

• In terms of USD, the total value of TRX staked in the third quarter increased by 14% month-on-month to $6.54 billion. As of the end of the third quarter, the USD value of staked assets on the TRON chain ranked sixth among all Proof of Stake (PoS) networks.

• As of the end of the third quarter, the market value of TRON’s USDT reached $58.94 billion, a 3% increase from the previous quarter’s $57.06 billion. In addition, TRON owns more than 50% of the USDT circulation.

Key data

Financial Overview

Market Cap and Revenue

This quarter, TRX's circulating market value increased from $10.9 billion to $13.5 billion, achieving seven consecutive quarters of growth. In addition, TRX's market value ranking rose by 1 place, from 10th to 9th. The TRX/BTC exchange rate rose by 24% month-on-month. Due to the deflationary nature of TRX, the reduction in market circulation also pushed up the price of TRX.

TRON uses a resource model to execute on-chain transactions. The basis of this model is to issue bandwidth and energy to pledged users. As long as the pledged users obtain enough resources, they can use these resources to 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.

TRON’s revenue in the third quarter hit a record high, increasing from $117.5 million to $151.2 million, a 29% increase from the previous quarter, achieving a new milestone. Revenue denominated in TRX increased from $996 million in the previous quarter to $1.05 billion, a 6% increase from the previous quarter.

TRON's revenue in the third quarter increased significantly, mainly due to the popularity of the meme issuance platform SunPump (for more information about SunPump, please refer to "Ecosystem Overview"). The activity of the SunPump platform began to rise on August 16, and showed a parabolic growth trend in the following two weeks. From August 16 to 31, a total of more than 270.3 million TRX (about 42 million US dollars) were destroyed, accounting for nearly 27% of TRON's revenue in the third quarter. In addition, the TRX destruction on August 21 (34.7 million) set a record for the largest single-day TRX destruction since TRON was founded.

Supply data

The circulation of TRX is affected by two factors: TRX destruction and TRX rewards. All transaction fees paid in TRX are destroyed, resulting in a deflationary nature to the TRX supply. In addition, a portion of TRX is distributed as rewards to stakers and block producers, and enters the circulating supply, with the daily minting of this portion of TRX being approximately 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. TRX's circulation decreased from 87.2 billion to 86.62 billion in the third quarter. After annualization, TRX's annual inflation rate is -2.7%, and the annualized inflation rate this quarter has decreased by 11% from the previous quarter (-2.4% in the previous quarter).

Newly minted TRX will be 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 28th – 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 in proportion to the TRX votes they received.

In the third quarter, the actual annualized yield of TRX staking increased by 13% month-on-month, from 6.9% to 7.7%, mainly due to the increase in TRX destruction.

Network Overview

Usage

TRON's on-chain activity indicators (number of transactions, number of active addresses, number of new addresses, etc.) have maintained growth momentum for two consecutive quarters. Among them, the average daily number of transactions on the network increased from 6.3 million to 7.2 million this quarter, a month-on-month increase of 14%.

TRON’s various on-chain activity indicators (number of transactions, number of active addresses, number of new addresses, etc.) all increased in the third quarter. The average daily number of active addresses increased from 2 million to 2.1 million, a month-on-month increase of 6%.

The average daily number of new addresses on TRON continued to rise this quarter, increasing from 198,000 to 208,500, a 5% increase from the previous quarter. About 10% of the active addresses in the third quarter were new addresses, a slight increase of 1% from the previous quarter.

Most transaction types on TRON are still wallet transfers and stablecoin transactions. Wallet transfers increased by 10% month-on-month, from 2.8 million to 3.1 million; stablecoin transfers increased by 4% month-on-month, from 2 million to 2.1 million. Overall, wallet transfers and stablecoin transactions accounted for 73% of all transactions in the third quarter, a decrease of 6 percentage points from 78% in the previous quarter. The largest increase in market share is DeFi transactions. The launch of SunPump brought a Meme trading boom to the SUN platform, so the number of DeFi transactions surged in the third quarter, increasing by 487% month-on-month to 44,000. DeFi transactions accounted for nearly 1% of the total number of TRON transactions in the third quarter. In addition, the month-on-month growth in "other" types of transactions was also very significant, increasing from 1.3 million to 1.8 million, an increase of 38%. "Other" transactions include creating accounts, creating SR accounts, updating account permissions, initiating proposals, and other non-smart contract operations on the network.

Wallet transfers and stablecoin transactions have always been the main activities of TRON's daily active addresses. In the third quarter, an average of 1.6 million addresses conducted wallet transfers every day, a month-on-month increase of 10%. The number of addresses participating in stablecoin transactions has declined slightly. In the third quarter, an average of 624,800 addresses conducted stablecoin transactions every day, a month-on-month decrease of 1%. The number of active addresses participating in DeFi transactions has also shown an upward trend, increasing by 263% month-on-month to 6,700. At the same time, the number of active addresses participating in chain games increased by 2% month-on-month to 900.

Decentralized security

TRON uses the Proxy 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 posing certain centralization risks, but at the end of the third quarter, more than 419 Super Representative candidates received votes, compared to 416 in the second quarter. A more diverse candidate base helps alleviate concerns about network centralization and advocates for a more distributed governance model, thereby improving network stability and security. As can be seen, the number of Super Representative candidates is growing, which will encourage voters to cast their votes for new candidates. In addition, no single Super Representative received more than 10% of the total votes. In the recent election vote, Binance Staking received the most votes, winning 3.36 billion votes out of 41.36 billion votes (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, no measure can 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. As of the end of the third quarter, TRON had 7,954 nodes in 78 regions around the world (7,474 in the second quarter), of which Europe had the most nodes, accounting for about 39% of the total. 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.

Currently, users can stake TRX through Stake 1.0 and Stake 2.0. The new staking mechanism, Stake 2.0 (TIP-467), was launched in April 2023. It distinguishes between low-frequency staking operations and high-frequency resource proxy operations by adding 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 April 2023 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 staking to total circulation) in both modes fell slightly in the third quarter to 48%. However, more and more users switched from Stake 1.0 to Stake 2.0. As of the end of the third quarter, the TRX staking in Stake 2.0 increased by 30% quarter-on-quarter to 20.5 billion, while the TRX staking in Stake 1.0 decreased by 30% quarter-on-quarter to 21.42 billion. At the end of the third quarter, the total TRX staking was 41.93 billion, a decrease of 9% quarter-on-quarter. However, due to the increase in TRX prices, the total TRX staking increased from US$5.76 billion to US$6.54 billion, a month-on-month increase of 14%. As of the end of the third quarter, the value of staked assets on TRON ranked 6th among all Proof of Stake (PoS) networks, up 2 places from the previous quarter.

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 was 27.95 billion TRX ($4.36 billion) at the end of the third 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 * 43.2 billion)

• Energy obtained by staking an account = (the number of TRX staked to obtain energy / the total number of TRX staked to obtain energy in the entire network * 90 billion)

Most of the TRX staked by users on TRON is used to obtain bandwidth. The corresponding staked amount in the third quarter decreased from 38.59 billion to 27.46 billion, a decrease of 29% month-on-month. In terms of energy stake, the TRX staked amount increased from 7.64 billion to 14.47 billion, an increase of 89% month-on-month, partly due to the increase in the handling fee of Meme transactions. The staked amount corresponding to each type of resource is related to its consumption trend. Daily bandwidth consumption increased from 1.83 billion to 2.12 billion, an increase of 15% month-on-month; daily energy consumption increased from 83.98 billion to 110.76 billion, an increase of 32% month-on-month.

Development progress

In the third quarter, TRON passed a series of proposals aimed at alleviating on-chain congestion and reducing transaction fees.

• Proposal No. 92 (August 25) – Increases the total power limit of TRON to 120 billion. 20 out of 27 Super Representatives voted in favor of passing the proposal.

• Proposal No. 94 (September 12) - Increases the total energy limit of TRON to 150 billion. 21 out of 27 Super Representatives voted in favor of passing the proposal.

• Proposal No. 95 (September 19) - Modifies the threshold of the Dynamic Energy Model to 5 billion, adjusts the price per unit of energy to 0.00021 TRX, and modifies the maximum increment factor of the Dynamic Energy Model (in basis points) to 34,000. 22 of the 27 Super Representatives voted in favor of passing the proposal.

• Proposal No. 97 (October 3) - Increases the total energy limit of TRON to 180 billion. 21 out of 27 Super Representatives voted in favor of passing the proposal.

Ecosystem Overview

DeFi

TRON saw mixed results in total staked volume (TVL) in Q3. TVL denominated in TRX decreased 17% from $62.59 billion to $51.91 billion. However, TVL denominated in USD increased 4% from $7.8 billion to $8.09 billion. TRON remains firmly in second place among all network TVL rankings, nearly $2.69 billion ahead of third-placed BNB Smart Chain, which now has a TVL of $5.4 billion.

The top three TVL protocols on TRON are JustLend DAO, JustStable and SUN. This quarter, the TVL of the JustLend DAO protocol decreased by 1% (down $46.4 million) from $5.8 billion to $5.75 billion; despite the decline in TVL, the net borrowing amount on JustLend DAO increased from $87.9 million to $101.3 million, up 15% from the previous quarter, which may indicate that TRON users are more willing to use leverage. In previous quarters, BTC accounted for more than 90% of the TVL of the JustLend DAO protocol. As of the end of the third quarter, BTC accounted for only 48% ($2.74 billion) of JustLend DAO’s TVL, and TRX accounted for 27% ($1.56 billion), ranking second; JustLend DAO’s TVL accounted for 71% of TRON’s total, down 4% from the previous quarter.

The TVL of the collateralized debt position (CDP) protocol JustStable grew by $132.3 million this quarter, up 9%, to $1.58 billion. All TVL assets on JustStable are TRX. In addition, the amount of TRX deposited in JustStables decreased from 11.58 billion to 10.11 billion, a decrease of 13% month-on-month, indicating that the increase in TRX prices has driven the growth of the JustStales protocol TVL, thereby also pushing its TVL to 20% of TRON's overall TVL from 5% in the previous quarter.

The TVL of the SUN platform increased the most in Q3 (39%), from $542.4 million to $755.4 million, partly due to the launch of SunPump in this quarter. The SUN platform consists of three AMMs (automated market maker protocols): V1, V2, and V3. As of the end of the third quarter, the TVL of V1 was $365.7 million (accounting for 48%), the TVL of V2 was $200.4 million (accounting for 27%), and the TVL of V3 was $184.6 million (accounting for 24%). In addition, the TVL of the SUN platform increased to 9% of the total TRON, an increase of 34% month-on-month. The TVL of the three platforms JustLend DAO, JustStable, and SUN accounted for more than 99% of the total TRON DeFi ecosystem.

SunPump

On August 12, SUN launched the SunPump launch platform, where all TRON users can deploy tokens (especially Meme). SunPump uses the bonding curve mechanism for initial price discovery.

After several important announcements, SunPump's popularity began to heat up:

• August 13th - Cryptocurrency exchange HTX announced that it will list popular memes on the SunPump platform that meet certain conditions.

• August 14th - Cryptocurrency exchange Poloniex announced that it will list popular memes on the SunPump platform that meet certain conditions.

• August 15th - SunPump announced the launch of a $10 million Meme ecological incentive plan.

• August 16th - The well-known on-chain token browser Dexscreener announced that it will support TRON.

SunPump’s activity peaked on August 20, with more than 7,500 memes issued in just one day, generating 3.7 million TRX (about $585,000 at the time). By the end of this quarter, more than 89,000 projects had been issued on SunPump, generating 34.5 million TRX (about $5.4 million at the end of this quarter). In addition, SunPump has also led to the birth of many popular meme communities.

Decentralized Exchange (DEX) Trading Volume

After the launch of the SunPump platform, TRON’s decentralized exchange (DEX) activity reached its highest level since 2022. The average daily DEX trading volume in the third quarter rose from US$26.4 million to US$65.8 million, an increase of 150% from the previous quarter. SUN V2 is responsible for hosting the Meme liquidity pool issued by the SunPump platform, so its trading volume has increased significantly under the influence of SunPump. SUN V2's average daily DEX trading volume increased from US$2.6 million to US$27.9 million in the third quarter, a quarter-on-quarter increase of 982%.

Most of TRON’s DEX trading volume is concentrated on the SUN platform. In June 2023, SUN introduced the centralized liquidity (CL) automated market maker (AMM) to the SunSwap V3 series. During the first quarter of 2024, more than half of the transactions on the SUN platform were processed by the SunSwap V3 AMM for the first time. Although the meme drove the increase in SUN V2’s trading volume, the above trend was not affected in the third quarter, and the trading volume on SUN V3 accounted for 51% of TRON’s total trading volume (average daily trading volume of US$33.3 million).

Stablecoins

The market value of TRON's stablecoins has been climbing steadily over the past year, and the third quarter was no exception. This quarter, the total market value of TRON's stablecoins increased from $58.02 billion to $59.97 billion, a month-on-month increase of 3%. TRON's version of USDT still dominates stablecoins, accounting for 98% of the market value, which is the same as the previous quarter. As of the end of this quarter, the market value of TRON's version of USDT was $58.94 billion, up 3% from $57.06 billion in the previous quarter. In addition, USDT circulating on TRON accounts for approximately 51% of the total circulation of USDT, a decrease of 3% from the previous quarter.

The market capitalization of three other stablecoins on TRON also increased in the third quarter. The market value of TRON's second largest stablecoin USDD rose from US$729.9 million to US$730.6 million, a month-on-month increase of 0.11%. USDD’s market value in the third quarter accounted for 1%, a decrease of 3% from the previous quarter. TUSD's market value increased most significantly, rising from US$89.1 million to US$166.6 million, a month-on-month increase of 87%. USDJ ranked fourth with a market capitalization of $70.7 million, an increase of 4% from $67.8 million in the previous quarter.

Transfer transaction volume is another important indicator for measuring the performance of stablecoins. This indicator counts the total value of all stablecoin transactions on the chain, not just stablecoin transactions processed by DEX smart contracts. In the third quarter, TRON's daily average USDT transfer transaction volume increased from US$13.86 billion to US$14.38 billion, a month-on-month increase of 4%.

Ecological growth

TRON continues to implement strategies to expand its ecosystem. In addition to focusing on stablecoins, it has also launched a $100 million AI development fund and continues to hold TRON hackathon events.

On July 25, the seventh season of the TRON Hackathon was officially launched, with a total prize pool of up to $650,000, including $500,000 in TRX and $150,000 in energy rewards, aiming to attract a large number of developers to join the TRON network. The seventh season has five major tracks: Web3, Artistry, DeFi, Builder, and Integration, encouraging participants to propose diverse blockchain solutions. Sponsors of the hackathon include Google Cloud, BitTorrent File System, Just Ecosystem Dapps, HTX DAO, SUN Ecosystem Dapps, and ApeNFT. The event will not only promote innovation in the TRON ecosystem, but also help discover and cultivate talents, and contribute to the long-term development of TRON.

On September 10, 2024, TRON, in partnership with Tether and TRM Labs, announced the formation of the T 3 Financial Crime Unit (T 3 FCU) to address cryptocurrency-related criminal activity. This inter-company action is intended to address growing concerns about illegal activity involving USDT on the TRON chain. With a market cap of over $118 billion, more than half of USDT in circulation on the TRON chain, strong security measures are urgently needed.

T 3 FCU successfully brought a crackdown on illegal activity detected between July and September 2024. Since its formation in July 2024, the group has frozen more than 12 million USDT fraudulent funds and helped at least 11 victims.

One of TRON's key plans for 2024 is to continue to enter the Bitcoin ecosystem. Justin Sun announced in the first quarter that TRON will launch a Bitcoin Layer 2 solution, aiming to allow the Bitcoin ecosystem to access TRON's stablecoin fund pool (a total of US$59.97 billion as of the end of the third quarter) in a secure manner. TRON's 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's ecological 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

During the third quarter, TRON maintained positive growth in many indicators. Thanks to the deflationary token model and increased network activity, TRX's circulating market value increased by 24% month-on-month, achieving growth for seven consecutive quarters. In addition, this quarter, TRON's average daily transaction volume increased by 14% month-on-month, and the number of daily active addresses increased by 6%. This quarter, TRON's DeFi sector's TVL increased by 4% month-on-month, ranking second in the entire network with $8.09 billion.

This quarter, the launch of SunPump, the first Meme launch platform on TRON, not only promoted a significant increase in DeFi transactions, but also drove DEX trading volume to increase by 150% month-on-month. TRON stablecoins continued their outstanding performance, among which USDT continued to lead, accounting for 98% of the total market value of the network's stablecoins. Through the launch of various projects such as the seventh season of the TRON Hackathon Competition, Bitcoin Layer 2 Solutions, and the T3 Anti-Financial Crime Team, TRON's ecology has also made great progress.

Full report:

https://messari.io/report/state-of-tron-q3-2024