Summary of key points
During the second quarter, many indicators of TRON maintained positive growth, including a 1% increase in market value, a 29% increase in the average daily number of transactions, a 31% increase in the average daily number of active addresses, and a 9% increase in the market value of stablecoins.
Although TRON's US dollar revenue fell slightly in the second quarter (down 8% quarter-on-quarter), it still recorded US$117.5 million overall, second only to Ethereum and Solana.
In terms of US dollars, the total value of TRX staked in the second quarter increased by 3% month-on-month to $5.8 billion. As of the end of the second quarter, the value of staked assets on the TRON chain ranked eighth in the entire network.
As of the end of the second quarter, the market value of TRON’s USDT reached $57.1 billion, a 10% increase from the previous quarter’s $52.1 billion. Nearly 53% of the USDT in the market is circulating on the TRON network.
The winners of the sixth season of the TRON Hackathon were announced in June. The competition had five tracks, including Web3, Artistry, DeFi, Builder and Integration, attracting more than 1,000 contestants. The total prize money of the event was as high as $650,000, of which $500,000 was TRX rewards and $150,000 was energy rewards.
TRON Introduction
TRON is a public open source blockchain network that uses the Delegated Proof of Stake (DPoS) mechanism, and uses an election mechanism to determine who will maintain the network. TRX staking users vote on the chain for their favorite super representative candidates. Elections are held every 6 hours, and the top 27 candidates with the highest number of votes in each round will become super representatives and take turns producing blocks. The TRON Virtual Machine (TVM) empowers applications on its network, using an "energy + bandwidth" model rather than the gas fees 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, and 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.
Core Data
Financial Overview
Market Cap and Revenue
TRX's circulating market value further increased in the second quarter, achieving six consecutive quarters of growth. As of the end of the second quarter, TRX's market value increased from $10.8 billion in the previous quarter to $10.9 billion, a month-on-month increase of 1%. In addition, TRX's market value ranking among all tokens (excluding stablecoins) rose by 4 places, from 14th to 10th, overtaking other high-market-cap tokens. So far this year, TRX's circulating market value has increased by 14%. Due to the deflationary nature of TRX, the reduction in market circulation has also pushed up the price of the token.
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 USD revenue in the first quarter, TRON’s revenue fell slightly in the second quarter, from $128.1 million to $117.5 million, a decrease of 8%. Revenue denominated in TRX fell to $1 billion, a decrease of 5% from the previous quarter. Among all smart contract platforms, TRON’s revenue ranked third in the second quarter, second only to Ethereum ($490.7 million) and Solana ($150.9 million).
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 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. TRX's circulation decreased from 88.2 billion to 87.7 billion in the second quarter. After annualization, TRX's annual inflation rate is -2.4%, and the annualized inflation rate this quarter increased by 8% from the previous quarter (-2.6% in the previous 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 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.
Network Overview
Usage
Looking at the usage of all smart contract platforms in the second quarter, TRON is one of the few platforms that has seen an increase in on-chain activity (including indicators such as the number of transactions, the number of active addresses, and the number of new addresses). Among them, the platform's average daily transaction volume increased from 4.8 million to 6.3 million (a month-on-month increase of 29%), and hit a new high this year in June, reaching 202.6 million transactions. The average daily number of active addresses increased from 1.5 million to 2 million, a month-on-month increase of 31%.
The average daily number of new addresses of TRON increased from 177,200 in the previous quarter to 198,000, up 12% from the previous quarter, achieving three consecutive quarters of growth. About 10% of the active addresses in the second quarter were new addresses, down 17% from the previous quarter. So far this year, about 11% of all active addresses are new addresses.
The main transactions on the TRON network are still wallet transfers and stablecoin transactions, accounting for more than 78% of the total number of transactions in the second quarter. In addition, the average daily number of transactions in both categories has increased compared with the previous quarter. Wallet transfers increased by 46% month-on-month to 2.8 million transactions; the average daily transfer of stablecoins also increased by 12% month-on-month to 2 million transactions. The average daily number of transactions in the "other" category increased the most quarter-on-quarter, increasing by 50% to 1.3 million transactions. "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, and the second quarter was no exception: an average of 1.4 million addresses performed a wallet transfer every day (a month-on-month increase of 42%), accounting for 58% of daily active address activities. In terms of stablecoin transfers, an average of 630,300 addresses performed stablecoin transactions every day (a month-on-month increase of 13%), accounting for 28% of daily active address activities. In addition to the above two items, other activities performed by daily active addresses showed a month-on-month decline.
Decentralized security
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 secure the network could be questionable as there are certain centralization risks, with 27 (up from 412 in Q1 2024) receiving votes. Increased candidate diversity can help mitigate centralization issues, promote a more distributed governance model, and enhance the resilience and security of the network. A growing number of Super Representative candidates should require the voting population to allocate their votes to new candidates. Additionally, no single entity received more than 10% of the votes. The entity with the most votes was Binance, which received 3.7 billion of the 44.5 billion votes (8.4% of all votes) in the recent election. Additionally, Google Cloud joined the ranks of Super Representative candidates in May. As of the time of writing, it ranks 23rd among all single entities in terms of votes received (1.2 billion).
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 over-concentration of nodes. 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 second quarter, the TRON network had 7,474 nodes in 76 regions around the world, with the largest number of nodes in Europe, accounting for about 45% of the total.
Currently, users can stake TRX on the TRON network through Stake 2.0. Stake 2.0 (TIP-467), a new staking mechanism launched in April 2023, 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 newly staked TRX are staked through Stake 2.0, but any TRX previously staked through Stake 1.0 will still be valid.
The staking rate, or the percentage of the total TRX supply that is staked, remained largely unchanged across both staking options, rising slightly to 53% in Q2. Additionally, more users continued to switch to Stake 2.0 over 1.0 during Q1. At the end of the quarter, Stake 2.0 had 15.8 billion TRX staked (up 6% month-over-month), while Stake 1.0 had 30.5 billion TRX staked (down 1% month-over-month). All told, staked TRX stood at 46.2 billion TRX at the end of Q2, up 1% month-over-month. But in USD terms, total staked grew 3% month-over-month, from $5.6 billion to $5.8 billion. Compared to other PoS networks, TRON ranked eighth in terms of staked funds in USD value at the end of Q2.
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 30.8 billion TRX ($3.8 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 pledge 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 number of TRX staked to obtain energy / the total number of TRX staked to obtain energy in the entire network * 90,000,000,000)
In the second quarter, the vast majority of TRX staked by users was used to obtain bandwidth, and the staked amount decreased from 38.9 billion to 38.6 billion, a decrease of 1% month-on-month. In terms of energy stake, the total amount of TRX staked increased from 6.7 billion to 7.6 billion, a 14% increase month-on-month. The number of stakes corresponding to each type of resource is related to its consumption trend. Daily bandwidth consumption increased from 1.4 billion to 1.8 billion, a 9% increase month-on-month; daily energy consumption increased from 77 billion to 84 billion, a 9% increase month-on-month.
Development progress
TRON released two major updates in the second quarter:
· On April 3, 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 it reconstructs Gradle dependencies, deletes duplicate statements, and makes module dependencies more concise and clear. In addition, this upgrade also aims to enhance the stability of network consensus and throughput performance, and especially improves the network's transaction processing speed (TPS) by optimizing proposal TIP-635 to increase the withdrawal speed of voting rewards.
· On June 15, TRON mainnet was upgraded to GreatVoyage-V4.7.5 (Cleobulus), which is a mandatory upgrade. The new version adjusts the energy cost of the SUICIDE and VOTEWITNESS opcodes in TVM. At the same time, the check logic of block messages has been improved, and the check is more stringent, limiting the size of account opening transactions to within 1000 bytes. This upgrade also adjusted the transaction size check logic to control the transaction size (including Result) within 500 kb and ensure the size consistency of Result and Contract in the transaction. There are several other improvements: fixed the race condition of fetchBlockInfo and syncBlockToFetch; optimized the block production logic by checking the miner status after obtaining the block lock; deleted redundant code; replaced cleanUp() in the cache with invalidateAll() to delete all entries.
Ecosystem Overview
DeFi
TRON’s total value locked (TVL) declined in Q2, from $10.1 billion to $7.8 billion, a 23% decrease from the previous quarter. Despite this, TRON remains the second-highest TVL network, nearly $2.3 billion ahead of third-place BNB Smart Chain, which now has a TVL of $5.5 billion. Denominated in TRX, TRON’s TVL fell 24% quarter-over-quarter, from $82.2 billion to $62.6 billion, indicating that outflows led to a decrease in TVL in USD terms.
The top three TVL protocols on TRON are JustLend DAO, JustStable, and SUN. This quarter, the TVL of the JustLend DAO protocol decreased by 26% (a decrease of US$2 billion) from the previous quarter, from US$7.8 billion to US$5.8 billion; the decrease was driven by a decrease in borrowing, accounting for US$34.3 million, accounting for 2% of the total quarterly decline. Since BTC accounts for more than 90% of the TVL of the JustLend DAO protocol, the decline in BTC prices is the dominant factor in the reduction of the protocol's TVL. As of the end of the second quarter, JustLend DAO's TVL accounted for 74% of TRON's total, a decrease of 3% from the previous quarter.
JustStable’s TVL increased by 2% quarter-on-quarter in the second quarter to $1.45 billion. In addition, the amount of TRX staked on JustStable was 11.6 billion TRX, which remained the same as the previous quarter.
SUN’s TVL fell slightly in Q2, from $583.7 million to $542.4 million, a quarterly decline of 7%. At the end of Q2, V1’s TVL was $289.7 million (53%), V2’s was $126.9 million (23%), and V3’s was $108.1 million (20%). In addition, SUN’s TVL dominance increased to 7% (a quarterly increase of 20%). Overall, JustLendDAO, JustStable, and SUN’s TVL account for 99% of DeFi TVL on TRON.
BounceBit, a Bitcoin re-staking project, launched a mining project (Points Paradise) on multiple chains in Q1. By the end of the first quarter, the project had received $314.6 million in deposits on TRON.
During the first quarter, TRON's decentralized exchange (DEX) trading volume hit a record high in recent years due to the meme coin craze and the return of the bull market. The average daily DEX trading volume in the second quarter decreased slightly from the previous quarter, from $27.2 million to $26.4 million, a decrease of 3% month-on-month. Despite the decline from the previous quarter, the overall trend of TRON's DEX activity remains strong: this quarter, TRON's average daily DEX trading volume far exceeded the $11.5 million in the second quarter of 2023, an increase of 128% year-on-year.
Almost all 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. The second quarter continued this trend, with SunSwap V3’s trading volume reaching $2 billion, accounting for about 67% of TRON’s total DEX trading volume in the second quarter (or $2.4 billion).
Stablecoins
TRON’s stablecoin continued its strong performance in Q2, with market cap increasing 9% quarter-over-quarter, from $53.1 billion to $58 billion. USDT remains the dominant stablecoin with a 98% market share, unchanged from the previous quarter. At the end of Q2, TRON’s USDT market cap was $57.1 billion, up 9% from $52.1 billion in the previous quarter. In addition, TRON owns approximately 53% of the total USDT in circulation, unchanged from the previous quarter.
The market value of TRON and TRON’s other two stablecoins also increased this quarter. The market value of TRON's second largest stablecoin, USDD, increased by 1% quarter-on-quarter, rising from US$725.9 million to US$729.9 million. USDD’s market share this quarter was 1%, a decrease of 8% compared to the previous quarter. The quarter-on-quarter growth in market value of TUSD was the most significant, rising from $69.3 million to $89.1 million, an increase of 29%.
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 second quarter, which attracted more than 1,000 participants and a total prize pool of $650,000, of which $500,000 in TRX and $150,000 in energy were awarded to winning teams in five different tracks, including Web3, Artistry, DeFi, Builder, and Integration. Top sponsors for the sixth season include Ankr, ChainGPT, and AITECH.
The winning projects selected by the community forum are:
· BlinkAI-Web3
· Unclaimed-Artistry
· HandShake-DeFi
· Block Fabric-Builder
· JustMoney Explorer-Integration
The winning projects selected by the community forum are:
· SaveWallet-Web3
· Unclaimed-Artistry
· TRON Energize-DeFi
· JustMoney Swap-Builder
· JustMoney Exchange-Integration
Other ecosystem developments in Q2 include:
On May 24, the cross-chain protocol LayerZero was officially launched, connecting TRON with 65 blockchain networks.
On May 29, TRON announced a partnership with leading crypto security company Fears Off. The partnership aims to strengthen the security of TRON and its ecosystem.
On June 5, TRON partnered with DLive and APENFT to create Streamer Academy, a platform that provides support for streaming.
TRON's key plan for 2024 is to continue to enter the Bitcoin ecosystem. In the first quarter, Justin Sun announced that TRON will launch a Bitcoin layer 2 solution, aiming to connect the Bitcoin ecosystem to the TRON ecosystem's $58 billion stablecoin fund pool in a secure way (data at the end of the second quarter). TRON's Bitcoin layer 2 solution and roadmap include 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 the 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
In the second quarter of 2024, TRON has made significant progress, but it also faces some challenges. Despite declines in USD revenue and total locked value (TVL), TRON’s circulating market capitalization has grown for six consecutive quarters. Key upgrades such as GreatVoyage-V4.7.4 and V4.7.5 improve network stability and performance. Network activity was strong, with significant increases in daily transaction volume, active addresses, and new addresses. Wallet transfers and stablecoin transactions still dominate, demonstrating the strong vitality and sustainable development potential of the TRON network.
Through the TRON Hackathon Season 6, the TRON DAO Fund project, and the new partnership with LayerZero, TRON has further expanded its ecosystem and capabilities. In the future, TRON will enhance cross-chain capabilities and DeFi opportunities by integrating with Bitcoin's second-layer solutions and leveraging its stablecoin funding pool. With these developments, TRON is expected to continue its growth and resilience in the crypto space.
Full report:
https://messari.io/report/state-of-tron-q2-2024
