Hello, Fellow Metrics Enthusiast!

Laura & Sooraj here, your crypto guides!

Firstly, a BIG thank you for sending in your votes!

And now, drumroll, please... Spotlight’s on Tron this week!

It might not be the tech marvel of the decade, but its numbers are making some noise.

Why Tron, you wonder? Because you voted, and we listened!

So, is Tron just a stage for Justin Sun's theatrics, or is there a real, bustling user base behind those impressive transaction numbers?

We’re here to sift through the noise and find out!

Expect an exploration that's way more enlightening than a casual tweet from Mr. Sun.

And hey, don’t go too far!

Next week we’re bringing you the lowdown on Cardano, the second star in our poll results.

Stay tuned, exciting discoveries await!

But now: Let’s explore Tron

What you’ll learn today

• Insight 1: Tron’s -3.5% Token Supply Growth Rate indicates a deflationary trend, potentially impacting token value positively.

• Insight 2: Tron isn't far behind Ethereum  In terms of Annualized Fee Revenue, the second-largest with a commendable $760 million.

• Insight 3: The centralization risks, especially those associated with Justin Sun, the single largest stakeholder in Tron and its infrastructure, introduce a significant layer of regulatory and legal risks

1. Market Overview

Circulating Market Cap

This metric serves as an indicator for evaluating the asset's relative size in the broader cryptocurrency market.

The market cap of Tron has been exhibiting a consistent rise over the past two years, whether you're looking at the 90-day, 180-day, 1-year, or 2-year timeframes.

Current value: $7.8 Billion

90-Day Trend: +13%

To put this in perspective, Tron's circulating market cap is only down by 19% from its all-time high.

This stands in marked contrast to industry heavyweights like Bitcoin and Ethereum, which are down by 50-60% from their peak, or other Layer 1 tokens that have plummeted a staggering 90-95%.

180-Day Trend: +26%

1-Year trend: +38%

2-Year Trend: +22%

Daily Volume

The daily trading volume of a crypto asset indicates both market interest and market liquidity. Higher volume corresponds to lower volatility, and vice versa.

Current value: $184 million

With a daily trading volume of $184 million, Tron is certainly making some noise in the market. It might not be hitting Ethereum's 'rockstar' levels of $4 billion, but hey, it's outpacing Solana's $174 million and Cardano's $100 million.

What Does This Daily Volume and Size of the Market Cap Mean?

So, Tron's market cap has been on a bit of a joyride for the past two years and is currently sitting pretty at $7.8 billion.

It has a decent volume compared to Layer 1 tokens like SOL and ADA.

Not too shabby for a blockchain that's often in the limelight for reasons other than tech.

2. Supply and Demand

Token Inflation Rate

Inflation Rate's Significance

A high rate could dilute the token's worth, turning it into something less exciting. A low rate, however, could drive up both demand and price.

Current value: -3.5% Token Supply Growth

In a landscape where Ethereum shows a modest inflation rate of 0.28%, Tron is indeed an anomaly with its deflationary rate.

This contrasts sharply with SOL's 7.3% and ADA's 2.63% inflation rates.

What does this -3.5% rate mean for a Tron Hodler?

Simply put, the decreasing supply could induce scarcity, theoretically increasing demand and possibly the value of individual tokens, provided other market conditions remain favorable.

Annualized Fee Revenue

Annualized Fee Revenue serves as a gauge of the financial health of a protocol. Elevated revenue figures point to vibrant transactional activity within the network, whereas diminished numbers could hint at waning user engagement

Current value: $760 Million

In terms of Annualized Fee Revenue, Ethereum leads the pack with a monumental $2 billion. Tron isn't far behind, the second-largest with a commendable $760 million.

Since TRON burns 100% of its transaction fees from the network's circulating supply, it increases scarcity. This creates value for all tokenholders rather than compounding the balances of validators and delegators. Since the burned transaction fees represent revenue, growth or declines in revenue generation influence TRX's market value either upwards or downwards.

Solana and Cardano are more distant competitors, registering at $14.22 million and $2.8 million, respectively.

Supply/Demand (S/D) ratio

The S/D ratio measures the network's financial balance. A ratio close to 1 indicates fee revenue and reward payouts are nearly equal. A ratio below 1 implies more rewards are paid out than fees earned, potentially questioning the token's long-term value if sustained.

Current value:

▪️Annual Fee Revenue: $760 million

▪️Rewards Per Year: $126 million

▪️Ratio: 6.03

With an S/D ratio of around 6.03, Tron is showing that it's more than capable of covering its bills. An S/D ratio of 6.03 indicates that Tron's annual fee revenue is approximately 6 times greater than its reward payouts.

Valuation to Demand (V/D) Ratio

Here we are looking at the valuation-to-demand ratio. So what does it mean?

All L1 token prices are based on optimism about the level of adoption achievable by the network in the future.

The market cap of L1 tokens in dollar terms suggests the speculative price people are willing to pay for future adoption.

However, the transaction fees paid in the last 365 days in dollar terms suggest the actual demand for the L1 network.

So let's take a look at how many times these networks are valued today compared to the transaction fees paid in the last 365 days.

Annualized Fee Revenue: 760 million USD

Current Market Cap: 7.58 billion USD

The total market cap of Tron Token (TRX) is being valued at approximately 9.97 times the total fees paid in the last 365 days.

To give you some context

Ethereum is valued at 95.74 times the total fees paid in the last 365 days.

Solana is valued at 554 times the total fees paid in the last 365 days.

MultiversX is valued at 1433 times the total fees paid in the last 365 days.

Cardano is valued at 3082 times the total fees paid in the last 365 days.

Thus, among the given examples, Tron has the lowest valuation when compared to its annualized fee revenue.

In this context, the lower M/D ratio could be interpreted in two ways:

Undervaluation: TRX could be undervalued compared to its actual utility, presenting a potential investment opportunity.

Lower Speculation: It may also imply that there's less speculative activity around TRX, which could be seen as a negative.

Why?

When it comes to valuation, Crypto is a space where speculation triumphs over actual utilization. So lower speculation in this context means, a high risk perceived in investing in TRX token—more on that in the risk section.

🗳️ What's Next? Your Vote Counts!

3. Security & Participation: Key Staking Metrics

Staking Ratio

Staking ratio can provide insights into the level of network participation among token holders, as well as the overall health and security of the network.

Current value: Tron Staking Ratio: 48.23%

90-Day Trend: +7.05%

When compared to Ethereum's 20.51%, Cardano's 62.41%, and Solana's 71.19%, the staking ratio of Tron looks modest, but not too bad.

Staking Market Cap

The staking market cap reflects the total value of staked tokens and indicates network security and participant commitment. A high staking market cap suggests a more secure and stable network.

Current value: $ 3.67 Billion

With a Staking Market Cap of $3.67 billion, Tron is in the top 10 staked assets by staking market cap

90 Day Trend: +29.7%

The growth of +29% over the past 3 months in Tron's Staking Market Cap is mainly due to the price appreciation of TRX as well as the increase in staking Ratio.

Staking Wallets

The number of Staking Wallets is more than a count; it indicates network participation and decentralization. A higher number suggests an active, engaged community, while a lower number might indicate centralized control or lesser community involvement.

Current value: 368,840 Staking Wallets 

This number puts Tron in the range of projects like Solana.

In comparison, Ethereum has a significantly higher number of staking wallets at 781,320 and Cardano around 1.3 million.

90-Day Trend: +5.97%

What do these Key Staking Metrics mean for a Tron Hodler?

A high staking market cap and staking ratio indicate robust network security and strong community participation. However, compared to Ethereum and Cardano, Solana has fewer staking wallets, suggesting room for growth.

4. Reward Metrics

Reward Rate

It is the current annualized average reward rate across the network. This is the rate at which stakers can earn rewards for participating in network consensus and/or governance.

Current value: Tron’s current reward rate is approximately 3,5%.

What This Means for TRX Stakers: A 3% reward rate is moderate, offering a steady, albeit not spectacular, the incentive for stakers to participate in the network.

Reward Stability

This is computed by comparing the realized reward rate over the last 365 days to the expected reward rate 365 days ago.

This metric tries to give you an indication of how reliable the expected reward rate for this asset is.

Current value: 100%

According to stakingrewards.com Tron’s reward stability is relatively high, with minor fluctuations observed over the past 30-90 days.

Remember: this metric may not be that accurate as it is currently in beta, and continuously being worked and improved upon to better the scoring framework.

What This Means for TRX Stakers: High reward stability means that TRX stakers can have confidence in the consistency of their staking returns over time.

Real Reward Rate

It is the nominal reward rate of the network adjusted for inflation. This metric can provide insights into the actual, inflation-adjusted return that stakers or delegators can expect to receive for participating in the network, and can help the stakers understand the potential long-term value of their token holdings.

Why does it matter?

The real reward rate adjusts the nominal rate for inflation, providing insights into the actual value stakers receive.

Current value: 8.73% with an absolute change of -0.49% over the last 30 days and 6.83% over the last 90 days.

What does it mean for a TRX staker: Positive real returns mean that the value of stakers’ holdings is increasing, not just nominally but also in real terms, enhancing the long-term value of their assets.

5. Risk

Hypercentralization

Due to hypercentralization, Tron has exponentially more risks compared to other L1s.

A. Founder

Justin Sun is a controversial figure, and his influence and money play a significant role in propping up Tron, but they also serve as a significant liability for Tron as a platform.

• Justin Sun's Control: His substantial TRX ownership and sway over Tron's infrastructure amplify ethical, legal, and governance risks, undermining the platform's credibility.

• Acquisitions: Tron's purchases, like Steemit, spark intellectual property issues and fuel debates on centralization, fracturing the community.

• Regulatory Action: The SEC's legal action against Justin Sun for unauthorized issuance of TRX and BTT escalates legal risks and governance concerns.

• Market Manipulation: SEC accusations of artificially inflating TRX trading volume via wash trading introduce market integrity concerns.

• Covert Endorsements: Undisclosed celebrity compensations for promoting TRX and BTT indicate transparency issues in promotional activities.

B. Initial Token Distribution

Tron has a highly centralized token distribution, and governance is heavily centralized around Justin Sun and the Tron Foundation.

C. Block production and Governance

Tron's PoS algorithm employs a select group of Super Representatives for transaction validation. The influence of a small number of actors with significant holdings, especially considering its very centralized token distribution, leads to centralization of the blockchain.

D. On-Chain Activity

The majority of Tron's on-chain activity is centered around a few applications such as JustLend, JustStables, SUN, and JustMoney. Upon further investigation, there is no information available about the teams behind these protocols. This absence of information raises questions about whether these are protocols supported by the Tron Foundation or entities related to Justin Sun. There is not much information available to the public to verify these connections.

Fully Diluted Market Cap

The Fully Diluted Market Cap (FDV) indicates potential value dilution. If any tokens are set to enter circulation, this could exert downward pressure on the asset's price.

Current value: $7.8bn

Tron’s Fully Diluted Market Cap is relatively close to its current market cap, indicating limited dilution risk.

Slashing

Current Status: Tron does not have slashing conditions, providing a risk-free environment for stakers.

Upcoming Unlocks

Upcoming unlocks can influence the token’s price as large amounts of tokens might enter the market.

Based on our research, there is no clear information on upcoming token unlocks in the Tron network.

6. Conclusion: Narrative vs. Metrics

🧰 Your Toolbox - to boost your token metrics research

• Tronscan.org: Primary block explorer for Tron, essential for transaction and block activity insights.

• Stakingrewards.com - Continues to be a valuable resource for staking metrics, including EGLD's staking ratio and reward rates.

• Messari.io - Known for its quality research, Messari offers in-depth analysis and metrics on EGLD among other assets.#

• Tokenmetrics.com - One of the best sources of reliable on-chain metrics.

• Remember: Cross-verify information, understand each metric, and stay updated with reliable sources. Especially researching outside the network’s databases to verify the numbers.

After all this research we went out for some fun.

Under a late September sky with friends (shh, they don't know they're online!), we shared laughs and insights.

much like we do with you each week on token metrics.

Ready for another round of clarity next week? We are!

See you next week,

Laura & Sooraj

#FollowTheMetricsNotTheHype