TRX, the native token of the Tron network, experienced a significant 9.5% increase in June compared to its competitors Solana’s SOL and Ether (ETH), which saw declines of 9% and 11% respectively for the same period.
A noteworthy development during TRX’s rise was the transfer of over $21 million worth of TRX to Binance from a wallet associated with Tron founder Justin Sun. This transfer has raised concerns among traders about the sustainability of TRX’s current rally above $0.12.
On June 27, Justin Sun reportedly moved 173.8 million TRX, valued at $21.4 million, to a Binance deposit address. This transfer occurred at a time when Tron’s total value locked (TVL) dropped to a six-month low of $7.5 billion on June 26, indicating that significant investors are withdrawing funds from the ecosystem despite TRX’s price surge.
A concerning fact is that 75% of the network’s total deposits are concentrated in a single decentralized application, JustLend, which experienced a 15% decrease in assets over 30 days. The majority (94%) of JustLend’s deposits are in BTCT, a TRC-20 token claimed to be equivalent to a Bitcoin position.
Furthermore, data from Exponential.fi suggests that the $5.3 billion in BTCT deposits at JustLend yield 0%, indicating that the main beneficiaries of these assets may not be typical users of the JustLend decentralized finance application.
Exponential.fi evaluation of JustLend’s BTC pool highlights concerns regarding significant “collateral risk,” a “reflexive” security mechanism used by TRX, and the “high centralization” of network validators. These risk factors could potentially lead to total investment loss due to issues within the underlying chain.
Despite the lack of direct evidence of misconduct, the discrepancy between the TRX token price trend and the growth of the Tron network is less than desirable. Additionally, none of Tron’s decentralized applications are listed in the global rankings of protocols by fees.
Ethereum remains the dominant player in the ecosystem, with Solana also featuring prominently, hosting applications like Raydium, Jito, and Marinade. While Tron has seen significant volumes in Tether (USDT), it has encountered challenges with other stablecoin providers, including U.S.-based issuer Circle.
Circle discontinued support for its TRC-20 USDC version citing trust, safety, and transparency concerns, while Binance also ended support for USDC on the TRC-20 network. These incidents have contributed to a decline in investor confidence in Tron’s ecosystem, despite TRX’s price remaining relatively stable.
The allegations made by the United States Securities and Exchange Commission (SEC) regarding the sale of unregistered securities through TRX and BitTorrent (BTT) tokens by Justin Sun have further added to uncertainties surrounding TRon’s ecosystem.
Despite TRX outperforming SOL and ETH by almost 20% over 30 days, coupled with indications of potential selling from wallets linked to Sun and declining network TVL, the sustainability of TRX’s support level at $0.12 remains uncertain.
Please note that this article does not offer investment advice or recommendations. All investment and trading decisions involve risks, and readers are advised to conduct their own research before making any investment decisions.