This unheralded crypto outperformed the competition in 2022 and looks poised for a strong 2023.

Throne (TRX -0.82%) it may never have generated the same hype as some of the more touted cryptocurrencies during the crypto market. But that’s not necessarily a bad thing, and it hasn’t stopped Tron from outperforming them by a wide margin in 2022, with a loss of 28% year-to-date, in contrast to losses of around 90% for competing Layer 1 blockchains such as Saltworks (CRYPTO: SOL) and Avalanche (CRYPTO: AVAX).

Tron even outperformed the top two cryptocurrencies, Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), which have fallen by 65% ​​and 68% to date. Here’s why Tron is one of the most resilient blockchains and why it should perform well in 2023.

Different currency symbols in orbit above the city skyline, representing stable money payments.

Image source: Getty Images.

What is Tron?

Tron is an open source smart contract platform that allows users to create and deploy decentralized applications, just like Ethereum. Like Ethereum, Tron is a proof-of-stake layer 1 blockchain. At one point, Tron was actually an ERC-20 token before migrating to its own blockchain in 2017. The Tron mainnet was launched in 2018. As of 2018, the Tron network has processed transactions in worth over 6 trillion dollars. Tron currently has a market capitalization of just over $5 billion.

With more than $4 billion in total locked value (TVL), Tron has surpassed all other blockchains in total locked value except for the much larger Ethereum. Total value locked is a measure of the value of all assets locked or committed to smart contract platforms such as Tron or Ethereum. This combined value of $4 billion surpasses Solana and Avalanche, who now have a combined value of $215 million and $780 million, respectively. Valuing cryptocurrencies is sometimes more of an art than a science at this point, but investors can take the total value locked into a platform and divide it by the coin’s market cap to get an idea of ​​whether a crypto asset is undervalued or overvalued. Dividing the market capitalization by the total locked-in value gives you a number similar to calculating the price-to-book value of a traditional stock. Based on this metric, Tron has a market cap to TVL ratio of around 1.2, which looks particularly attractive compared to the current market cap ratios of Ethereum (6.3X), Solana (19X), and Avalanche (4.6X).

What is Tron’s killer app?

Crypto skeptics will often say that this is all well and good, but what is the “killer app”? Why will people eventually want to use this cryptocurrency? And what makes it stand out? In many cases they are right. In a saturated market with thousands and thousands of tokens, many cryptocurrency projects are more of a white paper and token in search of a user base or a problem to solve rather than an asset with real world use.

However, this is not the case with Tron. Much of Tron’s appeal lies in its speed and very low transaction fees. The TRON network can process 2000 transactions per second and fees can be as low as $0.000005. While many blockchains boast high performance, this combination has made Tron an attractive blockchain for users around the world, especially in emerging markets. Tron stands out because a lot of people use Tron; there are 131 million Tron accounts. To date, the Tron network has processed 4.5 billion transactions, and more than $6.3 trillion in value has been transferred through Tron.

Because it is so cheap to send assets using the Tron blockchain, Tron is an attractive blockchain for users around the world who want to transact in dollar-denominated stablecoins such as Chain (USDT -0.25%) and USDC (CRYPTO: USDC). At the time of writing, over $16.3 billion worth of Tether has been transferred through the Tron network in the last 24 hours. While USDC, the second largest stablecoin, is not as popular on Tron, more than $1.5 billion worth of USDC was transferred to Tron in the last 24 hours.

At the time of writing, Tether’s market cap on Tron is around $31 billion, making it the top blockchain for Tether, surpassing even the much larger Ethereum, which has a Tether market cap of around $28 billion. In countries like China, where exchanging local currency for cryptocurrency has occasionally been banned, Tether gives people access to cryptocurrency and an exit from local currency. In many countries, Tether has become a viable substitute for the US dollar for people seeking exposure to the US dollar (to mitigate the volatility of their local currency or make cross-border payments), and Tron is often an integral part of this process. In developing countries where applications like Paypal (NASDAQ: PYPL) or Apple (NASDAQ: AAPL) Payment is not available (many countries in Africa, Asia, Middle East and Latin America), sending and receiving Tether on Tron is a viable alternative to sending and receiving payments in dollars.

Looking ahead

Tron has been around for a long time (by crypto standards) and survived the crypto winter before that, and there’s something to be said for that. With a large, global user base and a compelling use case (sending stablecoins around the world quickly and cheaply), Tron is a good bet to continue to churn and surpass many of its more glamorous rivals in 2023. As Tron continues to gain traction in terms of adoption and usage, it seems like a good cryptocurrency to have exposure to and worth allocating within a crypto portfolio.

Michael Byrne has positions in Bitcoin, Ethereum and Solana. The Motley Fool has positions in and recommends Apple, Avalanche, Bitcoin, Ethereum, PayPal and Solana. The Motley Fool recommends the following options: long $120 March 2023 Apple calls and short $130 March 2023 Apple calls. The Motley Fool has a disclosure policy.

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