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What Is Tron (TRX)?
Key Takeaways
Tron is an EVM-compatible Layer 1 blockchain that uses the Tron Virtual Machine (TVM) to run smart contracts and decentralized applications (DApps).
The network uses a Delegated Proof of Stake (DPoS) consensus mechanism to enable quick and low-cost transactions.
TRX, the native token of the network, supports transactions, smart contracts, governance, and decentralized finance (DeFi) activities across the Tron ecosystem.
What Is Tron?
Tron is an EVM-compatible Layer 1 blockchain that uses the Tron Virtual Machine (TVM) to power smart contracts and decentralized applications (DApps). Tron was initially launched as a decentralized network for sharing content. Over time, it has developed into a broader ecosystem that includes decentralized finance (DeFi) and stablecoins. The network’s native token, TRX, is used to pay for transaction fees, execute smart contracts, and participate in network governance.
History
Tron was founded by Justin Sun, a Chinese entrepreneur who previously worked with Ripple. In 2017, the Tron Foundation was established in Singapore to guide the project’s development. TRX was first launched as an ERC-20 token on Ethereum during the project’s initial coin offering in August 2017. In 2018, Tron released its own mainnet, and the TRX tokens were migrated to the new blockchain.
Since its launch, the Tron network has processed more than 12 billion transactions. Tron’s global presence has been noted through its selection by the US Department of Commerce to record GDP data on its blockchain.
How Tron Works
Delegated Proof of Stake (DPoS)
The network uses a Delegated Proof of Stake (DPoS) consensus mechanism. In this model, TRX holders stake their tokens to gain voting rights, which are then used to elect 27 Super Representatives (SR). These SRs are responsible for validating transactions, producing blocks, and proposing governance updates. The process is cyclical, with elections held regularly to ensure accountability. In return, both SRs and voters receive TRX rewards as an incentive for participation.
System resources
Tron transactions are powered by three system resources: Bandwidth, Energy, and Voting Rights.
Bandwidth: measures the size of a transaction in bytes.
Energy: measures the computational cost required to execute smart contracts on the network.
Voting Rights: obtained by staking TRX, are used to participate in governance by electing SRs.
If a user lacks sufficient Bandwidth or Energy, they must burn TRX to complete a transaction. This resource allocation model helps regulate network usage and prevents malicious contracts from overconsuming resources.
Tron Virtual Machine (TVM)
Tron supports DApps through the Tron Virtual Machine, which is largely compatible with the Ethereum Virtual Machine (EVM). This compatibility enables developers to migrate Solidity smart contracts to Tron with minimal changes, although recompilation is still required.
Like the EVM, the TVM maintains the blockchain’s state, ensuring consistency across all nodes. The main difference lies in its resource model, where Energy replaces Ethereum’s gas as the unit of computation.
Use Cases
Stablecoins
Tron’s transaction speed and low costs have established it as a popular network for stablecoin activity, particularly for Tether (USDT). In March 2025, the network introduced a feature that allows users to pay transfer fees in USDT instead of TRX. This is enabled through a GasFree wallet, which requires a one-time activation fee of 1 USDT. After this, each transfer incurs a fixed charge of 1 USDT, paid directly in USDT.
It’s worth noting that community governance approved a 60% reduction in energy fees in August 2025, lowering transaction costs across the network. As of August 2025, the network hosts over $78 billion in USDT supply, distributed across millions of accounts, with approximately 2 million transfers taking place daily. This scale has made Tron a central platform for global stablecoin transactions and one of the primary networks for USDT issuance and transfers.
Decentralized finance (DeFi)
Tron has emerged as a prominent platform for DeFi applications. Protocols like JustLend, a lending and borrowing service, and JustStable, a stablecoin platform, are developed on the network. Tron’s low transaction fees make it suitable for stablecoin transfers and yield farming.
Non-fungible tokens (NFTs) and gaming
The network supports the creation and trading of non-fungible tokens (NFTs) using standards similar to Ethereum’s ERC-721. Tron also supports blockchain-based games and digital collectibles.
Criticisms and Controversies
Tron’s governance model, which relies on validators known as Super Representatives, has raised questions about centralization when compared to networks with broader validator participation. The project also faced early allegations of incorporating material from Ethereum and InterPlanetary File System (IPFS) into its whitepaper without proper attribution.
The network’s founder, Justin Sun, has been a prominent and sometimes polarizing figure, noted for his aggressive marketing approach. Despite these criticisms, Tron continues to support a large user base and consistently records high transaction volumes.
In 2025, Tron expanded its Super Representative pool to include new infrastructure providers such as Nansen, Kiln, and P2P.org. This introduced more institutional participants to the network, aiming to enhance operational security and address some of the criticism related to governance.
TRX Token
The TRX token is the native utility token of the Tron ecosystem. It’s used across Tron’s protocols and ecosystem for a variety of purposes, including:
Transaction fees: TRX is required for sending payments and interacting with smart contracts.
Resource allocation: By staking TRX, users obtain Bandwidth and Energy, which are consumed by transactions and smart contract operations in place of direct fee payments.
Governance: TRX holders gain voting rights through staking, allowing them to elect Super Representatives and participate in the decision-making process.
Ecosystem utility: TRX can serve as collateral in DeFi protocols, a medium of exchange in NFT marketplaces, and a settlement asset for stablecoin transfers.
Token supply
TRX operates on a combined model of issuance and burning. New tokens are created at the protocol level through block rewards, with each block currently providing 8 TRX to the producing Super Representative and 128 TRX distributed as voting rewards.
At the same time, TRX is burned when users pay for network resources such as Bandwidth and Energy. This dual-track mechanism balances inflationary issuance with deflationary burning, resulting in a supply model that adapts dynamically to network activity.
Closing Thoughts
Tron has become a major network for stablecoin transfers, with low fees and fast settlement times encouraging broad adoption. Beyond payments, it supports applications in DeFi, NFTs, and gaming. The network’s governance model remains a topic of discussion, reflecting the trade-off blockchains often face between decentralization and efficiency at scale.
Further Reading
Blockchain Layer 1 vs. Layer 2 Scaling Solutions
What Is the GENIUS Act and Why Does It Matter for Stablecoin Users?
What Is the Solana Virtual Machine (SVM)?
Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.
Tron is an EVM-compatible Layer 1 blockchain that uses the Tron Virtual Machine (TVM) to run smart contracts and decentralized applications (DApps).
The network uses a Delegated Proof of Stake (DPoS) consensus mechanism to enable quick and low-cost transactions.
TRX, the native token of the network, supports transactions, smart contracts, governance, and decentralized finance (DeFi) activities across the Tron ecosystem.
What Is Tron?
Tron is an EVM-compatible Layer 1 blockchain that uses the Tron Virtual Machine (TVM) to power smart contracts and decentralized applications (DApps). Tron was initially launched as a decentralized network for sharing content. Over time, it has developed into a broader ecosystem that includes decentralized finance (DeFi) and stablecoins. The network’s native token, TRX, is used to pay for transaction fees, execute smart contracts, and participate in network governance.
History
Tron was founded by Justin Sun, a Chinese entrepreneur who previously worked with Ripple. In 2017, the Tron Foundation was established in Singapore to guide the project’s development. TRX was first launched as an ERC-20 token on Ethereum during the project’s initial coin offering in August 2017. In 2018, Tron released its own mainnet, and the TRX tokens were migrated to the new blockchain.
Since its launch, the Tron network has processed more than 12 billion transactions. Tron’s global presence has been noted through its selection by the US Department of Commerce to record GDP data on its blockchain.
How Tron Works
Delegated Proof of Stake (DPoS)
The network uses a Delegated Proof of Stake (DPoS) consensus mechanism. In this model, TRX holders stake their tokens to gain voting rights, which are then used to elect 27 Super Representatives (SR). These SRs are responsible for validating transactions, producing blocks, and proposing governance updates. The process is cyclical, with elections held regularly to ensure accountability. In return, both SRs and voters receive TRX rewards as an incentive for participation.
System resources
Tron transactions are powered by three system resources: Bandwidth, Energy, and Voting Rights.
Bandwidth: measures the size of a transaction in bytes.
Energy: measures the computational cost required to execute smart contracts on the network.
Voting Rights: obtained by staking TRX, are used to participate in governance by electing SRs.
If a user lacks sufficient Bandwidth or Energy, they must burn TRX to complete a transaction. This resource allocation model helps regulate network usage and prevents malicious contracts from overconsuming resources.
Tron Virtual Machine (TVM)
Tron supports DApps through the Tron Virtual Machine, which is largely compatible with the Ethereum Virtual Machine (EVM). This compatibility enables developers to migrate Solidity smart contracts to Tron with minimal changes, although recompilation is still required.
Like the EVM, the TVM maintains the blockchain’s state, ensuring consistency across all nodes. The main difference lies in its resource model, where Energy replaces Ethereum’s gas as the unit of computation.
Use Cases
Stablecoins
Tron’s transaction speed and low costs have established it as a popular network for stablecoin activity, particularly for Tether (USDT). In March 2025, the network introduced a feature that allows users to pay transfer fees in USDT instead of TRX. This is enabled through a GasFree wallet, which requires a one-time activation fee of 1 USDT. After this, each transfer incurs a fixed charge of 1 USDT, paid directly in USDT.
It’s worth noting that community governance approved a 60% reduction in energy fees in August 2025, lowering transaction costs across the network. As of August 2025, the network hosts over $78 billion in USDT supply, distributed across millions of accounts, with approximately 2 million transfers taking place daily. This scale has made Tron a central platform for global stablecoin transactions and one of the primary networks for USDT issuance and transfers.
Decentralized finance (DeFi)
Tron has emerged as a prominent platform for DeFi applications. Protocols like JustLend, a lending and borrowing service, and JustStable, a stablecoin platform, are developed on the network. Tron’s low transaction fees make it suitable for stablecoin transfers and yield farming.
Non-fungible tokens (NFTs) and gaming
The network supports the creation and trading of non-fungible tokens (NFTs) using standards similar to Ethereum’s ERC-721. Tron also supports blockchain-based games and digital collectibles.
Criticisms and Controversies
Tron’s governance model, which relies on validators known as Super Representatives, has raised questions about centralization when compared to networks with broader validator participation. The project also faced early allegations of incorporating material from Ethereum and InterPlanetary File System (IPFS) into its whitepaper without proper attribution.
The network’s founder, Justin Sun, has been a prominent and sometimes polarizing figure, noted for his aggressive marketing approach. Despite these criticisms, Tron continues to support a large user base and consistently records high transaction volumes.
In 2025, Tron expanded its Super Representative pool to include new infrastructure providers such as Nansen, Kiln, and P2P.org. This introduced more institutional participants to the network, aiming to enhance operational security and address some of the criticism related to governance.
TRX Token
The TRX token is the native utility token of the Tron ecosystem. It’s used across Tron’s protocols and ecosystem for a variety of purposes, including:
Transaction fees: TRX is required for sending payments and interacting with smart contracts.
Resource allocation: By staking TRX, users obtain Bandwidth and Energy, which are consumed by transactions and smart contract operations in place of direct fee payments.
Governance: TRX holders gain voting rights through staking, allowing them to elect Super Representatives and participate in the decision-making process.
Ecosystem utility: TRX can serve as collateral in DeFi protocols, a medium of exchange in NFT marketplaces, and a settlement asset for stablecoin transfers.
Token supply
TRX operates on a combined model of issuance and burning. New tokens are created at the protocol level through block rewards, with each block currently providing 8 TRX to the producing Super Representative and 128 TRX distributed as voting rewards.
At the same time, TRX is burned when users pay for network resources such as Bandwidth and Energy. This dual-track mechanism balances inflationary issuance with deflationary burning, resulting in a supply model that adapts dynamically to network activity.
Closing Thoughts
Tron has become a major network for stablecoin transfers, with low fees and fast settlement times encouraging broad adoption. Beyond payments, it supports applications in DeFi, NFTs, and gaming. The network’s governance model remains a topic of discussion, reflecting the trade-off blockchains often face between decentralization and efficiency at scale.
Further Reading
Blockchain Layer 1 vs. Layer 2 Scaling Solutions
What Is the GENIUS Act and Why Does It Matter for Stablecoin Users?
What Is the Solana Virtual Machine (SVM)?
Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.
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