This report recommends Tron (TRX) as a "buy" as of March 21, 2025. Fundamentally, TRX is a beta play on Tether (USDT) and a bet that as USDT volumes continue to grow, the Tron network will retain dominance over its volumes.

TRX's price has held up over a multi-year timeframe compared to to other large-cap tokens with a long history, even outperforming Bitcoin (BTC) in a peak-to-peak comparison relative to previous cycle highs. Additionally, as this data was captured around amidst a market drawdown, it was the only other token outside BTC with a current price above its prior all time high (ATH).

This report attempts to explain TRX’s historical strength and project it into the future. In doing so, it establishes the connection between Tron and Tether and makes the case that the types of transactions most responsible for Tron's historical growth are likely to continue growing themselves. From there, it examines TRX's relationship to transaction volume on Tron. It also defines parameters for monitoring the health of Tron, USDT, and USDT on Tron to actively manage the position, and identifies key risks inherent to the thesis.

Asset Selection Criteria

TRX was selected for initial evaluation by applying filters to tokens that compare their performance across multiple cycles. The universe was a cohort within CoinGecko's top 100 tokens, and the filters are as follows:

1. The token must have been around since at least the 2021 bull cycle

   1. Wanted a token that had performed across multiple cycles to control for recently launched ones that may have just happened to fit neatly into this cycle's meta

   2. Also helps to go against recency bias - there are so many "new shiny things" in crypto that it is easy to forget about established tokens

2. The token must have, in the most recent bull period (defined as Q4 2024), reached an all-time high (ATH)

   1. Higher prices than previous cycles, despite mania of previous cycles, points towards some actual sustained use over time that merits investigating

Current price relative to the prior ATH (i.e. whatever ATH came before Q4 2024) was also recorded. This was a rudimentary way to measure relative strength during downturns

A note on cycles: hard-coded dates reflective of my intuited view of bull periods, largely tied to BTC's price action, were used. Having more quantitative ways to define cycles is an important area of future research.

• First bull period: Oct 2017 - Jan 2018

• Second bull period: Jan 2021 - Sept 2021

• Third bull period: Jan 24 - Mar 24

• Fourth bull period: Oct 24 - Dec 24

After running this analysis, the only tokens that reached ATH during the late '24 run-up and had a higher current price than the previous highs were TRX and BTC. TRX's most recent peak relative to its previous peak also had an even larger difference than BTC. For comparison, TON, SOL, and BSC were the only other tokens with positive values. Additionally, its first peak was in 2017, when many tokens hadn't been launched yet. So for the purposes of this analysis, its long history actually worked against it - if we were only comparing prices from 2021 onward, its current ATH distance from previous ATH would be 150%, and its current price would be 41% higher than previous ATH.

This performance can be intuitively grasped by looking at its price chart, which with the exception of a spike in early 2018 and again in late 2024, is largely characterized by a gradual grind upward over time that consistently settles in at price levels higher than previous cycles.

USDT

You can't tell the story of Tron without telling the story of USDT. This stems from its roots as the intended reserve network for Tether, and is reflected in how the two remain intertwined today. Because of this connection, the growth of USDT can be used as a proxy for the growth of Tron.

Network activity illustrates how deep the relationship is: the USDT contract accounts for 98% of all gas used on the network. In other words, Tether is the usecase for Tron

In turn, Tron is the home of a large proportion of USDT activity, boasting the highest notional volume of transfers relative to other chains:

And the second highest supply of outstanding USDT:

There are two key classes of transactions that constitute a large proportion of this volume: low value transfers and exchange settlements. The remainder of this section will provide evidence that these are significant drivers of Tron usage and why their continued growth can be expected.

It is also important to note that generally Tron is considered the default chain for USDT. The total market cap of stablecoins and total amount of USDT outstanding are both at all time highs, so this default status should mean any USDT growth to directly benefit Tron, even outside the transfer types specified.

Low-value Stablecoin Transfers

Despite huge notional volume of USDT transacting on Tron, the median amount per transaction is around $400 (relevant dune query). For most of the chain's life, it has been even lower than that.

This value profile is consistent with the anecdotes about Tron's main use cases being low-value transfers such as remittances and peer-to-peer (P2P).

And for as many transactions are presently occurring, this class of low-value stablecoin transfers will continue to grow, driven by the facts that:

1. Crypto is a better rail for transmitting value than legacy systems, and

2. USD is a better product for storing value than many nations' currencies

To illustrate these principles, consider two use cases that USDT in particular stands to be a beneficiary of through its strong positioning in non-US countries: remittance and payment for services.

Per the World Bank, in 2024 the average cost of a $200 remittance is 6.62%, or $13.24. In contrast, the average cost to send USDT on Tron in 2024 was $1.05. Remittances globally are also consistently growing. Tether stands to benefit in two ways as the world wakes up to this delta: more remittances proportionally will use crypto, while the absolute global remittance volume grows.

Stablecoins also unlock seamless access to USD's value for people in countries where native currencies are in flux. The ready availability of USDT lowers the barrier to obtaining something that represents USD to nearly zero. With the friction to acquire USD removed, consumers and service providers alike should naturally prefer to hold it over their native currency. And if both parties in a transaction are holding it, using it as a means of exchange is both sensible and convenient. This has played out to a tee in developing markets, with 33%+ of consumers in Latin America reporting that they had made a payment for an everyday purchase with a cryptoasset as of 2022 (!).

The above is predicated on USD remaining the dominant fiat currency, which remains likely. Pulling exchange rate data from 2015, 2020, and 2025 of USD versus 54 other global currencies, 71.7% of them have lost some value relative to USD over the past 10 years. 41.5% have lost more than 25%, and 18.9% lost more than 50%.

Additionally, the current state of the market is such that even if people wanted to send payments using different currencies, they don't really have an option. USD-denominated stablecoins have always dominated, hovering close enough to 100% for all intents and purposes since 2020.

Exchange-Related Flows

In contrast to the median transfer value of USDT on Tron, the average is around $10k. This large difference suggests the presence of another much larger class of transfer, which may be attributable to centralized exchange (CEX) activity.

A DeFi Report study confirmed that from Feb 2023 - Feb 2024, 29% of Tron's USDT transactions involved a CEX, with an average cohort value of $14,372.

Crunching numbers from the above study shows us that in the month of January 2024, CEX's accounted for roughly $205b worth of USDT transfer volume on Tron.

• Calcuation: 73.9 million total transfers, 29% of which were CEX-related, with an average value of $14,372 and multiplying by ~66% to account for the fact that the measurement was roughly 1.5 months from 1/1/24 - 2/13/24.

This means exchange-related flows on Tron would represent about 30.5% of USDT's total volume across all chains ($670b, according to Artemis).

This huge volume can be explained by certain features of the Tron blockchain that make it cheaper to send USDT there compared to Ethereum. Given how much USDT CEXs transact in, cheaper transfers translate to meaningful savings. For these reasons, as long as USDT remains dominant in trading pairs for exchanges, Tron will continue to be the preferred channel for sending it.

1. Gas fees on Tron are universally lower than on Ethereum, so at a baseline transfers are already going to be cheaper.

2. As will be explained more in the "Tokenomics" section, staking TRX enables the staker to make free or discounted transactions. Any exchanges that have meaningful amounts of TRX to stake, either through a direct deal or through rehypothecating user funds, would be able to reduce their fees for outbound transfers to as low as zero.

If exchange volumes begin to drop, it could represent a risk to these types of transactions. However, this graph from The Block illustrates that while exchange volumes are cyclical, they don't appear to be in secular decline.

Tether's Preference for Tron

But why USDT on Tron, versus any other chain? The above insight into CEX preference for using USDT on Tron likely contributes to a self-fulfilling prophecy. They recommend it as the default stablecoin for users, more participants use it, thus making it easier to continue recommending as the default.

Indeed, as recently as 2024, Binance still recommends USDT on Tron:

For beginners unsure of their needs: Start small with USDT-TRC 20 for its ease of use and low transaction costs. You can always switch to USDT-ERC 20 later if needed.

As for how the flywheel got started, the best answer may be the simplest: path dependency. According to a Liam Horne report on USDT:

Binance played a massively important role in Tron’s early success. The exchange was one of the first to ever list Tron’s native token, TRX, which helped boost its credibility. In the early days of Tron’s adoption curve, Binance also facilitated transactions on the network for free!

Additionally, Tron was the default blockchain for depositing and withdrawing Tether on the exchange. Why it did this, and what the business agreements were between Justin Sun and Changpeng Zhao are unclear, but it definitely worked really well.

This could also explain its stickiness as a remittance tool in developing markets like Lebanon, where USDT on Tron has incumbent status.

Monitoring the relationship

At this point in the chain's lifecycle, the origin of the relationship is less important than its continued momentum. To that end, there are a number of metrics that should be used to monitor the ongoing health of USDT and Tron, all of which are currently pointing in a positive direction.

1. The amount of USDT on Tron. As of now, it is steadily increasing. This is the clearest signal of the momentum that the network has in the USDT transfer market.

2. The percentage of USDT on Tron versus across all other chains. This is useful for a wider view on Tron's continued position as the preferred USDT app-chain. It is still relatively high, climbing back up to ~50% dominance after experiencing a drop in late 2024.

3. USDT market share relative to all other stablecoins. As Tron's strength relies on USDT, a drop in USDT's dominance would make TRX relatively less useful. This value also remains high (where the green area is USDT) (source). The graph also looks kind of like a long Pepe.

These are incredibly important metrics to continuously monitor as they collectively represent the health of USDT, USDT on Tron, and by extension, Tron itself. Meaningful decreases in any could represent a serious risk to the continued demand for TRX. However, as long as they remain neutral or better, demand should at least continue with its current pace. This is enough to cause deflation, which is a key driver of price.

Tokenomics

Having established that Tron is the preferred venue for USDT transactions, the next question is how these transfers accrue value to TRX. The answer is through aggressively deflationary tokenomics, which helps push price up by lowering circulating supply.

Aggressive Supply Control

Fundamentally, every single USDT transfer is associated with some amount of TRX being removed from circulation. The end result is an aggressively constrained supply.

Some prerequisite knowledge is that transaction costs on Tron are measured in two different units called "bandwidth" and "energy", dictated by transaction size in bytes and compute costs, respectively. Ultimately, they both have some exchange rate with TRX, making the sum of both the transaction cost. USDT transfers, as smart contract interactions, spend both units.

100% of TRX transaction fees get burned. So a standard USDT transfer (example) would burn Bandwidth consumed * TRX exchange rate + Energy consumed * TRX exchange rate.

The network has been deflationary at a rate of -0.94% per year since 2020, even accounting for nearly two full years of inflation (source).

However, the Tron chain gives users 600 free bandwidth per day (where a USDT transfer costs around 347). Additional bandwidth and energy allocations can be earned by staking TRON, where the daily allowance is proportional to the amount staked. As an illustration, this address has a daily allowance of 99,994 bandwidth and 29,651,886 energy. At average bandwidth and energy exchange rates, it can make 227 covered USDT transfers per day.

In this way sending USDT can be "free" at the point of transfer, but it comes at the cost of locking up TRX and thus removing them from circulating supply.

Of 95 billion tokens, 42.8 billion (45%) are staked.

If Supply Available to Buy = Circulating Supply - Amount Staked, decreasing circulating supply through burns or increasing amount staked should cause price to increase, assuming demand stays relatively constant.

Growth Metrics

Some selected metrics that are the result of TRX usage:

Steady tokenholder growth. This largely mirrors the growth of USDT issued on Tron, which makes sense as TRX is required to transact.

Revenue: annualized 5x better than Ethereum. Another way to read this is "how much TRX is removed from circulation on an annualized basis".

Daily active users only outpaced by Solana and Near. Given the fact that USDT transfers are the main use case, these users also are more likely to be real than bots for airdrop farming. Solana can largely be explained by memecoin mania over previous 12 months at time this snapshot was taken.

Other Tailwinds

The report thus far has been a growth thesis rooted entirely in the expectation that Tron continues to dominate as the preferred chain for USDT. However, expansion strategies to put TRX on BTC L2's and Solana may yet bear out, expanding its utility and potential pool of buyers.

Risks

Concentration Risk³

Tron is inexorably tied to two things:

1. Its founder, Justin Sun and

2. Tether, which in turn poses two unique risks:

   1. USDT volume - whether leaving Tron or losing market dominance

   2. Tail risk that tokens themselves are not sufficiently backed

One top-level mitigant to these risks is that both Justin Sun and Tether have ties to the current US presidential administration. For this reason, it seems unlikely that there would be any major US enforcement action that could be a risk to either in the medium term.

Justin Sun

Justin is a controversial character in crypto, and is often covered in a negative light. Some examples are below:

• Formal SEC complaint in 2023 accusing him of wash trading between 2018 and 2019.

• Allegedly demanding misplaced BTC after Poloniex acquisition

• Alleged media interference after disagreeing with tone of a CoinDesk article

Given Justin's deep association with the protocol, the concern would be the token price itself could be impacted by news related to him. However, this has not borne out in practice. The most serious of the negative news pieces was his SEC suit on March 22 2023. Price dropped from $0.068 to $0.060 on the news, but recovered to $0.066 within a day.

Tether

As the vast majority of activity on Tron is USDT-related, anything that causes Tether volumes to decrease will directly impact demand for TRX. This can be either through other chains gaining relative popularity or anything that decreases overall demand for USDT like being delisted in EU. Metrics to monitor are defined further up in the report and can help frontrun any USDT volume-related change in price.

The greater risk is one that would threaten Tether's entire business, and thus all USDT supply at once. Tether has never published a full audit to confirm the soundness of their reserves, earning themselves a D-grade from a crypto ratings agency and propping up a cottage industry of skeptics. A recent hire has prompted Tether CEO to announce an audit is a "top priority", and proress there should be monitored.

• Despite this, the market has historically remained undeterred. This is partly because Tether has been able to process withdrawals in the past, with Reuters noting "Crypto traders who rely on Tether say they draw confidence from it having previously maintained its peg and processed billions of dollars worth of redemptions during periods of crypto market turbulence, such as in 2022."

• At the risk of sounding overly cynical, if Tether gets wiped out, every token will experience precipitous drops so the risk is not limited to Tron.

Conclusion

For the reasons outlined above, TRX is a "buy" until USDT growth stalls. The demand for USDT on Tron drives TRX deflation, which has helped lead to historical overperformance relative to all assets that have existed since the 2021 bull market, including BTC. Absolute values and rates of change for the health of USDT in general and USDT on Tron specifically are also incredibly easy to quantify, providing a convenient way to continually reassess confidence in the TRX position.