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Hype Asset of the Day | May 9, 2022


Officially launched in 2017, Tron (TRX) is a cryptocurrency designed to facilitate speedy, low-cost transactions through its innovative Tron blockchain. Similar to Ethereum, users of the Tron blockchain are able to build decentralized applications (dApps), creating a bustling ecosystem within the Tron network. Because Tron transactions are far faster, cheaper, and more energy-efficient, it’s been a big hit with anyone looking for a cheaper alternative to Ethereum. Recently, mentions of Tron have been up by a massive 328.57% over the past day, likely as a result of anticipation surrounding the release of its stablecoin; USDD. Currently, TRX is trading for $0.081, up around 5.9% YTD, a stark contrast to the current performance of the vast majority of larger-cap cryptocurrencies. This relative stability in the face of economic turmoil has led investors all over the globe to ask ‘Is Tron a good investment’, so to help answer this query we’ve reviewed the main positives and negatives of buying TRX, enjoy!

Is Tron A Good Investment - Positives

With TRX performing well compared to the rest of the market, it’s no wonder so many investors are wondering whether it's a worthwhile addition to their portfolios. Here are a few of the most compelling arguments for Tron.

  • The primary reason for Tron’s meteoric rise in mentions is its newly released stablecoin, USDD. If you’ve been following crypto news over the past few months you might’ve heard about USDT having liquidity issues and not having ample amounts of USD in its reserves, now Terra’s UST has also suffered as it briefly became unpegged from the dollar, dropping 10% before assets were sold to re-reg UST to the Dollar. Because of these issues, Tron’s USDD has become even more crucial to the success of the crypto market and will likely take large amounts of customers away from USDT & UST.

  • One of the main reasons investors are flocking to the USDD stablecoin is its algorithmic balancing system. If the price of USDD drops below $1, people can trade 1 USDD for $1 worth of TRX. Alternatively, if USDD rose above $1, traders can exchange $1 worth of TRX for 1 USDD, in theory keeping USDD pegged to USD at a 1:1 ratio.

  • Another way Tron is aiming to take market share from Terra is by offering a 50% increased interest rate. While Terra currently boasts a 20% APY, Tron is offering its users 30%.

  • While investors were wary of Tron due to it not being fully decentralized, things have changed. In December 2021, Tron completed its decentralization process and now acts solely as a community governed DAO (decentralized autonomous organization).

  • To ensure Tron can pay out the 30% rewards it offered and so the USDD token is able to maintain a $1 value during times of uncertainty, Tron is attempting to raise $10 billion for the TronDAO reserve. If a stablecoin becomes unpegged from the dollar, it’s a terrible sign. Therefore, this reserve could be crucial for maintaining the peg & building up USDD’s user base.

Is Tron A Good Investment - Negatives

No investment is free from negatives. To ensure our readers understand the risks involved with buying TRX, we’ve included a couple of the primary arguments against Tron.

  • Several prominent crypto analysts have raised concerns that Tron’s USDD is essentially a copy of Terra’s UST. While this is true in terms of how price is maintained, there are also plenty of differences, like the size of the reserve pool ($2.26 vs $10 billion).

  • While Tron is offering users an impressive 30% interest for holding USDD, this number will be hard to maintain. While it will certainly attract users to the Tron ecosystem, a 30% interest rate cannot be marinated solely by lending, meaning Tron will have to eat into its reserves to continue paying out rewards at the same rate.

Hype Asset of the Day - Conclusion

Overall, Tron is an exciting cryptocurrency that’s managed to remain fairly strong despite widespread economic turmoil. With Terra’s UST becoming unpegged from the dollar last night (08/05/22), the release of Tron’s USDD couldn’t have come at a better time. As long as nothing goes awry for Tron, it’s likely we’ll see a subtle TRX price increase as users slowly flow into Tron’s ecosystem. If you’re interested in receiving more trending cryptocurrency and stocks direct to your inbox, you might want to check out our premium plans. However, if you’re still unsure about the services offered by HypeIndex, head over to our FAQ page.

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