Tron Network Deposit Drops To 6-Month Low With TRX Price Rallies – Trouble in Paradise?
TRX ( TRX ), a native of the Tron network, posted a 9.5% month-over-month gain in June, falling behind competitors Solana ( SOL ) and Ether ( ETH ) by 9 percent and 11 percent, respectively. At the same time.
Interestingly, TRX's growth coincided with a wallet linked to Justin Sun, the founder of Tron, who transferred more than $21 million worth of TRX to Binance. Traders are now questioning how sustainable TRX's rally above $0.12 is.
Justin Sun sent TRX to Binance on June 27th.
According to information from Arkham Intelligence, on June 27, Justin Sun moved 173.8 million TRX, worth $21.4 million, to a Binance deposit address. On June 26, Tron's total value locked (TVL) fell to a six-month low of $7.5 billion, according to Defillama, suggesting that major investors are pulling money from the ecosystem despite TRX's rise.
The shocking fact is that 75% of the network's total deposits are concentrated in one decentralized application, JustLend, which has shown a 15% reduction in assets within 30 days. A closer look raises concerns about the sustainability of Tron's ecosystem, especially since a staggering 94% of JustLend deposits are in BTCT, the TRC-20 token said to be the equivalent of Bitcoin (BTC) space.
Additionally, data from Exponential.fi suggests that the USD 5.3 billion in BTCT deposits in JustLend will yield 0%, suggesting that the primary beneficiary of these assets may not be the users of JustLend's decentralized finance app, but rather indirect profit.
Exponential.fi assessed that JustLend's BTC pool has weak fundamentals, in addition to the “high centralization” of network validators, the “flexible” security mechanism TRX uses to reduce the volatility of other digital assets. Their risk summary warns of potential total investment losses due to “difficulties in the downstream chain”.
While there is no direct evidence of it happening, the inconsistency of the TRX token price trend with the growth of the Tron network is less than ideal, especially since none of the DApps are listed as paid by international protocol standards.
As Ethereum remains the absolute leader in the ecosystem, Solana stands out, featuring apps like Radium, Gito, and Marinade. Although Tron has seen multibillion-dollar volumes in USD Tether (USDT), it has faced challenges with other stablecoin providers, including US-based Issuing Circle.
End-to-end support for USDC and Binance on the Tron network
In the year On February 20, Circle, the second largest stablecoin issuer, USD Coin (USDC), ended support for its TRC-20 issue, citing trust, security and transparency concerns. In the year In November 2023, the non-profit group “Campaign for Accountability” said Tron had been named in “several international law enforcement actions involving billions of dollars in money laundering by organized crime groups and sanctioned entities.”
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On March 25, Binance, a leading global crypto exchange, also ended support for USDC on the TRC-20 network. Users had less than two weeks to exchange, transfer or withdraw their tokens from Binance, although transactions on other USDC-backed blockchains remained unaffected. Although TRX's price seems unaffected by these doubts, these events have further eroded investors' confidence in the Tron ecosystem.
In the year In April 2024, the US Securities and Exchange Commission (SEC) reiterated its original charge that Justin Sun and his companies sold unregistered securities in Tron and BitTorrent (BTT) tokens, alleging that Sun had engaged in “manipulative laundering”. The SEC alleged that TRX and BTT were promoted and sold to “consumers and investors located in the United States.”
Considering that TRX SOL and ETH have outperformed by almost 20% in 30 days, despite the drop in TVL of the Tron network and signs that wallets linked to Justin Sun may be sold, the possibility of TRX maintaining the $0.12 support level seems doubtful.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
