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WAX ON: Is TRON's valuation justified? A quick review by WAX CEO William Quigley

Oct 22, 2019
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TRON.

Few other blockchains ignite as much controversy as this blockchain, which is designed to expand the market of decentralized digital content applications. Why? Well, in addition to founder Justin Sun’s regular stream of controversial tweets and press mentions, the TRON blockchain’s metrics don’t quite add up.

In the latest episode of WAX ON with William Quigley, our CEO and co-founder takes a look at the numbers put out by one of the most valuable blockchains in the world and asks the important questions like:

  • Why has the number of TRON accounts tripled, while daily active users has remained almost the same?
  • Why hasn’t smart contract calls increased (and even declined)?
  • Do metrics even matter in blockchain?

Robert Beadles AKA Crypto Beadles has other questions. "TRON’s valuation could possibly be justified if in fact their users and volumes are real,” says Beadles. “However, the more pressing question is, is the rumor about China having an arrest warrant for Justin Sun real? Justin is the face and driving force behind TRON. If the rumor is true and he is arrested, I would imagine the price of TRON would implode."

FUD TV doesn't think TRON bucks the norm when it comes to valuation, saying: “Justifying values is tricky for Bitcoin so it’s gonna be impossible for anyone else."

Hackernoon writer Andrey Sergeenkov has a high degree of confidence in TRON. “TRON has an evolutionary advantage - the network is 80 times faster than Ethereum. If you implement this variation in the niches where speed is essential for survival, TRON is clearly superior.”

Watch the video here and let us know what you think on Twitter.

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Video Transcript:

Is TRON’s valuation justified? Let's do a quick review of their TRON blockchain. Now TRON is the 14th most valuable blockchain according to CoinMarketCap. And by several metrics, TRON has been on a tear. TRON has over three and a half million accounts. This year alone. TRON has added over 2 million of those accounts. Now while that should be cause for celebration, something is not quite right.

TRON has about 50,000 active accounts a day (what we call DAUs - daily active users). Pretty good for a blockchain, but here's what's weird. TRON’s DAUs were also about 50,000 nine months ago... nine months ago when TRON had about 1 million blockchain accounts. So think about that. TRON’s customer base or proxy for customer base; it's number of blockchain accounts has tripled in the past nine months, but the number of people using the blockchain has barely moved. So you add more than 2 million new accounts to your blockchain, but you don't see any significant increase in customer activity. That's, that's just odd.

So you know what, let's look at another metric to see if we can shed some light on what's going on. Why don't we look at smart contract calls? Smart contract calls are another way to measure a blockchain's activity. It's basically how many times a day the smart contract is being asked to do something. The volume of smart contract calls on TRON’s blockchain has dropped 75% in the past year. How it is possible that TRON has added 2 million new accounts in the past year, which by the way is more than the total number of all accounts for EOS, yet two of the most important measures of blockchain activity, daily active users and smart contract calls has shown no increase or even declined?

Now, one would think if the first 1 million customers generated approximately 50,000 daily active users, then 3 million customers would generate three times that - 150,000 daily active users. And if 1 million accounts generated 4 million smart contract calls then 3 million accounts should generate 12 million smart contract calls. Now, yes, that's a linear extrapolation and there are reasons it wouldn't scale exactly that way, but TRON’s metrics aren't even close. The growth in TRON’s blockchain accounts seem to bear no relationship to the basic measures of its blockchain activity.

So what would explain that? I suppose it's possible that TRON just had really bad luck. TRON was successful at recruiting 2 million new accounts, those people went through the hassle of creating blockchain accounts on TRON, and all of them just decided in the end no, they weren't really interested in trying TRON after all. It's possible I guess, but probable, no.

Another explanation is it all 2 million new accounts that TRON added this year - suspiciously growing in a nice, neat, consistent amount by the way every day - are fake. But who would have the motivation to do that? Maybe TRON itself, perhaps to bolster the impression that TRON is growing in popularity and therefore is really worth its billion dollar valuation? Do metrics matter in the blockchain space? In my next video, we're going to take a closer look at the metrics I think should matter when it comes to evaluating blockchains. See you soon.

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