Why Tron’s Fee-to-Market Cap Ratio Outshines Top Layer 1s
Tron, with a $19B market cap, boasts a daily protocol revenue of $7.9M—more than two times Solana’s $3.8M fees, despite having five times the market cap. What’s happening here, and is Tron undervalued compared to its peers? Let’s take a deep dive.
Source: Tronscan
How Tron Works
Tron leverages a Proof-of-Stake model combined with a resource system: Energy and Bandwidth. Users can acquire these resources in two ways: by staking TRX or burning TRX tokens.
- Bandwidth covers standard transactions like TRX or token transfers. Users either stake TRX to generate free Bandwidth or burn a small amount of TRX for immediate resource access once their free allocation runs out.
- Energy powers smart contract execution, essential for dApps, DeFi platforms, and NFTs. Like Bandwidth, Energy can be obtained by staking TRX or burning TRX for quick, one-time needs.
This dual system ensures both flexibility and cost efficiency for users, allowing them to choose between long-term staking or paying directly through burning.
Source: Tronscan
This ensures low costs for both developers and users while maintaining scalability.
What Makes Tron Unique?
- Cost Efficiency: Tron’s unique fee structure combines low costs with accessibility. Users can stake or burn TRX to access Energy and Bandwidth, while a free daily bandwidth allocation enables new users to start transacting without worrying about gas fees or technical complexity. This simplifies onboarding and makes Tron an ideal solution for affordable money transfers in regions where cost and accessibility matter most.
- Staking Incentives: Staking TRX offers dual benefits: users earn rewards and generate the resources they need to use the blockchain without extra costs. By staking, users can vote for Super Representatives (SRs), who validate transactions, earn 16 TRX per block, and share rewards with their voters. This setup incentivizes staking, supports governance, and ensures a more decentralized and secure network.
- USDT Dominance: Tron’s dominance in the stablecoin market stems from its strong partnership with Tether, which began in 2019 when USDT launched as a TRC-20 token. The collaboration leveraged Tron’s infrastructure, addressing key limitations on other blockchains. Over time, this partnership has blossomed, with Tron now facilitating $135B in USDT transfers over the past 7 days, issuing 61.8B USDT, and serving over 57M holders.
- Ecosystem Growth: Tron’s ecosystem is accelerating with the launch of SunPump, aimed at onboarding memecoin traders through the SunSwap platform. With 93,300 tokens launched, projects like Sundog ($156.7M) and Tron Bull ($45.7M) highlight Tron’s growing appeal.
Tron’s Metrics
Tron is showing signs of outperforming its last market cycle, with key metrics already surpassing previous highs.
Source: Dune @Tron_dao
Tron’s active user base has exploded this cycle, rising from 735K at its 2021 peak to 2.24M in November 2024, a 205% increase. Despite this rapid growth, TRX’s price has grown just 71% from its 2021 peak of $0.12 to $0.18, suggesting a disconnect between network expansion and valuation. If price growth aligns with user base expansion, there’s considerable room for TRX to climb further.
Source: Dune @Tron_dao
Monthly network fees have soared from $35.4M in November 2021 to $212.2M in November 2024, a 500% increase. This indicates strong revenue growth. Despite this, TRX’s price hasn’t scaled at the same rate, highlighting potential undervaluation if historical fee-to-price ratios hold.
Source: Dune @Tron_dao
Tron’s energy consumption, akin to gas consumption on Ethereum, reflects the demand for smart contracts and dApps. From a previous cycle peak of 2.59 trillion in October 2020, consumption has more than doubled to 5.78 trillion in October 2024, signaling robust growth in smart contract activity. However, with TRX currently at $0.18, compared to $0.026 during the last energy peak, price still trails the surge in network utility.
Source: Dune @Tron_dao
Monthly transaction volume at 90.5M in November 2022 during the bear market, despite TRX trading at a low of $0.055. By October 2024, transactions had recovered to 95.4M, while TRX surged to $0.159. Even with a slight dip to 83.5M in November 2024, transaction growth parallels its last cycle, TRX could see further gains as activity scales.
Tron’s metrics prove a network that’s outpacing its valuation. Active users, fees, energy consumption, and transactions have all hit new highs, yet TRX’s price hasn’t fully reflected this growth. If the past is any guide, the next phase of this cycle could see TRX surge as the network’s strength drives its true value.
What’s Driving Tron’s Growth?
Source: Dune @Tron_dao
Analyzing the most active contracts on Tron gives us a clear picture of where the network stands and where it’s headed. The USDT contract, responsible for 95.49% of contract calls as of December 1, underscores Tron’s critical role in global stablecoin activity. USDT remains a lifeline in economically unstable regions like Argentina and Turkey, where it’s used to hedge against inflation, and in sanctioned nations like Iran and Venezuela for cross-border transactions.
On the other hand, SunPump, which exploded in October 2024 after a promotional push by Justin Sun, has supercharged the memecoin sector on Tron. Over 89,000 tokens have been launched since SunPump’s debut, fueling a surge in energy consumption. Energy consumption skyrocketed to 5.78 trillion in October 2024, a clear signal of heightened smart contract activity tied to SunPump’s memecoin boom. Projects like Tron Bull (TBULL) and Suncat (SUNCAT) lead this trend, revealing Tron’s ability to capture speculative energy alongside real-world stablecoin utility.
The X-Factor of Justin Sun
Justin Sun is more than just a blockchain founder—he’s a master of publicity and a relentless promoter, turning himself into the face of Tron and keeping the project in the spotlight. In 2024, Sun once again demonstrated his talent for creating buzz and driving adoption through a mix of strategic initiatives and headline-grabbing stunts.
The launch of SunPump, a memecoin platform, brought a surge of activity to Tron, generating $1.1 million in revenue and enabling the creation of over 18,000 tokens in just 11 days. To sustain this momentum, Sun introduced a $10 million Meme Ecosystem Boost Incentive Program, funding liquidity and growth for memecoins and solidifying Tron’s position as a hub for speculative trading.
But it’s not just about platforms or programs—Sun’s ability to captivate attention is unparalleled. From auctioning off an NFT dinner with Warren Buffett to partnering with $SUNDOG and Trust Wallet, Sun blends hype with tangible results. In his latest stunt, he purchased the infamous duct-tape banana artwork for $6.2 million at auction and ate it in front of reporters, grabbing headlines worldwide.
This blend of innovation, community-building, and headline-worthy theatrics makes Justin Sun the ultimate X-factor for Tron, ensuring the network stays relevant and thrives in the ever-competitive crypto landscape.
Source: New York Post
TVL to Market Cap: Tron Stands Out
When comparing Total Value Locked (TVL) to market cap, Tron emerges as a standout among Layer 1s. With $8.02B in TVL against an $18.08B market cap, Tron has a 2.25:1 ratio. In contrast, Ethereum, despite its dominance, has a $71.5B TVL and a $442B market cap, giving it a 6:1 ratio. Solana and BNB lag further, with $8.9B TVL and $108.3B market cap (12:1 ratio) for Solana, and $5.5B TVL against a $94B market cap (17:1 ratio) for BNB. Tron’s metrics suggest that its valuation has yet to catch up with its ecosystem activity.
TVL to Fees: Revenue Efficiency in Action
Tron’s ability to convert TVL into protocol revenue further highlights its operational efficiency. Over the past 30 days, Tron generated $236.78M in revenue, translating to over $7.9M daily, all from its $8.02B TVL. Ethereum, with its massive $71.5B TVL, generated $6.05M daily, reflecting higher user costs but less proportional revenue. Solana’s estimated $5.53M daily revenue from $8.9B TVL is competitive but falls behind Tron’s proportional efficiency. BNB, by contrast, lags significantly, generating only $535K daily fees from its $5.5B TVL, raising questions about its ability to monetize its ecosystem.
Conclusion
The numbers appear to paint a clear picture—Tron is outperforming on nearly every key metric: user growth, revenue efficiency, and stablecoin dominance. Despite this, TRX’s price hasn’t caught up to the network’s explosive expansion. The markets typically react in themes and maybe TRX is forgotten in this cycle, , or is there more to the story?
