TRON:  Underwhelmed Or Undervalued?

It is hardly a distinction.  Among the top 10 cryptocurrencies in the last month, TRON was the worst performer.  Roundly speaking, the price fell by 35%. May was brutal enough in general, but to land on the bottom to the performance charts is hardly the sort of thing to be proud of.  

The underlying blockchain technology along with smart contracts has a very long term future, so perhaps it is unfair to single out TRON’s performance in a such a short period.  But there is good reason to be raising the issue.

Background

TRON founder Yu-Chen Sun is out to challenge the likes of Ethereum.  In a bit of an ironic twist, using the Ethereum platform, TRON’s ICO last September raised $70 million making it one of the ten biggest ICOs of 2017.  

In simple english, TRON presents itself as a more flexible and scalable version of Ethereum. Initially aimed at entertainment applications like gaming, TRON has bigger fish to fry down the road.

In the meantime, TRON is getting started by transitioning from the Ethereum network to its own public blockchain. The TRON mainnet officially launched on May 31.  The network will remain in beta for most of June. Token migration will occur from June 21 to June 24, when users must exchange their ERC-20 tokens and receive an equivalent number of TRX on the new blockchain.

June 25 is the date that TRON developers have declared “Independence Day”.  This is when the Genesis block will propagate across the network and Tron will finally become the “Ethereum killer.”

Shortly after the TRON mainnet was announced back in April it received overwhelming praise from investingpr.com predicting the new TRX would trade around $1 within five years. That would be better than a 16 fold increase over current levels.

Bound For Nowhere

At this point, I think you can probably guess where we are going with the TRON story. The TRON mainnet was announced in April.  This was the biggest announcement in the life of this young company. The usual pattern during this magnitude of news is for the price of the token is to rise to new high levels and at least maintain this going forward.

Instead by the end of May, TRON turns in the worst price performance among the largest capitalized cryptos.  What does this mean.

Not The First Nor The Only

If you maniacally fixated on TRON, you probably have some ideas.  A popular explanation in the trading community was that somehow sinister traders had been conspiring to create a pump and dump game with the public.  There may be some truth to this but it is sheer speculation: virtually impossible to verify. Here is what can be said.

The fact that TRON developers are out to be the Ethereum killer puts them right along side of EOS that raised over $180 million last year as well as other Ethereum wannabes. The TRON website shows a total of 110 nodes in less than ten countries.  This compares with supporters of TRX that talked about over 2,500 nodes in 31 countries.

Assuming these numbers bare any connection to reality, we may only have a snapshot of the potential. However, it is clear from the price action, potential investors in TRX are less than impress.

Conclusion

Believers point to price forecasts of $1-$2 for TRX by the end of 2018.  Is this the same hyperbole that we have heard time and again or is there reason to be optimistic.  Even the biggest supporters are honest enough to warn of the exceptionally long term horizon needed to realize the potential for TRX.  In our view, TRON today is like looking at ETH in 2015. Before TRON kills Ethereum, technology could solve some of the major shortcomings like scalability etc that presently limit Ethereum.  

Featured image courtesy of Shutterstock. 

Author:
James Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.