TRX (TRX), the native token of the Tron network, is up 9.5% on a monthly basis in June, significantly outpacing rival tokens Solana (SOL) and Ether (ETH), which are down 9% and 11% respectively during the same period. .
Interestingly, the rise in TRX coincided with a wallet linked to Tron founder Justin Sun transferring over $21 million TRX to Binance. Now traders are questioning how sustainable the TRX rally above $0.12 really is.
Justin Sun is known to have sent TRX to Binance on June 27th.
According to data from Arkham Intelligence, on June 27, Justin Sun transferred 173.8 million TRX worth $21.4 million to a Binance deposit address. On June 26, Tron’s total locked value (TVL) plummeted to a six-month low of $7.5 billion, according to DefiLlama, suggesting that major investors are withdrawing funds from the ecosystem despite the surge in TRX prices.
The surprising fact is that 75% of all deposits on the network are concentrated in a single decentralized application, JustLend, which has led to a 15% drop in assets over a 30-day period. A closer look raises concerns about the sustainability of the Tron ecosystem, especially since a whopping 94% of JustLend deposits are in BTCT, a TRC-20 token that is said to be equivalent to Bitcoin (BTC) positions.
Moreover, according to data from Exponential.fi, the return on BTCT worth $5.3 billion deposited in JustLend is 0%, suggesting that the primary beneficiaries of these assets, rather than regular users of JustLend’s decentralized finance application, may be profiting indirectly. .
Exponential.fi also rated JustLend’s BTC pool as fundamentally unsound due to the “high centralization” of the network validators, the “reflective” security mechanism that TRX uses to mitigate the volatility of other digital assets, and the significant “collateral risks.” Their risk summary warns of potential total investment loss due to “base chain issues.”
Although there is no direct evidence of fraud, the mismatch between TRX token price trends and the growth of the Tron network is not ideal. Notably, none of Tron’s DApps are included in the global rankings of fee-based protocols.
Ethereum is still the absolute leader in the ecosystem, while Solana is also prominent, featuring applications such as Raydium, Jito, and Marinade. Tron has seen billions of dollars in trading volume in USD Tether (USDT), but has struggled with other stablecoin providers, including U.S.-based issuer Circle.
Circle and Binance End USDC Support on Tron Network
On February 20, Circle, the issuer of USD Coin (USDC), the second-largest stablecoin, discontinued support for the TRC-20 version, citing trust, safety, and transparency concerns. In November 2023, the non-profit “Campaign for Accountability” claimed that Tron “has been implicated in multiple international law enforcement actions allegedly involving multibillion-dollar transactions between organized crime groups and sanctioned entities.”
Related: Binance Eliminates Prime Brokerage Loophole
On March 25, Binance, a leading global cryptocurrency exchange, also ended support for USDC on its TRC-20 network. Users had less than two weeks to convert, transfer, or withdraw tokens on Binance, but USDC transactions on other supported blockchains were not affected. These events have further weakened investor confidence in the Tron ecosystem, even though TRX price appears to be unaffected by these uncertainties.
In April 2024, the U.S. Securities and Exchange Commission (SEC) reiterated the original lawsuit’s allegations that Justin Sun and his company sold unregistered securities through Tron and BitTorrent (BTT) tokens, and accused Sun of engaging in “manipulative wash trading.” The SEC claims that TRX and BTT were promoted and sold to “consumers and investors located in the United States.”
Despite signs that Tron’s network TVL is decreasing and wallets connected to Justin Sun may be selling, it is likely that TRX will remain at the $0.12 support level, given that TRX has outperformed SOL and ETH by nearly 20% over 30 days. The possibilities seem doubtful.
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.