The professional feud between the Tron Foundation's founder, Justin Sun, and Ethereum's Vitalik Buterin is well-known. The full 'battle' can be read here on Chepicap or ToshiTimes. Depending on your philosophy, it seems like Justin appears to be winning on the surface. With USDT-Tron's official launch be tomorrow, can a stablecoin put Tron (TRX) far ahead of its competition?
Justin has said that Tron’s primary goal was to surpass Ethereum in dapps and smart contracts. So far, Sun has put several things in place including acquiring BitTorrent, launch several projects and partnering with several major players in the industry. In a tweet, Justin announces that Tron possesses 267,000 Dapp users at that time with 16236 active Dapp users. Second of the list is EOS with 197,000 and Ethereum with 151,000 users within the period. He uses data from DappReview, one of the leading dapp ranking websites. As a result, the popular Blockchain Protocol has officially become the number one Dapps platform in the world.
First, let's look at what Stablecoins are.
What are Stablecoins?
Tron (TRX) partnered with Tether to issue a new USDT coin on Tron’s network, early last month. The TRX-powered stablecoin is set to launch on April 9th. Stablecoins are cryptocurrencies with values pegged to assets such as the US dollar or gold. They are a stable, scalable and secure means for transactions, aim to mimic traditional, stable currencies. It is a cryptocurrency that is pledged to the value of any underlying asset or commodity.
Many Stablecoins are pegged at a 1:1 ratio with certain fiat currencies, such as the US dollar or the Euro, which can be traded on exchanges. Hence, Stablecoins are not subject to the extreme price volatility that other cryptocurrencies are affected by. The new USDT-Tron is a TRC20-based USDT that will support Tron's growing network of decentralized applications.
These asset-pegged cryptocurrencies aim to create a new and improved payments system for the world. It is secure, transparent, decentralized, fast and low cost, utilizing cryptocurrencies (digital cash) as a means of exchange. Therefore, these benefits can bring help to solve Tron's network in delivering peak efficiency.
Protecting against volatility with Stablecoins
But the value of most cryptocurrencies, especially Bitcoin, fluctuates on a daily basis. We highlight several examples of difficulties to cope with this volatility on our previous article on Crypto Funds. Hedging with stablecoins is the only way to manage extreme price fluctuations.
Tron's Founder also mentioned that the goal is to move USDT from its Bitcoin-based protocol called Omni to a better network: Tron. He added that the move will benefit not only Tron but its competitors, Bitcoin and Ethereum. This can lead to an overall performance boost in the whole blockchain ecosystem.
Quoting from Justin:
“The stablecoin is the most important thing when we come to the infrastructure and the whole industry. I think it will benefit the whole industry. Most of the congestion and the bad experience of the stablecoin comes from the Omni blockchain because this is an obsolete solution with extremely expensive, slow and also unreliable infrastructure for the stablecoin.”
Real-world applications and benefits for USDT-Tron
Although still in its early stages, Stablecoins have many potential real-world uses. Here are just a few examples.
TRX as a currency
It could be used just like any other currency for commerce, with the added benefits of being a digital currency. Stablecoins are also especially beneficial for cross-border payments eliminating the need for conversion of different fiat currencies, and instant transaction. As USDT-Tron will be a TRC20 token, this can substantially increase TRX usage.
Recurring and P2P payments
Stablecoins also allow the use of smart financial contracts that can be enforceable over time. Smart contracts are self-executing contracts that exist on a blockchain network, without requiring any third party or central authority to control or manage it. These autonomous and automatic transactions are traceable, transparent, and irreversible, making them ideal for salary and loan payments, tax and rent payments, and subscriptions.
Stablecoins have the potential to change millions of families’ lives in developing countries. Migrant workers have to send remittances through businesses like Western Union to get money back to their families and loved ones. This is a slow and costly process, where families end up losing a big chunk of their funds to high fees.
Protection from value crash in TRX or local currencies
In the event of a fiat currency crashing in value, citizens could exchange their crashing currency for USD-backed or EUR- backed quickly before they lose their savings due to hyper-inflation. This also applies to TRX users.
Improved cryptocurrency trading
The possibility of cryptocurrencies pairing with TRX can be a reality. Very few cryptocurrency exchanges out there currently support fiat currencies due to strict regulations. But the use of Stablecoins allows exchanges to get around this problem by offering fiat-or gold backed cryptocurrency trading pairs.
Tron (TRX) Crowdfunding
As we mentioned, cryptocurrencies can be volatile. Tron can now facilitate a Dapp that can provide crowdfunding opportunities with crypto-currencies and crypto-assets, or offer convertibility of cryptocurrencies to Stablecoins as a hedge to price volatility.
Lending and Microfinance
Dapps can utilize Stablecoins for peer to peer lending. A borrower can call for funding through a lending DApp based on his risk profile and reputation and negotiate a rate of return on the borrowed funds. Interest payments can be serviced at regular intervals with a penalty system in place for late payments. This has already been done with bitcoin, but due to the price volatility of cryptocurrencies, lenders may lose more of their asset value than what can be earned from the interest during the period of the loan.
Justin Sun Shares What's Next for Tron & USDT-Tron
A fully functional stablecoin like USDT-Tron can make payments and trades much more seamless and stable. Based on the TRC20 protocol, the smart stablecoin on Tron will support smart contracts and will introduce a privacy option as well. Justin Sun says:
“We’re getting lots of interest from these institutional investors. I think we’ll do everything to fulfill their requests because when the institutional investor gets into this industry they have lots of requests.” “Lots of institutions don’t want people to know they’re buying cryptocurrencies. They don’t want people to know their accounts or how much money is in their accounts.”
After addressing the needs of crypto traders, Sun’s strategy for the stablecoin involves a second phase: cross-border payments for consumers. Sun is eying use cases that will allow Tron to compete with Stripe and Square which serve mobile users and e-commerce payments for merchants and shoppers.
Justin also hints on a collaboration with Ethereum Developers from Loom Network.
“I think even within this year, we will see Tron even collaborate – officially collaborate – with Ethereum doing something good for the industry.”
Lastly, a scalability solution for Tron in the second quarter of Q2. Justin claims this solution can bring 100x scalability and reduced fees in future TRX transactions.
Curious Case of USDT
The popular stablecoin, Tether (USDT), has gone through significant amounts of controversy since its launch. There have been questions asked about whether the company is actually able to back the coin by the US dollar. Despite promising to release reports that verify its holdings, they have yet to release it. The partnership with Tron can broaden the use of Tether's network and build its legitimacy in the Crypto space. As a result, boosting Tether's reputation as well as the confidence of both crypto traders and enthusiasts.
Disclaimer: This article above of Tron (TRX) and Tether (USDT) is purely for educational purposes. Therefore, it should not be used as financial advice or an indication that Moonwhale supports the aforementioned cryptocurrencies.
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About The Author:
Iliya Zaki is the Head of Marketing & Business Development for Moonwhale Ventures. Based in Singapore, Iliya manages the marketing and public relations aspects for Moonwhale as well as clients under advisement. He is also a regular writer for Hackernoon and several other publications such as Investing.com, Daily Hodl, Securities.io, and many more.