Key Takeaways
- On Aug. 29, Tron slashed transaction fees by as much as 60%.
- Since the update, Tron revenues have declined to their lowest level over a year.
- Tron founder Justin Sun argued that the short-term hit is worth it for long-term growth.
After Tron slashed transaction fees by 60% on Aug. 29, revenue accrued by the protocol dropped nearly 40% to its lowest level in over a year.
The decline means Super Representatives’ income will decline, which could even suppress the price of TRX as the burn rate cools off. However, Tron founder Justin Sun has argued that this is just a short-term sacrifice that will lead to growth in the long run.
How Tron Fees Work
Unlike many blockchains, Tron doesn’t have a single gas fee for all transaction types.
Instead, Tron’s fee model distinguishes between bandwidth and energy.
Simple, address-to-address TRX transfers only incur bandwidth. Meanwhile, energy is required to execute smart contracts, including TRC-20 token transfers, such as USDT payments.
While TRX, which used to pay for bandwidth, is burned, a portion of Tron’s energy fees goes to Super Representatives, the equivalent of Ethereum’s validators.
Because every account gets 1,500 free bandwidth points daily, Tron’s “energy unit price” is the most significant factor determining transaction fees for TRC-20 transfers.
Fee Reduction Hits Revenue
Tron’s latest update cut the energy unit price from 210 sun (the smallest unit of TRX) to 100 sun.
Artemis data suggests this immediately affected Tron’s revenue, calculated as the sum of burned TRX and fees generated by Super Representatives.
“In the short term, Tron’s profitability will be affected, since network fees are directly reduced by 60%,” Sun observed on Friday.
“However, in the long run, profitability will improve as more users and transactions occur on the Tron network,” he predicted.
Chasing Stablecoin Dominance
As the most popular chain for USDT transactions, stablecoin activity accounts for the vast majority (as much as 93%) of Tron’s revenue.
However, although significant amounts of USDT have migrated to Tron, it still hosts less than half of the overall supply, leaving plenty of room for more growth.
Neither is USDT the only player in the game.
Although Circle discontinued USDC on Tron in 2024, citing compliance concerns and other business needs, other stablecoin issuers still back the blockchain.
Notably, Tron is now home to around a fifth of all USD1, the ascendant stablecoin issued by World Liberty Financial.
USD1’s popularity on Tron reflects a growing alliance between Tron, its founder, and the Trump family.
World Liberty Financial was co-founded by Donald Trump Jr. and Eric Trump, who have developed increasingly close ties to Justin Sun.
Sun has also invested in Trump-associated crypto projects, including the TRUMP meme coin and World Liberty Financial’s WLFI token.
James Morales is CCN’s blockchain and crypto policy reporter. He has been working in the news media since 2020, writing about topics such as payments, banking and financial technology. These days, he likes to explore the latest blockchain innovations and the evolving landscape of global crypto regulation.
With an educational background in social anthropology and media studies, James uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
