The Bizarre World of Tron DeFi

Tron has been called an Ethereum (ETH) clone, a knock-off, a, “trashy,” hyped-up, billion-dollar mess. During 2020’s rise in ETH fees, many users migrated to networks like Tron to save time and money. So, following Uniswap’s incredible success with automatic market makers (AMM) and the subsequent DeFi and Yield Farming crazes, Tron had to have fun, too. So DeFi on Tron was born. Tron’s DApp volume skyrocketed in Q3, 2020, resulting in almost $2 billion in volume. JustSwap, the Uniswap-style AMM exchange, alone saw a volume peak of over $367 million a day on Sept. 2. Though those numbers have dwindled, Tron still left its mark.

.@Tronfoundation: DeFi Ecosystem Transaction Volume in Q3 2020

The transaction volume increased by 2,577%.

TRON’s DEX category holds a 41% share of the total volume.

The #dapp helping the category grow is #JustSwap. @justinsuntron @DeFi_JUSThttps://t.co/ryyKTlnpCN pic.twitter.com/uIFiVG96mo

— DappRadar (@DappRadar) October 3, 2020

While the Tron network remains a distant second to Ethereum in Dapp volume, it hosts traffic reminiscent of the wild west days of cryptocurrency. Gambling, Ponzi Schemes, Incentivized Mining Rugpulls or token dropouts, and, perhaps most-damning of all, a less-than-perfect user interface can all be found on the alleged Ethereum clone. I tested a small amount of TRON to see how much money could truly be made.

The poor man’s Ethereum?

In a nutshell, the world of Tron DeFi is the squeaky, bad-hair-day version of Ethereum. It works just like Ethereum, only different. For example, Tron boasts it can process over 2,000 transactions per second (TPS), as opposed to Etheruem’s 15 to 30. Under scrutiny, a study found that theoretical 2,000 transactions per second impossible to reach. The apparent true limit of 748 TPS is nothing to sneeze at, but it illustrates the superficial glitz and glam of the Tron network.

The Tronlink wallet, endorsed by Tron CEO Just Sun and the Tron Foundation, is the gateway to Tron Defi. It is an analogue of Consensys’ Metamask wallet for Ethereum. Tronlink’s user experience is just not that slick. The wallet uses a small, serif typeface, all the buttons have right angles, and the colors are unattractive. What’s more, in my personal experience, Tronlink updates slowly enough to create problems. For example, a pop-up window would say my transaction was confirmed. I still had several TRX left in my wallet (or so I thought), so I went to do another transfer and approved it. Unfortunately, my TRX balance had not been updated, so Tronlink overdrew my remaining TRX to attempt and fail a transaction that never should have happened.

JustSwap

The similar, lackluster experience extends to Tron’s Automatic Market Maker “JustSwap.” The transaction fees, which are around 1 TRX ($0.26, at press time), are lower than Ethereum, and most transactions take only a few seconds. However, the market maker fees of 0.3% are equal to those of Uniswap. The functionality is also almost identical to that on Uniswap, with liquidity tokens and slippage fees to boot. To it’s credit, JustSwap reached a peak of $265 million in liquidity in early September, and still hosts the second highest amount of DApp volume after Ethereum. The Q3 2020 Tron Defi volume grew $133 billion.

Though Tron does host such popular coins as WINK, USDT, and Huboi token, the Uniswap gem chasers have little to work with here. There just are not enough projects hosted on Tron to bring it the incredible popularity of Uniswap. But liquidity mining is a different story.

Incentivized mining and the Sun Token

On Aug. 31, 2020, Tron CEO Justin Sun announced the launch of his meme coin, the SUN token. The aim of the token, Sun said, was to give back to the Tron community and have fun in the wake of the meme coin bubble. In essence, SUN would be subject to genesis mining, and huge yield farming opportunities would finally come to the Tron network.

TRX could pull a YFI here. No Premin, No ICO, No angel investor ? We love this kinda 5hit sir! Thank you.

— Corn Longer (@_BearSlayer_) August 31, 2020

In fact, Sun genesis mining offered incredible rewards on liquidity token staking, though it was short lived. Nonetheless, subsequent rounds of yield farming with ever-dropping yields followed on Sun.io, the Sun token staking site.

The only problem is that the value of SUN token has dropped over time, taking the value of those rewards down along with it.

All in all, between JustSwap fees and the impermanent loss of yield farming, I lost about 10% of the TRX I put up to experiment with. Perhaps this was my mistake, or perhaps Tron Yield Farming is not a money-printing machine. But there is one more corner of Tron Dapps that promise just that.

Decentralized Ponzis

In search of he best of that Tron had to offer in terms of DeFi, I ended up at Dapp.review. The site lists and ranks different decentralized applications by intended use, protocol, as well as various metrics. The site offered an impressive number of Dapps for Tron. Each of the dozens of Tron Dapps had pages  including positive reviews and links to Telegram groups. These Telegram groups had hundreds, sometimes thousands of subscribers, all spamming their affiliate links. For the purposes of this experiment, I chose NanoTron. According to Dapp.review, Nanotron had over 100 five-star reviews and a 24 hour volume in the tens of thousands.

The landing page provided several options for investment that seemed out of this world. Nanotron offered 8.5% daily interest on staking TRX for 18 days, for a total of 153% interest. Another option offered 5.5% daily interest with no limit. Was this too good to be true? Almost certainly! But a Ponzi scheme is only bad if you get burned before you pull your money. For the sake of science, I dropped 300 TRX, worth about $7.50, at the time. Something became immediately apparent. Firstly, the system took the principal and never returned it. In other words, that 153% I was promised would total only 53% ROI. So after 18 days, I was ready to withdraw my funds, and went to nanotron.io to reap my 53% benefits. The page had updated: It was gone. The whole site. Goodbye $7.50 And when I scrolled down on the Dapp.review list of Tron projects, I noticed that many Dapps suddenly had no funds in the protocol, no volume, and broken links. Those tiles representing dozens of apps on Tron turned out to be gravestones.

It would be one thing if these scam sites were just floating out there on the internet. Sadly, the Tron team seems to play along. One such high-risk apparent scam was the Tron Supernode. Tron foundation backed JustSwap was allegedly trading the token on its whitelist before and for some time after the rugpull that made $2 million of Tron disappear.

The House of the Rising SUN

Still, one corner of Tron’s DeFi is able to shine, if in an unsavory way. Tron-based decentralized gambling is alive and well. Both DappRadar and Dapp.Review offer several gambling sites run on Tron. One particularly successful site is WINK. The site boasts a pretty nice user interface and experience. They offer poker, dice, casino games, non-casino games, and sports betting. Wink, also known as Tronbet, also checks users’ IP addresses, and will block access based on location. (Nothing a good VPN can’t fix).

Notably, WINK is not only known by the Tron team, but even seems to be encouraged. The token is tradable on JustSwap. More compelling is that the WINK token can be staked on sun.io. Is Tron condoning gambling? Is staking a gambling token an instance of gambling? What laws does such a token adhere to? Therein lies the problem. One of the many beautiful moments of blockchain is that the creators cannot cause consensus actions. Whether on Ethereum or Tron, no centralized group can physically halt use of a token by a user with an Internet connection. Freedom from banks and government currencies is certainly appealing. So be careful. Immutable and trustless transactions are powerful, but it is still the Wild West out there. NOTE: The views expressed here are those of the author’s and do not necessarily represent or reflect the views of BeInCrypto.