Justin Sun’s Tron: The past, present and future price analysis

Understanding TRON

Justin sun’s TRON is a decentralized blockchain platform that supports high throughput smart contracts that target the Internet, Media and Entertainment markets across the globe. Tron serves as an excellent social media platform, allowing users to freely exchange thoughts, ideas, media without the interference of any middlemen.

The Expertise of the team:

Source: Inwara’s ICO database

This project is led by the CEO, Justin Sun, who previously worked at Ripple as Chief Representative, Advisor and founded Peiwo in 2013, one of the largest live streaming apps in China. His educational background includes the University of Pennsylvania, Peking University, and Hupan University which was created by Jack Ma, Chairman of the Alibaba Group.

As per the company website, there are more than 100 employees with great expertise contributing their knowledge to the research and development of TRON.

The technological backbones of TRON are experienced blockchain enthusiasts who were previously employed by internet giants such as Alibaba, Tencent, and Baidu where Sun surrounded himself with a team of all-star mentors, including Feng Li and Tim Berners-Lee.

BitTorrent Acquisition

Mergers & Acquisitions play a key role in giving an exposure to a company’s strengths and potential ability in developing confidence among investors.

Tron acquired BitTorrent for $140 million which is a great opportunity to increase its market space and users. According to BitTorrent, its protocol has up to 170 million monthly users.

As a result of this acquisition Tron might attain a potential network to help mine coins, using BitTorrent’s P2P architecture and a large network of users.

BitTorrent claims that its protocols move as much as 40% of the world’s Internet traffic on a typical day, making it the largest decentralized application around at that moment.

Price and Return on Investment (RoI) analysis:

The peak price of TRX averaged at $0.13 representing a 6742.10% appreciation in value since its main sale. Being an altcoin, this spike was the inevitable effect of the Bitcoin boom during Dec-2017 and Jan-2018.

Tron witnessed the next peak of its price at $0.09 representing a 4636.842% gain in April ahead of the news of its Test net launch(31-Mar-2018) and Main net (31-May-2018).

Return on Investment (Weekly average)| Source: InWara ICO Database

TRX’s first trough in its RoI occurred at 1935.41% during the second week of Jan 2018 where BTC was priced at $11,188 and TRX at $0.04 showing a parallel fall along with BTC.

The second trough in RoI occurred at 917.86% during the second week of September when BTC was sitting at $6300 and TRX at $0.02 which is an all time low in its price as well as RoI.

Competition:

Ethereum can be considered as one of Tron’s main competitors in terms of number for transactions they handle. TRX consistently handles 2,000 TPS whereas Ethereum handles 25 TPS and BTC handles 3 to 6 TPS.

Tron launched its Virtual machine on October 12th and on October 18th, Ethereum recorded 565,791 transactions against Tron’s impressive figure of 599,354 transactions. Clearly, Tron posed a challenge to Ethereum in terms of TPS.

On 23rd Oct 2018, Tron exceeded Ethereum’s daily transaction volume after launching “TRONbet”, a gambling Dapp.

Tron Foundation’s CEO Justin Sun has reported that the organization is hoping to allow a wide exhibit of Dapps soon. Tron’s blockchain is as of now fit for handling more than 20,000 TPS, which gives it plenty of room in for a flood of new developers.

Valuing a Crypto-Token: TRX

Here is the Valuation model which Inwara refers to https://docs.google.com/spreadsheets/d/1mE8YLJXegoCGuUe682tG061oXeS0hkdKQEM-F1uz4dM/edit?usp=sharing

There are four sections to most of the crypto-valuation models that InWara uses.

• Section A explains the supply schedule input and output
• Section B quantifies the economy Input and based on the calculations, we calculate the economy and current utility value
• Section C projects the percentage adoption of TRX within its target market (which feeds into Section B)
• Section D accounts for deriving current market value from Future Utility, using an assumed Discount Rate.

Starting with Section A, Rows 2–11 are used to determine how many tokens will be in the float and therefore available to the TRX economy, with Row 11 the particularly important output row: Number of Tokens in Float after Bonders & Holders.

There’s a certain amount of TRX tokens issued in the ICO, in this case, 40% of the total that will ever be in existence, or 40 billion TRX. The remaining tokens are locked up by early private investors, the foundation and the founders, vesting over different periods depending on how the monetary policy is structured.

Turning to Section B, let’s dive deep into the TRX Economy. Assuming that there’s an annual decline of 5% in the cost per unit that Tron facilitates. It explains the monetary base necessary to calculate the GDP of TRX.

Based on the inputs of market valuation of the“Online streaming” industry on a global scale, we calculated the utility value of each TRX token in the float.

• Amount of time it takes for the network to go from 10% to 90% of its Saturation Percentage (Take Over Time)
• When the network will hit 10% of its Saturation Percentage (Start of Fast Growth)
• Maximum share the network will take of its target market (Saturation Percentage)
• The base year as 2018

Note that all values in blue are the particularly subjective assumptions.

Graph 1

Graph 1 depicts the current utility value of TRX each year whereas Graph 2 points out the Output and Percent penetration each year from 2018 to 2025.

Graph 2

The market price of a crypto asset is based on predictions of the future size of a crypto economy, and the utility value each token in the float will require to support that economy in the future.

Lastly, Consider rows 45 & 46 and look at the percent of the crypto asset’s market price that is composed of current utility value vs expectations of utility.

Since we have discounted back from a future utility value to the present, there’s a certain percentage of that price that is supported by current reality ($0.026741484), while the remainder is supported by future expectations ($0.015640291).

In TRX’s case, the asset’s market value is supported by 128.97% of current utility value, which is significantly better than most crypto assets in the market right now.

Valuation model inspired from Chris Burniske’s article.

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