For many of us in Tron, there was a disturbance in the force when CEO Justin Sun announced proposal 71. To be perfectly honest, this caused havoc for Tron users who were wielded to lower fees but as time progressed we saw the light at the end of the tunnel concerning higher fees.
Proposal 71 doubled the fee amount for transactions on the Tron Network from 20 TRX to 40 TRX. Compared to Ethereum this is still extremely cheap, however, this is the second time a fee increase has been proposed and passed this year! It begs the question: WHY?!
Why would a CEO intentionally raise the price to do business on his Network? The answer is multifaceted and it would help first to understand how Tron works. Tron Network is a Blockchain that operates on a POS (proof of stake) model, unlike BTC which is POW (proof of work). This makes Tron unmineable, and the method for minting new tokens has to be done through the governance of the ecosystem.
Tron has a “Freeze, Vote, Earn” governance that allows for the community to move the ecosystem in a particular direction through what we call proposals. These proposals are created by Super Representatives. When you Freeze TRX you get 2 things in return: Energy, and voting power! You can vote for your SR and get the according to APY as a reward. The TRX generated through this process is the production or minting of new TRX tokens. The energy that you get when TRX is frozen helps to get you FREE transactions on the network! This is a win-win scenario for long-term Tron holders!
The top 27 voted-for candidates on Tron are Super Representatives and make up the governing body of the ecosystem. 18 votes to a proposal mean that it is passed.
Now that you have a general idea of how Tron works, let’s break down how TRX became the first deflationary token of the top 100 coins! As stated above proposal 71 made TRX get higher fees which are paid in TRX. This means more Tron will be burned (removed from the supply) resulting in less production. And in this case, NEGATIVE production!
This is great for the ecosystem because it gives Tron an edge in the market attracting new investors. A coin’s price is based on Market Cap and Supply, and the higher the market cap the more a token or coin is worth. Lower supply means that buys have a bigger effect on positive price action. This puts TRX on a path for new ATHs and mass adoption. Not only has proposal 71 turned TRX into the first deflationary token, but it also prompted more TRX to be frozen in order to get the energy to cover the cost of transactions. This also implies more buys and fewer sells of TRX. The more Tron that cannot be moved, the more the price will go up as those tokens are unsellable!
In short, the Tron Foundation has done an excellent job with the ecosystem and this is just one of many proposals that show investors the true leadership and vision of Justin Sun and the Super Representatives!
“Article Contributed by KingsDove“