If you know about Ethereum standard ERC20 tokens and smart contracts, then understanding this article will be a walk in the park.
If you are wondering what ERC20 tokens and smart contracts are, read about them here and here.
Just like Ethereum has its own technical ERC-20 token, so do many other blockchains. On Tron, tokens are programmed according to the TRC-20 token standard.
As a public blockchain, anyone can issue their own TRC-20 token using the same basic set of rules, and their token can interact with any of the other apps running on the Tron platform.
In this guide, we’ll look at the similarities and differences between Tron and Ethereum to establish the role that TRC-20 tokens can play in the broader blockchain ecosystem.
What is TRON?
TRONIX is a MainNet token based on the TRON Protocol issued by TRON Foundation, known as TRX. POW, which is employed in ETH and BTC to confirm transactions, always has its downside like high electric power consumption and low TPS caused by low efficient consensus mechanisms. Therefore, TRON’s consensus mechanism is based on Delegated Proof of Stake (DPoS) and many innovations were made to meet its unique requirements.
Tron vs. Ethereum
There are many parallels between Ethereum and Tron, as well as some critical differences. Like Ethereum, Tron uses a virtual machine, known as the Tron Virtual Machine (TVM,) as a kind of operating system for smart contracts running on the platform.
The TVM also uses the same Solidity programming language as Ethereum. Therefore, tokens and smart contracts issued on Tron are fully compatible with Ethereum. As the Tron Foundation intends to make it easy for developers to port their existing apps and tokens into the Tron ecosystem, this compatibility is by design.
But you may be wondering why they’d want to do that if Tron and Ethereum are so similar. Why not just stay with Ethereum? This is where the critical differences between Tron and Ethereum come into play. Ethereum uses the proof-of-work consensus model, which is known for being relatively slow. As traffic has increased on Ethereum, supply and demand laws have driven transaction fees ever higher.
Tron’s Delegated Proof of Stake (DPoS) Consensus
In contrast, Tron uses the delegated proof of stake (DPoS) consensus. Because there are only 27 validators who need to confirm transactions, the network can handle far higher throughput with significantly lower fees. Therefore, developers use Tron because the superior scalability and low fees lend themselves better to high-volume apps, such as gaming.
However, there’s another consideration to the low fees on Tron.
Therefore, Ethereum developers must be mindful that introducing any unnecessary complexity into their code will also reflect increased transaction fees.
Because Tron has significantly lower fees, developers have much more freedom to program more elaborate smart contracts without worrying that high costs will render their apps unusable.
Rules of the TRC20 Token Standard
Like the ERC-20 token standard, TRC-20 tokens must adhere to a set of rules, including mandatory and optional elements.
There are six mandatory rules and three optional rules.
The mandatory rules are:
- Total supply refers to the maximum number of tokens that can be issued on the Tron platform.
- Balance Of will return the token balance of the user’s Tron account.
- The transfer allows tokens to be moved from the smart contract to a user’s account.
- Approve authorizes a third party, such as another smart contract, to transfer tokens.
- Transfer From allows a third party, such as another smart contract, to take tokens from a user account and transfer them elsewhere.
- Allowance queries the remaining number of tokens that a third party can transfer.
The optional rules are:
- The token name refers to the full written name of the token, e.g., Tether.
- Token ticker refers to the abbreviation used for the token, e.g., USDT.
- Token precision is the minimum divisible unit of the token, which can be up to one-eighteenth.
Like Ethereum, a developer can program other rules into TRC-20 tokens if they want them to carry out specific tasks. However, these code lines above are the minimum requirement for any smart contract to be classed as TRC-20-compliant.
Apps and Projects Using the TRC-20 Token Standard
Tether is perhaps the biggest and best-known project using the TRC-20 token standard. Tron-USDT is now more popular than Ethereum-USDT, with transactions on the former surpassing the latter in early 2021, reflecting that Ethereum’s high transaction fees are becoming a barrier for many users.
Revain is another project using TRC-20 tokens as part of its review platform. Revain operates as a kind of blockchain-based version of TrustPilot. People who leave reviews can get rewards for the quality of their contributions, incentivizing people to write useful and honest reports about their experiences.
JUST is a Tron-based variation on the Maker DAI stablecoin. Users can stake their TRX tokens into collateralized debt positions to generate a stablecoin called USDJ, which is pegged to the value of the US dollar.
Tron also has a vibrant ecosystem of games, including MegaCryptoPolis 3D, Blockchain Cuties, and many more.
TRC-20 tokens offer all the same benefits as ERC-20 tokens. However, Ethereum frequently suffers from congestion, resulting in high fees and a poor user experience.
Tron-based tokens offer a convenient workaround that’s becoming popular with many users, particularly for those transacting with stablecoins.
Phemex is pleased to provide users with access to TRC-20 USDT tokens with fast confirmation and no fees, providing more flexibility for stablecoin users.