In the wake of Terra’s algorithmic stablecoin UST losing its dollar peg and spiraling into collapse, the broader cryptocurrency market has experienced a sharp downturn. The implosion sent shockwaves across the digital asset ecosystem, dragging down major cryptocurrencies like Bitcoin and Ethereum. Yet amid this turbulence, TRON (TRX) has emerged as a rare outlier—defying the bearish sentiment with a notable price surge.
But what’s behind TRX’s unexpected resilience? While most altcoins faltered, TRON not only held its ground but gained momentum. This article explores the key factors driving TRX’s bullish movement, from strategic ecosystem developments to macro-level shifts in stablecoin dynamics.
Understanding TRON: A High-Speed Blockchain Infrastructure
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Launched in 2017, TRON is a public smart contract blockchain designed to serve as the foundational layer for a decentralized internet. Positioned as a scalable alternative to Ethereum, TRON leverages Delegated Proof-of-Stake (DPoS) consensus to achieve high throughput—processing up to 2,000 transactions per second (TPS) with a block time of just three seconds.
However, this performance comes at the cost of decentralization. The network relies on only 27 elected nodes, known as Super Representatives, responsible for block production and validation. While this model enhances efficiency, it raises concerns about centralization compared to more distributed networks.
TRX, the native cryptocurrency of the TRON ecosystem, serves dual purposes: facilitating transaction fees and enabling staking. Users stake TRX to participate in governance or delegate to Super Representatives, earning rewards in return. This staking mechanism reinforces network security and incentivizes long-term holding.
Initially viewed as an "Ethereum killer," TRON struggled to gain traction in emerging sectors like decentralized finance (DeFi) and non-fungible tokens (NFTs). However, recent data reveals a shift in momentum.
As of April 2025, TRON ranked seventh among DeFi-active blockchains with a 2.02% market share—outpacing contemporaries such as Binance Smart Chain and Avalanche. Following Terra’s decline—from 16% DeFi dominance to just 0.36% by mid-May—TRON ascended to become the fifth-largest DeFi chain, capturing nearly 4% of total value locked (TVL).
The USDT Factor: TRON’s Dominance in Stablecoin Transfers
One of TRON’s most significant use cases is its role in stablecoin transfers, particularly for Tether’s USDT. As gas fees on Ethereum surged during peak congestion periods, users increasingly turned to TRON as a cost-effective alternative for moving USDT.
Today, TRON hosts one of the largest USDT ecosystems outside Ethereum, with a circulating supply nearly matching that of ERC-20 USDT. Despite Tether’s recent move of over $1 billion in USDT to Ethereum and Avalanche, TRON remains a dominant force in stablecoin liquidity.
This widespread adoption has solidified TRON’s position as a go-to network for fast, low-cost remittances and trading settlements—especially in emerging markets where financial infrastructure is less developed.
However, TRON lags behind in the NFT space. According to industry tracking platform CryptoSlam, it does not rank among the top 17 blockchains by NFT sales volume. This highlights a clear asymmetry: while TRON excels in payments and DeFi infrastructure, it has yet to capture significant mindshare in digital collectibles.
What’s Driving TRX’s Recent Price Surge?
While most top cryptocurrencies suffered steep losses following the UST collapse—Bitcoin down 22.5%, Ethereum 27.8%, and XRP 31.2% since May 1—TRX bucked the trend with over a 10% gain from May 1 onward.
The catalyst? Another algorithmic stablecoin—this time developed within the TRON ecosystem itself.
In late April 2025, TRON DAO launched USDD (Decentralized Dollar), an algorithmic stablecoin designed to maintain a 1:1 peg with the US dollar. Like UST, USDD uses an algorithmic mechanism rather than traditional collateral to preserve stability. TRX tokens are burned to mint USDD and can be redeemed when USDD trades below parity, creating arbitrage incentives that help stabilize price.
But unlike Terra’s model, TRON introduced critical safeguards:
- Market cap ratio control: USDD’s total supply is capped well below that of TRX, avoiding the dangerous over-issuance seen with UST.
- Multi-layered backing: A $10 billion reserve fund composed of BTC, TRX, and other stablecoins acts as a shock absorber.
- High-yield incentives: Staking USDD offers up to 30% annual percentage yield (APY), attracting rapid capital inflows.
These design improvements aim to prevent a repeat of Terra’s fate—where confidence evaporated once the peg broke and reserves proved insufficient.
Supply Shock: How Token Burning Fueled Demand
A crucial driver behind TRX’s rally is the deflationary pressure created by USDD minting. As users burn TRX to generate USDD, the circulating supply of TRX decreases.
Between May 2 and May 16 alone, USDD’s market cap exploded from under $200,000 to nearly $290 million—resulting in a 3% reduction in TRX supply over just 16 days. In economic terms, this sudden drop in available tokens amid rising demand creates bullish price pressure.
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Such scarcity effects are amplified by strong staking participation and growing confidence in the platform’s long-term viability.
Can USDD Succeed Where UST Failed?
The central question now is sustainability. Can USDD maintain its peg without collapsing under stress? Early indicators suggest cautious optimism:
- The reserve fund provides real-time liquidity support.
- The lower issuance ratio reduces systemic risk.
- Community trust in Justin Sun and the TRON DAO remains relatively high.
Still, algorithmic stablecoins remain inherently vulnerable during extreme market stress. If confidence wanes or redemption mechanisms fail under pressure, even well-capitalized projects can unravel quickly.
Yet if USDD proves resilient over time, it could position itself as a legitimate successor to UST—one built on lessons learned from past failures.
Frequently Asked Questions (FAQ)
Q: Why is TRX going up when other cryptos are falling?
A: TRX is rising due to increased demand driven by the launch of USDD, supply contraction from token burning, and growing DeFi adoption on the TRON network.
Q: Is USDD safer than UST was?
A: Yes, USDD includes multiple safeguards absent in UST’s design—including a diversified reserve fund and a lower issuance cap relative to its native token (TRX).
Q: How does burning TRX affect its price?
A: Burning reduces the total circulating supply. With fewer tokens available and steady or increasing demand, prices tend to rise due to scarcity.
Q: Can I stake TRX or USDD for rewards?
A: Yes, both can be staked. USDD staking currently offers up to 30% APY, while TRX staking supports network governance and earns passive income.
Q: Where is USDT most used—Ethereum or TRON?
A: Both chains host large USDT supplies. Ethereum leads in overall usage, but TRON dominates in low-cost transactions and high-frequency transfers.
Q: Will TRON overtake Ethereum in DeFi?
A: Unlikely in the near term. While TRON is growing in DeFi activity, Ethereum maintains leadership in developer activity, security, and ecosystem maturity.
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TRON’s recent performance underscores a broader truth: innovation often accelerates during market downturns. While others retrench, forward-thinking projects like TRON seize the moment to expand their ecosystems.
With strategic moves in stablecoin development, supply management, and DeFi growth, TRX has demonstrated resilience in the face of crisis. Whether this momentum sustains depends on continued execution—but for now, TRON stands as a compelling case study in adaptive blockchain evolution.
Core Keywords: TRON (TRX), algorithmic stablecoin, USDD, DeFi blockchain, token burning, USDT on TRON, DPoS consensus