What is TRC20: Understanding the Token Standard Fueling the TRON Ecosystem
In 2017, TRON, a digital currency, was created by Justin Sun. Initially, TRON (TRX) began its journey as a token on the Ethereum blockchain platform, known as ERC20.
A year later, in 2018, the TRON development team decided to establish their own main blockchain network, giving birth to the TRC20 network. This network surpassed expectations and quickly gained popularity among users. In this article, we will delve into the features of the TRON blockchain network, comparing the TRC20 and ERC20 networks.
What is TRC20 Network?
The TRON blockchain network for digital currency experienced rapid growth in its early years and in 2019, within 300 days, it set a record for the number of transactions, surpassing the digital currency Bitcoin. TRC20 is essentially a set of rules and standards defined for all decentralized applications (DApps) or new tokens.
The TRON development team aimed to attract supporters and ERC20 network tokens to the TRC20 network through extensive marketing efforts. This is why there are significant similarities between these two networks. In fact, many of the TRC20 standards resemble the ERC20 standards. It is worth mentioning that despite the extensive promotion of TRON digital currency, many projects did not migrate from the Ethereum blockchain network to the TRON network.
TRC20 Token
The primary digital currency of the TRC20 network is TRON (TRX). However, this network has three main tokens named Just, WINK, and BitTorrent. (All tokens that adhere to the TRC20 standard are referred to as TRC20 tokens.) It is noteworthy that the highest daily trading volume does not belong to any of these mentioned digital currencies! In fact, the highest trading volume on the TRC20 network is attributed to Tether (USDT), a stablecoin. Tether, as a leading stablecoin, currently has a market volume of over $10 billion.
When entering reputable exchanges like Binance and attempting to transfer Tether, you will notice that several networks, including ERC20, TRC20, BSC, BEP, and OMNI, are available for the transfer of this digital currency. However, what drives most users to choose ERC20 and TRC20 networks for DeFi transactions? In the following, we will examine and compare these two networks.
TRC20 Standard
Initially, the first standard for TRON digital currency was TRC10. The TRC10 standard did not have the capability for tokens to utilize smart contracts, making it easy to create TRC10 tokens. After a while, the development team defined the TRC20 standard, enabling tokens and blockchain projects on TRON to utilize smart contracts. In general, the TRC20 token system is more complex than TRC10 tokens.
The addresses of TRON tokens and TRON digital currency itself all start with the letter T. It is important to note that when transferring on the TRON blockchain, you must select TRC20 and have a certain amount of TRON digital currency (TRX) in your wallet to use as a transaction fee when transferring TRC20 tokens from a digital currency wallet.
Also, keep in mind that you cannot directly transfer a TRC20 token to a wallet that supports ERC20 tokens. If you mistakenly or unknowingly attempt to do so, your transferred asset will be lost, and there is no way to recover it. This is due to the one-way nature of digital currency transactions.
ERC20 Standard
ERC20 standards are defined for all tokens operating on the Ethereum ERC20 network. These rules were established by the Ethereum blockchain development team. Despite TRON’s efforts to attract ERC20 tokens to its network, the ERC20 network continues to operate as the largest host for tokens.
The main differences between ERC20 and TRC20 are as follows:
- The primary difference between these two networks lies in their consensus models. Transactions in the Ethereum blockchain are carried out through mining, which is a decentralized consensus method, and income is generated through mining. In the Tron blockchain, the consensus is achieved through staking. The Tron network selects individuals with the highest amount of TRX (Tron’s native digital currency) to validate transactions. In the TRC20 network, income is generated through staking and holding.
- Another difference between these two networks is in terms of speed and transaction fees. When comparing the Ethereum and Bitcoin networks, it can be said that the Ethereum ERC20 network is superior in terms of both speed and transaction fees. When comparing the ERC20 network with the Tron TRC20 network, Tron has a significant advantage. In terms of speed, Ethereum can process a maximum of 30 transactions per second on average, while Tron can process up to 2150 transactions per second. In terms of transaction fees, the TRC20 network has lower average fees compared to the Ethereum network.
The approximate transaction fee for transferring Tron’s digital currency ranges from 0 to 1 TRX. In some platforms like TronWallet, the fee for transferring this cryptocurrency is zero, and the average time it takes for your transaction to be completed is less than 3 minutes.
- Another difference is the popularity of these two networks. Since Ethereum has a longer history, it hosts a larger number of tokens, and as a result, more exchanges and wallets support the ERC20 network.
- In general, as the Tron blockchain is relatively newer, its technology is more advanced. However, the remarkable updates made by the Ethereum development team cannot be ignored. The Tron development team claims that the TRC20 network can serve a wide range of tokens. Additionally, the Tron blockchain is highly scalable, allowing decentralized applications (DApps) to easily utilize existing smart contracts in the TRC20 network and continue their operations smoothly.
In summary, the main digital currency of the TRC20 network is Tron (TRX). This network has three main tokens, with the highest trading volume belonging to the digital stablecoin Tether (USDT). The TRC20 standard is a set of rules defined for tokens and projects that want to use the Tron network. Tokens that use the TRC20 network are referred to as TRC20 tokens.
Initially, the Tron development team introduced the TRC10 standard, but since it did not support smart contracts, they decided to define the TRC20 standard. This allowed TRC20 projects and tokens to use smart contracts on the Tron network. The main difference between the ERC20 and TRC20 networks lies in their consensus methods. Transaction validation in the Tron network is based on staking, while in the Ethereum network, it is based on mining. Another difference is in terms of speed and transaction fees, where the TRC20 network performs better than ERC20.
Final Thoughts
In conclusion, ERC20 and TRC20 are two popular token standards used in blockchain networks. While both have similarities in their functionality and purpose, they also have notable differences.
The key distinction lies in their consensus models, with ERC20 relying on mining and TRC20 utilizing staking. This impacts how transactions are validated and how income is generated within each network.
Furthermore, TRC20 demonstrates faster transaction speeds and generally lower fees compared to ERC20. Tron’s network scalability allows for a high volume of transactions per second, making it an attractive option for decentralized applications.
Despite Ethereum’s longer history, Tron has gained popularity and support from exchanges and wallets, providing a thriving ecosystem for TRC20 tokens.
Overall, both standards have their strengths and are suitable for different use cases. Understanding the nuances of ERC20 and TRC20 can help users and developers make informed decisions based on their specific needs and preferences in the ever-evolving blockchain landscape.
