When investing in a cryptocurrency token, there are many things that need to be evaluated. Many investors look at the fundamentals and the team behind a project. Does the project solve a problem? Is the team behind this project capable of delivering? Do they have the necessary funding and manpower to execute their plan? These are all great questions that need to be answered when doing your analysis. In the case of Tron, I think all these questions have very positive answers. But there is still one thing that gives me chills at night that no one is talking about. Will the supply of TRX reach 100 billion in 2020?
The Lockup Period
In December of 2017, Justin Sun announced that Tron will lock up over 34 billion TRX until January 1st, 2020. Keep in mind that in December of 2017 the market was in a complete tear, making new highs almost every day. Expectations were running extremely high with pictures of lambos being posted on every form of social media. Well, as we crypto enthusiasts have endured, things didn’t go according to plan. Below is the tweet that Justin posted in late 2017:
— Justin Sun (@justinsuntron) December 19, 2017
Then in August of the following year, several months after the Tron Mainnet launch, Justin Sun went on to tweet the following regarding the whereabouts of the Tron controlled TRX.
Last month, considering the safety of digital assets, @Tronfoundation locked 33,251,807,424 #TRX in 1000 addresses of #TRON mainnet, in order to let #TRONICS search these addresses more conveniently, we made a query tool, feel free to search now. $TRX https://t.co/HxPSlodsYq pic.twitter.com/FbAyDvieBg
— Justin Sun (@justinsuntron) August 11, 2018
All these accounts can be tracked here.
Funding the Beast
Tron currently has a large staff consisting of hundreds of employees along with 2 offices, one based in San Francisco and the other based in Beijing. All this costs quite a bit of money. In the article I previously wrote called Rise of Tron, I go over how a wallet sold over 8 billion TRX while the price of TRX rose to 30 cents and continued to sell all the way back down to below 3 cents. In my opinion, this is the source that funded a big portion of Tron’s operations.
So will this happen again? Can this happen again? No, that non-stop selling cannot happen again because that would be the end of Tron. At least not with the current price. But surely some selling could take place to make ends meet. We hope that Tron’s financial situation is sturdy enough to not have to resort to this. Can they initiate another lockup until market conditions improve? After all, Bittorrent should provide a good source of income for the company. It would be nice if Tron can reassure investors of this in the coming weeks. As with any market, having too much uncertainty in the mix is never a good thing.
Adjusting to Market Conditions
As 2018 delivered its fatal blow to many, and even got the die-hards trembling, it is safe to say that what occurred wasn’t anywhere near our expectations. Would Tron have frozen the tokens only until January 1st, 2020 if they knew that Tron would be at a little over 3 cents in June of 2019? I hope not. At this moment, as an investor in TRX, I would like to know what the plans are for the 33.2 billion tokens that are expected to be unlocked in a little over 6 months. That is right around the corner.
We all know what happens when the supply of something goes up and the demand remains constant. The price goes down. Those that invested in highly inflating staking tokens know very well what I am talking about. Of course, Tron has a sound platform with many great aspects to their project. But supply will still have a big effect on the price going forward. I suspect that the TRX price action will be suppressed as investors worry about what will happen. All this can be avoided with the proper plan and communication.
This is why it is important to ask this question now rather than closer the 2020. If the tokens, or a portion of the tokens, will be locked up in another contract after they get unlocked on January 1st, that would be very good news. Just imagine another bull run with no dark cloud in the sky.