Founder Justin Sun Explains TRON’s Unique DAO And DPoS Consensus Mechanism
In 2021, H.E. Justin Sun, Founder of the TRON blockchain, wrote an open letter to the TRON community in which he explained TRON’s transition to becoming a fully decentralized autonomous organization (DAO). According to Sun, the blockchain protocol had become “essentially decentralized” and would rely on community governance from holders of TRON’s native TRX token.
“This marks TRON’s entry into a new era of decentralization. Personally, as an ordinary member of the TRON protocol community, I will continue to support and encourage the development of TRON and its decentralized community. I hope that my TRON community friends will continue to work together and propel the TRON platform into an evermore prosperous, thriving ecology,”
– wrote Sun.
He went on to explain that a cornerstone of TRON’s philosophy has always been to empower users with a secure, decentralized blockchain that respects data privacy, and a DAO is ideally suited for this purpose.
“Unlike centralized platforms, and despite achieving significant success and social impact, we have never curated any user data in the TRON blockchain, nor do we have any right to do so. As the whole world confronts rising social issues caused by big tech data monopolies, TRON’s success in empowering its community is uniquely significant, and we will continue to herald that change.”
Founded in 2017, Justin Sun’s TRON was one of the first platforms to utilize smart contract technology to enable blockchain-based development of a variety of decentralized apps (dApps), distinguishing it from blockchains such as bitcoin’s, which is used exclusively for the exchange of tokens.
TRON was also one of the first blockchains to utilize a proof of stake (PoS) consensus system to validate nodes on its chain, a method that’s become increasingly attractive to crypto and blockchain enthusiasts due to its potential to avoid the high energy consumption associated with proof of work (PoW), the traditional validation system used on the bitcoin blockchain.
The upside of these two features of the TRON blockchain, its smart contract capabilities and PoS validation system, will be crucial to the blockchain’s mainstream adoption and evolution as a fully decentralized protocol.
According to Justin Sun, decentralization is the future of crypto and blockchain technology, and TRON is positioned as a leader in this decentralization effort, due both to its capability to produce the dApps that will power a decentralized Web3 and to its commitment to a DAO grounded in a proof of stake consensus mechanism.
“I’m a big believer in the spirit of DAO,” said Sun in a recent conversation with Jeremy Allaire, CEO of stablecoin developer Circle. “It’s one of the biggest use cases for the blockchain.”
Sun explained that a decentralized, on-chain voting system has the potential to ensure democratic transparency, speculating that the technology could even eventually be used in government elections.
“If everyone voted on blockchain, we would not have disputes in elections, which these days happen very frequently,” said Sun. “We wouldn’t have these kinds of disputes anymore because every transaction, every voting system would be purely on-chain, so it’s fully transparent.”
For now, however, Sun is focused on ensuring TRON’s DAO is as decentralized and democratic as possible, designing a system built to encourage more egalitarian participation in the community through an approach known as delegated proof of stake (DPoS).
How Does TRON’s Delegated Proof of Stake Work?
PoW validation systems require computers to solve complex cryptographic problems to add a block to the blockchain. Once the block is validated, the transactions it contains are immutable and visible to anyone on the chain. The miners who solve the problem and validate the block are rewarded with cryptocurrency, for example, bitcoin.
In a PoS system, blocks are added to the chain using staked assets from holders of on-chain tokens. Validators stake their tokens, making them available for the chain to use to generate the consensus required to validate a block. In exchange for temporarily offering their tokens for this use, validators are rewarded with more crypto.
Proponents of the PoS system argue that the approach is much more sustainable than PoW, which requires computers using massive amounts of electricity throughout the mining process. PoS doesn’t involve mining, and it is thus seen as a more sustainable approach.
In implementing a DPoS system for TRON, Justin Sun sought to build on the basic concept of PoS to create a more democratic, community-driven approach. While traditional PoS systems often enable only users with large amounts of tokens to serve as validators, TRON’s DPoS system implements a democratic voting process to select validators, with any holder of TRX eligible for election by other members of the TRON DAO. TRX holders cast their vote using TRX, with one token equaling one vote, and representatives are elected only after receiving over 100 million votes. Once elected, 27 “super representatives” serve as validators, with elections held to replace the representatives every six hours. Each of the super representatives receives equal compensation for their role.
As Sun explains, this system distributes power more evenly than a traditional PoS, empowering the TRON community as a whole and not only a select few of those who hold the most tokens.
In discussing the early iteration of the system on Twitter in 2019, Sun explained it as a “fair, decentralized distribution of staking revenues, encouraging greater user participation and smoother engagement with staking from more wallets, exchanges, and partners.”
He also noted that it would create “greater voter turnout, along with higher stake ratio across the network, which will bring about a more active community and a more robust network economic system, increasing the lock-up amount from users within the #TRON ecosystem.”
This prediction seems to have come to fruition, with TRON surpassing 4.6 billion network transactions in January 2023 and reaching a total value locked of $9.3 billion and more than 135 million accounts created.
Next Steps for Justin Sun and TRON DAO
Amid TRON’s transition to becoming fully decentralized, H.E. Justin Sun accepted a new role as permanent representative of Grenada to the World Trade Organization. In this role, his goal is to spread the message of the benefits of blockchain technology for the global economy. He’s also been appointed to the global advisory board of Huobi, a crypto exchange that dominated the Chinese market prior to China’s crypto trading ban and that’s now pursuing broader international reach.
TRON has become one of the world’s largest DAOs, with the community working on use cases in areas such as decentralized finance (DeFi), gaming, and stablecoins.
In 2022, TRON launched the USDD stablecoin, and the platform has become one of the largest hosts of stablecoins in the blockchain space. Sun continues to advocate for the benefits of these coins pegged to the value of fiat currencies and designed to protect holders from fluctuating token prices. He sees the stablecoin as foundational to mainstream adoption of crypto as developers continue to build a decentralized ecosystem.
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