The market is absolutely excited for SRM Entertainment. Now with that $210 million cash infusion, the beleaguered tech company is primed to metamorphose into competitive upstart Tron Inc. A 547.5% surge in stock price? Well sorry, that’s not just optimism, that’s crazy talk, that’s almost irrational exuberance. And with Justin Sun, the master of hype himself, at the helm of this ship, investing $100 million and acting as an advisor, you have to wonder: are we witnessing a genuine revolution, or is this an elaborate magic trick about to vanish into thin air?

Is The Hype Justified Here?

Let's be clear. Tron’s success, if that’s the right term to use, is almost completely anchored to Tether (USDT). More than 60% of all USDT live on the Tron blockchain and it’s the most popular smart contract on the chain. That’s a good fair number of eggs in one basket. That success of concurrent foray has brought in renown success revenue of $1.6 billion over the past three annual years. It also leads to a central point of failure. Consider it the same way as constructing a 100-story skyscraper on a foundation of quicksand. Impressive in theory, but what happens when the tide goes out?

The unexpected connection here? It's not just about crypto. It's about the entire financial system. And we’ve watched banks go up and down on less. Tether’s eventual implosion might come from heavy regulatory enforcement action, or a massive black swan event. And if that occurs, Tron’s empire could come crashing down just as fast as it rose!

Fees Killing The Golden Goose?

Transaction fees are skyrocketing. Here is where the rubber meets the road, and where Tron's alleged advantage begins to appear as a liability. Sending USDT on Tron is less expensive than sending USDT on Ethereum…or at least, it used to be. Seriously? And stablecoins—the would-be, elegant workhorses of the crypto world—have gotten too pricey for regular transactions. This is a more troubling trend especially in emerging markets where these tokens are often marketed as pathways to greater financial inclusion.

It’s the equivalent of a budget airline at the last minute raising its first-class fare. People will find alternatives. And they are. Coinbase’s Base, Plasma – and we’re only getting started. Zero-fee USDT transactions? That's a game-changer. I get that Tron enjoys the advantages of settled liquidity, no question, but liquidity evaporates in a hurry when the users abandon ship. Are we in fact witnessing the start of that exodus. The anxiety is real.

Regulatory Capture And Cronyism Abound

Justin Sun getting involved in the political process in America may be the most frightening part of this whole saga. He cuddles up to the Trump family, investing in Trump-branded DeFi products. He even went on to mint Trump’s stablecoin, USD1, which makes you wonder a lot about regulatory capture. Don’t overlook the role of Dominari Securities, a company connected to Trump, in facilitating the merger.

The SEC agreeing to a temporary enforcement pause for Sun and the Tron Foundation only pours more coals onto the fire. It stinks of political influence. Are we seeing the emergence of an entirely new dynasty, crypto-connected and insulated from accountability by all its powerful friends? Outrage is the only appropriate response here.

This is more than just the story of Tron—that’s what’s at stake for the integrity of the entire crypto space. If regulators are swayed by political winds, it undermines the very principles of decentralization and transparency that crypto is supposed to champion.

P/S Ratio: A Reality Check

Let's talk numbers. And at a $9.5 billion market cap, Circle’s Price-to-Sales (P/S) ratio is 31.65, an astonishingly rich valuation. The KBW Banking Index PE is a very low 1.71. Tron’s P/S ratio in 2024 is 6.4. On the surface, 6.4 looks good, even cheap relative to Circle. This is where you have to look under the hood. Is Tron's revenue sustainable? Is it diversified? Or is it close to 100% relying on USDT transaction volume, a metric which is already beginning to face pressure?

The surprise link here is to fintech’s precursor, traditional finance. The P/S ratio can be an effective tool to help gauge when a company’s stock price is undervalued or overvalued. The P/S ratio is a valuation metric that relates a company’s stock price to its revenue. It is simply the company’s market capitalization divided by its trailing 12 months total revenue.

If USDT’s dominance starts to fall, then Trons major revenue source might dry up too – all of a sudden that 5.4 P/S ratio looks a lot less rosy. Now, it’s a saving grace that even in the wild west that has become the world of crypto, basic financial principles aren’t thrown out the window.

Tron's price surge is tempting, sure. Awe and wonder at the sheer scale of the potential gains are tremendously powerful emotions. Don't be blinded by the hype. Justin Sun is no doubt a marketing genius, but not even the best marketer can beat gravity. Touted as a remarkable opportunity for growth, this reverse merger with its all too cozy connections and decidedly unsustainable business model is more likely than not a trap. Worrying that investors will lose their money ought to be the motivation on this one. Don’t roll the dice—invest wisely and be willing to shut this experiment down if this bet goes south. Don't let your portfolio become collateral damage in Justin Sun's latest high-stakes game.

Tron's price surge is tempting, sure. Awe and wonder at the potential gains are powerful emotions. But don't be blinded by the hype. Justin Sun is a skilled marketer, but even the best marketers can't defy gravity. This reverse merger, with its questionable connections and unsustainable business model, could very well be a trap. Anxiety about losing money should be the driving force here. Invest with caution, and be prepared to pull the plug if this gamble backfires. Don't let your portfolio become collateral damage in Justin Sun's latest high-stakes game.