The world of digital currencies has experienced phenomenal growth in recent years. The global market capitalization of more than 25 cryptocurrencies is approximately $000 trillion. As of November 1,45, 10, the total daily cryptocurrency trading volume is $2023 billion, with a significant contribution to this figure made by stablecoins, which account for 137,59% of the total 72,22-hour cryptocurrency market volume – $99,37 billion. From these data it is clear that stablecoins play an important role in the cryptocurrency market. They play an important role in maintaining the smooth functioning of the cryptocurrency market as they are pegged to less volatile assets such as fiat currencies or commodities and provide stable value amid market fluctuations.
With all the hype surrounding USDT and USDC, one has to wonder whether TUSD will live up to its promise as the first regulated stablecoin to be fully backed by the US dollar and use real-time third-party evidence to back up its underlying reserves.
In this article, we'll take a closer look at TUSD: What it is, how it works, what steps you need to take to buy this stablecoin, and much more.
Main conclusions:
- TrueUSD is a regulated stablecoin, pegged 1:1 to the US dollar and fully backed by cash reserves.
- Its reserves are highly transparent through independent real-time attestation, as well as on-chain availability of collateral and mintage control data through the company's Proof of Reserves (PoR) system chainlink.
- TrueUSD can be used on various supported blockchain networks such as Ethereum, Tron, BNB Chain and Polygon.
What is TrueUSD (TUSD)?
TrueUSD (TUSD) is the fourth-largest stablecoin by market value, fully backed and legalized, pegged to the US dollar in a 1:1 ratio. Built on the TrustToken platform, it was brought to market in early 2018.
TrustToken (later rebranded as Archblock) is a decentralized finance (DeFi) platform with two products: a “basket” consisting of five stablecoins, including TUSD, and a collateral-free DeFi lending protocol, TrueFi, which supports borrowing of TUSD and two other major stablecoins – USDT and USDC.
In December 2020, the Asian consortium Techteryx acquired the intellectual property rights to TUSD, thereby separating this stablecoin from TrueFi.
TUSD has gained a lot of popularity recently as Binance turned to it as an alternative to BUSD when Paxos was ordered by the New York State Department of Financial Services (NYDFS) to stop minting BUSD tokens in February 2023.
Is TrueUSD safe?
Initially, TrueUSD's dollar holdings were distributed among various bank accounts owned by different trust companies. All participants signed a binding agreement to conduct monthly audits and publish data on collateral holdings. To reduce counterparty risk and provide legal protection to token holders from theft, multiple escrow accounts were used in the TrueUSD token. TrueUSD's publicly audited smart contracts mint TUSD tokens when USD passes through escrow accounts and burn TUSD when USD is redeemed, maintaining a 1:1 parity between circulating TUSD and USD held in escrow accounts.
While this system provided secure fund management because you could exchange USD directly into third-party escrow accounts rather than through the network, the TrueUSD team decided to further enhance the transparency of their operations through the use of technology.
TrueUSD is leading the way as the first stablecoin to utilize real-time reserve fund attestation independently verified by third parties. Additionally, TUSD is pioneering the transparent availability of collateral and control data. mining on-chain using Chainlink's proof-of-reserve (PoR) technology. Chainlink's decentralized oracle provides greater transparency, reliability, and security. If fiat reserves in Chainlink PoR are found to be less than the circulating supply of TUSD, decentralized applications (DApps) can immediately activate measures to protect user funds.
TrueUSD (TUSD): how it works
TrueUSD uses smart contracts that allow the issuance and exchange of a tokenized version of the US dollar. It uses four token standards: ERC-20 (Ethereum), TRC-20 (TRON), BEP-20 (BNB Chain) and AVAX C-Chain (Avalanche).
When a user purchases TUSD with United States Dollars (USD) through the TrustToken platform, the smart contract underlying the platform automatically generates and issues an equivalent amount of TUSD, which becomes part of the circulating supply of the token.
If a user redeems TUSD through TrustToken, the smart contract automatically burns the redeemed tokens or permanently removes them from the TUSD circulating supply. At the same time, the platform credits the user with an amount in USD equal to the number of purchased TUSD.
TrustToken does not charge any fees for purchasing or redeeming TUSD. Instead, the company generates income by charging interest on US dollars held in its accounts.
By using TrustToken, traders realize their ability to buy and sell TUSD on a 1:1 basis, creating a natural arbitrage opportunity in the market and maintaining the token's peg to the dollar.
Key features of TrueUSD (TUSD)
Fully backed by US dollar
Each TUSD token has an equivalent US dollar value held in reserves to back it up.
Transparent
Using Chainlink's PoR, TUSD provides real-time independent confirmation and on-chain availability of collateral and mint control data.
Possibility of repayment
The TrustToken platform never prevents legitimate redemptions from verified clients. If an individual or organization passes an anti-money laundering (AML)/know-your-customer (KYC) check on the TrustToken platform, they can exchange TUSD for USD. At any given time, the minimum TUSD withdrawal amount is $1000.
Multi-blockchain support
TrueUSD is compatible with several blockchain networks, including Ethereum, Tron, Optimism and Arbitrum. This allows the stablecoin to be used seamlessly across all of these blockchains.
Tokenomics TUSD
At the time of writing, the price of TUSD is $0,998 with a 412/XNUMX trading volume of approximately $XNUMX million.
TUSD at the time of writing occupies 26-place According to CoinGecko, it has a market value of approximately $3,34 billion and a current supply of approximately 3,35 billion TUSD coins. The TUSD price is as close as possible to the US dollar, but minor fluctuations are possible.
TUSD is supported on five chains: Ethereum, TRON, Avalanche, BNB Smart Chain and BNB Beacon Chain. Additionally, it is supported by seven bridge networks including Polygon, Arbitrum and Optimism.
TUSD vs USDT
USDT is the most popular stablecoin in the cryptocurrency space. With a market value of $86 billion, USDT is not only the largest stablecoin by market value, but also the third largest cryptocurrency after Bitcoin and Ethereum. As the dominant player among stablecoins, USDT is the most liquid and has many use cases.
Both TUSD and USDT are pegged 1:1 to the US dollar and are backed by real world assets (RWA) such as cash reserves and cash equivalents, but that's where their similarities end. TUSD is licensed and regulated, unlike USDT, which is registered in the British Virgin Islands and is not regulated in any way, despite claims that it is adjustable.
Additionally, TUSD is much more transparent than USDT, and its recent adoption of Chainlink's PoR helps improve this transparency. At the same time, USDT has been heavily criticized for not properly auditing its reserves.
Moreover, it turned out that only a small portion of USDT reserves is represented by real money - 2,9% to be exact. More than 50% of reserves are commercial paper, which are unsecured short-term bills. To reassure users, USDT promptly exchanged commercial paper for US Treasuries, but the company's reluctance to conduct a full audit casts doubt on the reliability of its financial information.
TUSD vs USDC
The second-largest stablecoin, USDC, trails USDT with a market value of $24,35 billion. However, it is often cited as a safer alternative due to its commitment to regulation and transparency. USDC's parent company, Circle, has been issuing regular monthly audits conducted by third parties since 2018.
TUSD is fully backed by cash reserves. On the other hand, USDC (like USDT) is backed by a mixture of cash and cash equivalents. However, its cash equivalent is an SEC-registered government money market fund, signaling a commitment to regulation. Arguably, TUSD and USDC are equally compliant, but the larger market capitalization USDC provides it with greater liquidity and ease of use on crypto platforms.
Is TrueUSD (TUSD) a good investment?
Given its high level of regulation and transparency, TUSD can be considered a low-risk investment. Its meteoric rise to fourth place by market capitalization among stablecoins following the fall of BUSD also highlights its potential to expand into more DeFi channels.
Since TUSD is a stablecoin, it will not increase in value on its own. However, investors can use TUSD as a hedge against volatility, and can also store TUSD (i.e. stake, farm, or mine TUSD on DeFi platforms on Ethereum, TRON, or BNB Chain) to earn rewards.
However, the analysis and conclusions presented here or on any other website should not be construed as investment advice as cryptocurrencies are highly volatile by nature. We recommend that you conduct thorough research before making any investment. When investing, it is best to invest no more than you can afford to lose.
Final thoughts
As a regulated and transparent stablecoin, TUSD is a safer investment choice than other tokens popular among DeFi applications for liquidity pools and peer-to-peer lending. In theory, TrustToken can issue as much TUSD as users require and supply exactly the number of dollars needed, making the token attractive to investors of any portfolio size.
Stablecoins like TUSD do not appreciate in value because they are tied to real assets. However, you can invest in TUSD in the same way as in foreign currencies. After all, TUSD is backed by the US dollar, which is currently is the world's reserve currency and will most likely retain its leadership for the foreseeable future. TUSD is definitely a stablecoin to keep an eye on.