What Is the TrueUSD (TUSD) Stablecoin?
TrueUSD (TUSD) is a stablecoin pegged to the US dollar, with live on-chain attestations by independent institutions. TUSD is available on major trading platforms including Binance and OKX, and is live on popular blockchains including Ethereum, TRON and BNB Chain.
Key Takeaways
-
TUSD (TrueUSD) is a stablecoin pegged to the value of the US dollar.
-
It operates a mint-and-burn system managed using smart contracts that control the generation of new TUSD, redemption of reserved USD, and burning minted TUSD in correspondence.
-
TUSD has seen exponential growth in the previous year in Assets Under Management (AUM), amount of stablecoin in circulation, industrial adoption, and technological development.
This article is sponsored by TRON.
Stablecoins play a key role in the crypto space, where fiat-pegged stablecoins play a major role: value preservation in between trades without requiring users to off-ramp their gains in order to take profit.
Stablecoin facilities define separate systems for stable asset production, peg maintenance, and supply regulation. The performance of each stablecoin depends highly on how the provider designed these systems. TUSD (TrueUSD) is one of these stablecoins.
TUSD has progressed impressively in the past few months with over 400% growth in TUSD stablecoin in circulation in 2023 alone. It is also integrated into multiple protocols, blockchain networks, financial institutions, and as a payment solution in mainstream firms. TUSD has emerged as the fourth largest stablecoin, boasting over $3.3 billion worth of stablecoin issued, only behind USDT, USDC, and DAI.
Background of TrueUSD (TUSD)
Binance, the world’s largest cryptocurrency exchange by traded volume, announced that it would be replacing the BUSD with TUSD following regulatory issues with the stablecoin backed by the exchange. It would proceed to swap BUSD in its reserves to TUSD and USDT on March 17, 2023.
TrueUSD is a stablecoin pegged at a 1:1 ratio to the US dollar. It is issued and managed by Techteryx who acquired the management rights from Archblock, Inc., the firm behind TrustToken. Before the acquisition in 2020, TUSD was managed by Archblock alongside other financial applications under its hood including TrueFi and TrueFX. With the acquisition, TUSD now operates separately from these other applications and systems managed by Archblock under the TrustToken brand.
TrueUSD is also used in the payment sector, with various partnerships across different platforms showcasing practical use cases of TUSD.
Travala lets users book their holidays using their TUSD, demonstrating practical application and value in the tourism industry. Meanwhile, UQUID, a leading Web3 shopping platform that enables users to purchase over 120 million products ranging from gift cards to clothing, also supports TUSD.
TUSD is also accepted as payment method on HYVE, the largest Web3 freelancing marketplace, enhancing TUSD’s competitiveness and application in the job market. Finally, NOWPayments lets businesses accept crypto payments, and TUSD is supported as a payment method.
❓Can #TUSD be used in a real world scenario?
— TrueUSD (@tusdio) February 20, 2023
✅The answer is yes.
📜TUSD #StableCoin can be used for many things out there, get yourself a pizza🍕, find a job 🖥️ or even book your holiday 🧳.@travalacom @JustMoneyIO @NOWPayments_io @join_hyve
👇Learn more here! pic.twitter.com/ZA2PvYqIVp
According to available information, the management is focused on the development of TUSD as a statutory stablecoin issuance system with a focus on delivering a seamless minting and circulation system and also maintaining the stablecoin’s peg.
Here’s how it hopes to achieve this.
How Does TrueUSD Work?
TrueUSD’s system comprises a set of smart contracts and a cash reserves system. Since TUSD is backed by cash, the amount of circulating TUSD must be at least equal to the fiat USD held in the reserves. Therefore, to mint TUSD, a user deposits US dollars on the TUSD platform. The smart contract mints TUSD equal to the deposited fiat and transfers it to the user. The minted TUSD can be used like any other cryptocurrency while the platform keeps custody of the user’s fiat USD. TUSD can be minted on four blockchain networks currently, including Ethereum, BSC, Avalanche, and TRON.
To redeem TUSD, the user deposits TUSD to the platform and receives USD while the smart contract burns the redeemed TUSD automatically. The Mint and Burn contract maintains the 1:1 ratio between circulating TUSD and Fiat deposited in the reserves.
Since TUSD is minted at a 1:1 ratio with real cash and can be redeemed at will, it presents an arbitrage opportunity which also contributes to the tight peg maintenance. For instance, when TUSD goes below 1$, an arbitrager can purchase TUSD at the market price and redeem them at 1$ each, making a profit according to the percentage deviation from the dollar peg.
To ensure a 1:1 value for the user, TUSD charges no fee in the minting or redemption process. The system generates revenue by committing the fiat in its custody to interest-bearing programs.
Features of TrueUSD
TrueUSD’s rapid rise is due to its transparency with real-time attestations, along with growing adoption and integration.
Proof of Reserves
Stablecoins backed by commodities and fiat have faced criticism in the past over the structure of their reserves. A stablecoin is expected to have a reserve that is minimally equal to the value of the circulating stablecoins. While most stablecoins claim solvency and a solid reserve, users can only be confident if they can verify this claim.
In line with the goal of transparency and full accountability to holders, TrueUSD has partnered with Chainlink for its Proof of Reserves project. Using Chainlink’s real-time decentralized data management technology, TrueUSD claims to be working on a Proof of Reserves (PoR) facility that enables users to verify the fiat reserves status. The PoR will also update reserves data in real-time.
Multiple Exchange Support
Several exchanges are integrating TUSD. On supported exchanges, users can deposit TUSD and trade it with paired cryptocurrencies on these exchanges. Exchanges that have developed support for TUSD include major exchanges like Binance, OKX, and HTX amongst others. On these platforms, TUSD can be traded against other stablecoin and crypto assets like Bitcoin. By being available on several exchanges, TUSD becomes accessible to millions of traders worldwide, and TUSD holders can easily use their minted stablecoin for their routine trades and investing.
Cross-Chain Compatibility
TUSD can be minted in different smart contract standards depending on the blockchain network. TUSD is available on popular blockchains including Avalanche, Ethereum, BNB Chain, and TRON. With the multi-chain support, TUSD holders can explore different platforms for managing their stablecoin. Protocols on these networks can also integrate TUSD easily.
Is TrueUSD Safe?
Techteryx has channeled efforts toward making TUSD transparent and safe. The current minting, reserve, and redemption structure is a product of improvements that are in line with this goal. TrueUSD uses escrowed accounts for the minting and burning of TUSD. The smart contract verifies custody of the fiat USD in the escrow account before minting TUSD, and automatically burns the TUSD once the USD is cleared from the escrow account after redemption.
As of December 2023, TUSD has engaged leading accounting firm MooreHK to provide attestation service on its fiat reserve. Starting from late January 2024, MooreHK will provide daily attestation services to TUSD and present daily attestation reports for TUSD token holders. It has also partnered with Chainlink for its PoR facility. Using the real-time reserves data, users can verify the stablecoin’s solvency at any time and ascertain the stability of the stablecoin.
If the reserves stay solvent and the mint-and-burn contract continues to function as described, the value of TUSD is expected to stay equivalent to the US dollar.
In the context of TUSD as a safe investment; it is important to note that much volatility isn’t expected for TUSD since it operates a system that is intentional about keeping its value stable. Therefore, relative to other cryptocurrencies, its value is unlikely to fluctuate. If the peg system maintains its operation, fluctuations in the value of TUSD will be insignificant except for stablecoin arbitrage traders. On the other hand, this means that TUSD can only play the value preservation role it is meant for, although users can stake TUSD to earn yield.
Final Thoughts
The crypto space needs a stablecoin that works for every class of investor. This is as regards personal convictions, technological experience, and trading patterns. TrueUSD presents a system that is meant to tightly protect the USD peg and also attract investors through ubiquitous availability and transparency. The integration of multiple exchanges, networks, and protocols improves the availability of the stablecoin, and investors can easily purchase TUSD. The partnership with reputable firms for its PoR data and audit is an attempt at delivering a trustworthy audit process and maintaining a transparent system for investors. In comparison with other stablecoins, TUSD is growing in adoption and presents investors with yet another alternative to preserve the value of their capital and spend easily.
Having said this, always do your research on any stablecoin before adopting it as your go-to stablecoin. Also, note that this article only discusses TUSD as a stablecoin and should not be taken as financial or investment advice.
CoinGecko's editorial team comprises writers, editors, research analysts and cryptocurrency industry experts. We produce and update our articles regularly to provide the most complete, accurate and helpful information on all things cryptocurrencies. Follow the author on Twitter @coingecko
Or check it out in the app stores
