TUSD VS FDUSD, which will be Binance's new "official" stablecoin?

Source: BlockBeats

In recent years, the stablecoin market has undergone significant changes. As the cryptocurrency sector matures and expands, stablecoins have become a key bridge connecting traditional finance and the digital currency world, with their market share and application scenarios continuously growing.

We all know that BUSD, a stablecoin developed by Paxos in collaboration with Binance, has long been the third-largest stablecoin after USDT and USDC. However, due to regulatory pressure from the SEC, Paxos chose to terminate its partnership with Binance regarding BUSD and stop issuing new BUSD, after which Binance also announced the delisting of BUSD.

Since November 2022, the trading volume of BUSD on Binance has plummeted and is set to gradually exit the historical stage by the end of December this year. This change provides opportunities for other stablecoins in the market, especially for emerging stablecoins looking to expand their market share.

Data Source: Dune

Against this backdrop, who will be Binance's new "official" stablecoin? The community is currently focusing on stablecoins commonly used in Binance launchpad trading pairs, such as the newly launched FDUSD and the historically older TUSD.

What is the background of the newly launched FDUSD by Binance?

First Digital USD (FDUSD) is issued by FD121 Limited (brand name: First Digital Labs), whose parent company, First Digital Trust, is a qualified custodian and trust company based in Hong Kong. On June 1 of this year, it officially announced the launch of the USD-pegged stablecoin—FDUSD, which is regulated in Asia.

According to data, First Digital's first round of financing was in 2020, and it has completed three rounds of financing totaling $25.15 million, with investors including Nogle and Kenetic Capital.

Data Source: Qichacha

First Digital stated when launching FDUSD that as a company registered under Hong Kong's Trust Ordinance, they must keep all FDUSD reserves in independent accounts at regulated financial institutions in Asia, which will prevent the FDUSD reserves from being mixed with other assets of First Digital Trust Limited.

Public information shows that the CEO of First Digital is Vincent Chok. According to LinkedIn, in addition to serving as CEO at First Digital, Vincent Chok has been the CEO of its parent company, Legacy Trust Company Limited, since 2015. The current COO of First Digital, Gunnar Jaerv, also previously held positions as the head of proprietary brand trust and head of the digital asset department at Legacy Trust Company Limited, working there for seven years.

Related Article: 《What is the background of the newly launched FDUSD stablecoin by Binance?》

The historically older TUSD

It is no exaggeration to say that TUSD is one of the earliest stablecoins in the market. According to its official website, TUSD was launched in April 2018 and is the first USD stablecoin operated by a regulated operator.

Although it had a relatively weak presence during DeFi Summer, TUSD (TrueUSD) was actually issued earlier than USDC (USD Coin), USDP (Pax Dollar), and BUSD. In the year it was launched, TUSD's issuance exceeded $200 million, and it secured a place in the cryptocurrency market due to its stability and reliability, becoming one of the major stablecoins at that time.

At the end of 2020, an investment company registered in the British Virgin Islands (BVI), Techteryx Ltd., led the acquisition of TUSD, which is now managed by Techteryx. It is reported that Techteryx operates globally, with offices in Asian countries and regions such as Singapore and Hong Kong. Additionally, Techteryx has established long-term partnerships with industry-leading companies to enhance user trust in TUSD and promote its adoption and development.

Application scenarios determine the ceiling of stablecoins

From the background of both, TUSD, as an earlier launched stablecoin, has a longer history and a more mature market and user base. On the other hand, FDUSD, issued by First Digital Labs, belongs to First Digital Trust and began financing in 2020, officially launching FDUSD in 2023, making it a newcomer.

For stablecoins, application scenarios are one of the most important factors. In September 2018, after Paxos obtained a license from the New York State Department of Financial Services (NYDFS) to issue stablecoins, it quickly launched the USDP stablecoin, which at its inception captured nearly 30% of the stablecoin market on Ethereum. However, due to limited application scenarios, its market share subsequently declined. This highlights the importance of application scenarios.

In comparison, TUSD and FDUSD share some similar application scenarios: both TUSD and FDUSD are widely used on cryptocurrency trading platforms as trading pairs, helping investors mitigate the impact of market volatility; due to their stability and low transaction costs, both are suitable for international cross-border payments and remittances. TUSD and FDUSD can also be used on DeFi platforms, such as lending and liquidity pools, providing stable asset options.

However, they also have different application scenarios. In terms of smart contracts and programmable finance, FDUSD particularly emphasizes its programmability, allowing users to utilize smart contracts for complex financial transactions, custodial services, and insurance arrangements without intermediaries. While TUSD can also be used in smart contracts, its applications in programmability are not as prominent as those of FDUSD.

From the perspective of asset-backed financing, business payment solutions, and daily consumption digital wallets, TUSD is more commonly seen in crypto asset collateralization and financing, especially as stable collateral on DeFi platforms, benefiting from its earlier market presence and broader acceptance. TUSD plays an important role not only in traditional cryptocurrency trading and DeFi platforms but also shows wide applicability in numerous payment scenarios globally, successfully integrating into various industries and fields.

Specifically, through Travala.com, TUSD is also used as a payment tool in the travel industry, allowing users to book travel and vacations using stablecoins. This not only provides users with more payment options but also promotes the application of cryptocurrencies in traditional industries. As a cutting-edge Web3 shopping platform, UQUID supports TUSD payments, facilitating users to purchase gift cards, clothing, and over 120 million products, deepening TUSD's penetration in the e-commerce sector.

HYVE, as the largest Web3 freelance market, accepts TUSD as a payment method, enhancing TUSD's competitiveness and application scenarios in the job market. Additionally, the NOWPayments crypto payment platform also supports physical merchants accepting TUSD as a payment method.

While FDUSD could theoretically also be used in these scenarios, its later launch may result in lower adoption in these application areas compared to TUSD.

Overall, both TUSD and FDUSD provide the core functions of stablecoins, such as serving as stable value storage and transaction mediums in cryptocurrency trading and cross-border payments. FDUSD's features in smart contracts and programmable finance are more pronounced, while TUSD has successfully integrated into various industries and fields, such as Travala.com, UQUID, HYVE, and NOWPayments, making it more mature and widely applicable in daily consumption, online shopping, and other payment needs.

Deployment platforms, chains, and market performance

As the birthplace of TUSD, Ethereum serves as its native blockchain network. TUSD initially existed as an ERC-20 token, fully leveraging Ethereum's smart contract technology for efficient management.

In addition, TUSD is also deployed on over a dozen mainstream public chains, including BSC, Avalanche, TRON, Fantom, and Polygon. As of now, TUSD has been listed on more than 100 trading platforms, including Binance, Coinbase, OKEX, HTX, and Gate.io, with the highest trading volume on DeFi automated market makers like Binance and Curve.

Now looking at FDUSD, to enhance accessibility, FDUSD has chosen to issue on Ethereum and BNB Chain, utilizing proof-of-stake (PoS) or proof-of-stake authority (PoSA) consensus mechanisms to ensure the immutability and transparency of FDUSD. Both TUSD and FDUSD also plan to deploy on more chains.

In terms of trading platforms, the newly launched FDUSD is currently traded on cryptocurrency exchanges such as Binance, BingX, BitVenus, and Gate.io, with the potential for further expansion to other major trading platforms.

As of June 2023, with another issuance of TUSD (TrueUSD), its issuance has surpassed $3 billion, with a market cap approaching BUSD, making it the fifth-largest stablecoin. In 2023, TUSD's issuance grew by over 200%, making it the only stablecoin whose issuance has continued to grow rapidly during the cryptocurrency bear market.

Due to different coordinate systems, the chart only represents trends. Data Source: glassnode

However, with the exit of BUSD, TUSD's market cap has already surpassed BUSD, approximately $2.95 billion, ranking fourth in the stablecoin market. FDUSD currently has a market cap of about $960 million.

Data Source: coinmarketcap

Overall, TUSD supports multiple blockchains, including Ethereum, Binance Smart Chain, and Avalanche, with a market cap of approximately $2.95 billion. It is widely used across various trading platforms and is suitable for cross-border payments, DeFi, and other scenarios. FDUSD is currently primarily on Ethereum and BNB Chain, featuring programmability suitable for smart contracts and financial services, with a market cap of approximately $960 million.

Can audits also be innovative?

It is reported that First Digital Labs places great importance on transparency. To ensure that reserves are accurately maintained, independent third parties such as Prescient Assurance conduct regular audits. These audits are published monthly, allowing users easy access to the latest reserve details, further enhancing the stability of FDUSD through this transparency.

TUSD has gone above and beyond in its auditing efforts. Previously, TUSD was continuously verified in real-time by an independent industry accounting firm in the U.S., The Network Firm, to ensure that its dollar reserves matched the circulating token supply at a ratio of 1:1, with a collateralization rate of 100%.

The Network Firm is an independent accounting firm based in the U.S. that specializes in the digital asset industry. Since 2016, the founding team of the firm has been at the forefront of developing crypto-native accounting and assurance services, as well as traditional tax and audit capabilities, accumulating rich experience from the industry.

Collaboration with The Network Firm enables TUSD to achieve 24/7 real-time verification, ensuring transparency and stability of its reserves and providing users with a better investment experience.

Additionally, TUSD is utilizing Chainlink's Proof of Reserves (PoR) technology to ensure minting security, further ensuring transparency and reliability. As the first stablecoin to secure minting through real-time on-chain verification of off-chain reserves, TUSD showcases a new paradigm of decentralization, transparency, and independent verification.

With the integration of Chainlink PoR, TrueUSD (TUSD) is the first USD-pegged stablecoin to provide on-chain real-time verification by independent third-party institutions, ensuring minting security and further ensuring transparency and reliability. Users can access relevant data anytime through the official website tusd.io, achieving daily automated audits.

Conclusion

The development of the stablecoin market is driven not only by technological innovation and market demand but also by significant influences from the regulatory environment. In recent years, as global regulatory agencies have increased their focus on the cryptocurrency market, the development strategies and compliance of stablecoins, as an important component of the cryptocurrency sector, have become hot topics. TUSD, as a stablecoin operating outside the U.S., has demonstrated a certain degree of flexibility and adaptability in addressing regulatory challenges.

As the profit model of stablecoins has been successfully validated by Tether, global giants like PayPal have also entered the market, creating new imaginative possibilities for the stablecoin market. As of mid-2023, the stablecoin market has surpassed $100 billion. According to market researchers, the stablecoin market is expected to grow to trillions of dollars within the next five years.

With the continuous expansion of the stablecoin market, as a key link in the cryptocurrency market, its application prospects in cross-border payments, fund transfers, and financial services are broad. TUSD and FDUSD, as important participants in the market, are expected to "eat into" BUSD's market share and play an increasingly important role in this rapidly developing market.

In comparison, the newly launched FDUSD is still a newcomer, while TUSD belongs to one of the earliest stablecoins in the market. Both TUSD and FDUSD provide the core functions of stablecoins, such as serving as stable value storage and transaction mediums in cryptocurrency trading and cross-border payments. However, FDUSD's features in smart contracts and programmable finance are more pronounced, while TUSD, due to its earlier market presence, has broader acceptance and is more mature and widely applicable in asset collateralization, financing, and daily consumption applications.