An Overview of the Stablecoin TrueUSD (TUSD)

Key Insights

• TUSD is a stablecoin pegged to the value of the US dollar.
• TUSD operates its minting and burning mechanism through smart contracts that control the issuance of new coins, redemption of dollar reserves, and the corresponding destruction of TUSD.
• Last year, TUSD experienced rapid growth in asset management scale, stablecoin circulation, industry adoption, and technological development.
• This article introduces the stablecoin TUSD and its operational mechanism, along with additional noteworthy points.

In the cryptocurrency space, stablecoins play a crucial role, and fiat-backed stablecoins are particularly significant: users can convert profits from trading into this type of stablecoin for value preservation without needing to cash out into fiat.

Stablecoin service providers need to build separate systems for stable asset generation, peg maintenance, and issuance volume adjustment, and the design of these mechanisms largely determines the performance of the stablecoin. TUSD falls under the category of fiat-backed stablecoins.

TUSD has performed exceptionally well in recent months, with its circulation increasing by over 400% in 2023. It has also achieved integration with multiple protocols, blockchain networks, and financial institutions, becoming a payment method for mainstream enterprises. As the fourth largest stablecoin, TUSD has a market cap of over $3.3 billion, following USDT, USDC, and DAI.

TrueUSD (TUSD) Background

The world's largest cryptocurrency exchange, Binance, announced that it would use TUSD to replace its stablecoin BUSD due to regulatory issues. On March 17, 2023, Binance swapped its reserves of BUSD for TUSD and USDT.

TrueUSD is a stablecoin pegged to the value of the US dollar, issued and managed by Techteryx. In 2020, Techteryx acquired management rights from the parent company of TrustToken, Archblock, Inc. Previously, TUSD was managed by Archblock, which also oversees financial applications like TrueFi and TrueFX. After the acquisition, TUSD now operates independently from other applications and systems managed by Archblock, under the TrustToken brand.

TrueUSD has established partnerships with multiple platforms in the payment sector, showcasing a wide range of practical use cases.

Users of Travala.com can use TUSD to book vacation packages, demonstrating TUSD's practical application value in the travel sector; the well-known Web3 shopping platform UQUID now supports users in purchasing over 120 million products with TUSD, including gift cards and clothing.

Additionally, the largest Web3 freelance market, HYVE, has also added TUSD as a payment method, enhancing TUSD's adoption and competitiveness in the job market; NOWPayments has enabled its merchants to accept TUSD and other cryptocurrency payments.

Based on the known information, the TUSD management team is committed to creating a smooth and convenient minting and circulation system to ensure a 1:1 peg of TUSD to the US dollar, with the goal of establishing a fiat stablecoin issuance system.

The specific implementation mechanism is as follows:

How TrueUSD Works

The TrueUSD system consists of a set of smart contracts and a cash reserve mechanism. Since TUSD relies on dollar collateral, its circulation cannot exceed the amount of its dollar reserves. To mint TUSD, users must first deposit US dollars on the TUSD platform. The smart contract then mints TUSD equal to the deposited dollar amount and transfers it to the user's account. The minted TUSD can be used like any other cryptocurrency, while the platform is responsible for holding the user's dollar assets. Currently, users can mint TUSD on Ethereum, Binance Smart Chain (BSC), Avalanche, and Tron.

When redeeming TUSD, users must deposit TUSD on the platform in exchange for dollar assets, while the smart contract automatically destroys the redeemed TUSD. The Mint and Burn contracts ensure that the circulation of TUSD always maintains a 1:1 ratio with the fiat reserves deposited on the platform.

When minting TUSD, the platform mints tokens at a 1:1 ratio based on the amount of cash deposited, and users can redeem their assets at any time, creating arbitrage opportunities that help maintain a stable peg. For example, when the price of TUSD falls below $1, arbitrageurs can buy TUSD at market price and redeem it at $1, thus profiting when TUSD's price deviates from the dollar peg.

To ensure a 1:1 peg, TUSD does not charge any fees during the minting and redemption processes. The system invests its held fiat assets into interest-bearing projects to generate income.

Features of TrueUSD

TUSD's rapid rise is attributed to its real-time verification ensuring transparency, along with broader promotion and integration.

Proof of Reserves

Stablecoins backed by commodities and fiat have faced criticism due to their reserve structures. The value of a stablecoin's reserves should at least equal its circulating value. Although most stablecoins claim to be solvent and well-capitalized, users only feel secure after personally verifying this.

To ensure transparency and take full responsibility for holders, TUSD has partnered with Chainlink to advance its proof of reserves project. TUSD states that it is utilizing Chainlink's real-time decentralized data management technology to develop a proof of reserves (PoR) mechanism that updates reserve data in real-time, allowing users to verify the status of fiat reserves.

Support from Multiple Exchanges

Currently, several exchanges are integrating TUSD. On exchanges that support TUSD, users can deposit TUSD and trade supported TUSD pairs. Major exchanges like Binance, OKX, and HTX have already supported TUSD trading. On these platforms, users can trade TUSD against other stablecoins and cryptocurrencies like Bitcoin. With support from multiple exchanges, millions of users worldwide can use TUSD, and holders can easily utilize it for daily transactions and investments.

Cross-Chain Compatibility

Users can mint TUSD under different smart contract standards, depending on the specific blockchain network. Popular blockchains like Avalanche, Ethereum, BNB Chain, and Tron have all supported TUSD. With multi-chain support, TUSD holders can manage their stablecoins across different platforms. Protocols on these platforms can also easily integrate TUSD.

Security of TrueUSD

Techteryx is continuously working to enhance the transparency and security of TUSD. The improved minting, reserve, and redemption architecture currently aligns with this goal. TrueUSD uses custodial accounts to mint and destroy TUSD. Before minting TUSD, the smart contract verifies the US dollar fiat in the custodial account. Once users complete the redemption and the dollar in the custodial account is settled, the smart contract automatically destroys the corresponding TUSD.

Starting from December 2023, the well-known accounting firm Moore Hong Kong has partnered with TUSD for verification services of fiat reserves. Beginning at the end of January 2024, Moore Hong Kong will provide daily verification services for TUSD and offer daily reserve proof reports to TUSD holders. Additionally, TUSD has also partnered with Chainlink for the proof of reserves mechanism. Through real-time reserve data, users can verify the solvency and stability of the stablecoin at any time.

With sufficient reserves and the normal operation of minting and burning contracts, TUSD's expected value will align with the US dollar.

It is worth noting that TUSD, as a secure investment channel, is expected to maintain value stability due to its system's intentional design, thus not experiencing significant value fluctuations. Therefore, compared to other stablecoins, TUSD has a low probability of value volatility. As long as its dollar peg mechanism operates normally, TUSD's value fluctuation range is minimal, unless arbitrage trading occurs. This means that while users can stake TUSD for returns, the token will still primarily serve its intended value-preserving function.

Conclusion

Due to the varying personal thoughts, technical experiences, and trading habits of investors, the cryptocurrency space requires a stablecoin suitable for all types of investors. TrueUSD's mechanism is strictly pegged to the US dollar, while its high transparency and widespread availability have attracted a large number of investors. TUSD has been listed on multiple exchanges, networks, and protocols, greatly enhancing its usability, allowing investors to easily acquire the token. To reassure investors and ensure the audit process is credible and the system highly transparent, TUSD has partnered with reputable companies for reserve proof data audits. Compared to other stablecoins, TUSD is continuously gaining popularity, providing investors with a new option that preserves value while being readily consumable.

Before choosing any stablecoin as a preferred option, please conduct thorough research. Furthermore, this article only analyzes the characteristics of TUSD as a stablecoin and does not constitute financial or investment advice.