Get to know the stablecoin TrueUSD (TUSD) in one paragraph.

Key Points Outlook

TUSD is a stablecoin pegged to the value of the US dollar.
TUSD operates its minting and burning mechanism through smart contracts to control the issuance of new coins, redemption of US dollar reserves, and the corresponding destruction of TUSD.
Last year, TUSD experienced rapid growth in asset management scale, stablecoin circulation, industry popularity, and technological development.
This article introduces the stablecoin TUSD and its operating mechanism, and supplements other points worth paying attention to.

In the field of cryptocurrency, stablecoins play a crucial role, and the importance of fiat-pegged stablecoins is particularly prominent: users can convert profits into this type of stablecoin for value preservation when trading, without the need to withdraw in fiat currency.

Stablecoin service providers need to separately build systems for stable asset generation, peg maintenance, and issuance adjustment. The design of these mechanisms largely determines the performance of stablecoins. TUSD belongs to the category of fiat-pegged stablecoins.

In the past few months, TUSD has performed well, with its circulation increasing by over 400% in 2023. It has also integrated with multiple protocols, blockchain networks, and financial institutions, and has become a payment method for mainstream enterprises. As the fourth largest stablecoin, TUSD has a stablecoin issuance value of over 3.3 billion US dollars, second only to USDT, USDC, and DAI.

Background Introduction of TrueUSD (TUSD)

Binance, the world's largest cryptocurrency exchange, announced that due to regulatory issues with its stablecoin BUSD, it will use TUSD as a replacement. On March 17, 2023, Binance swapped its BUSD reserves 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 the management rights from TrustToken, the parent company of Archblock, Inc. Previously, TUSD was managed by Archblock, which also owns financial applications such as TrueFi and TrueFX. After the acquisition, TUSD is now operated independently from other applications and systems managed by Archblock, under the brand name of TrustToken.

TrueUSD has established partnerships with multiple platforms in the payment field, demonstrating its wide range of practical use cases.

Travala.com users can use TUSD to book vacation accommodations, demonstrating the practical application value of TUSD in the travel industry; the well-known Web3 shopping platform UQUID now supports users to purchase over 120 million items using TUSD, including gift cards and clothing.

In addition, the largest Web3 freelance market, HYVE, has added TUSD as a payment method, increasing the popularity and competitiveness of TUSD in the job market; NOWPayments has supported its merchants to accept TUSD and other cryptocurrencies as payment methods.

Based on known information, the TUSD management team is committed to building a smooth and convenient coinage and circulation system, ensuring a 1:1 peg with the US dollar, with the goal of establishing a legal stablecoin issuance system.

The specific implementation mechanism is as follows:

Operation Principle of TrueUSD

The TrueUSD system consists of a set of smart contracts and a cash reserve mechanism. As TUSD relies on the collateral of the US dollar, the circulation of TUSD must not exceed the amount of its US dollar reserves. If users need to mint TUSD, they need to deposit US dollars on the TUSD platform first. Subsequently, smart contracts will mint an equivalent amount of TUSD to the deposited US dollars and transfer it to the user's account. The minted TUSD can be used like other cryptocurrencies, and the platform is responsible for custodial of the user's US dollar assets. Currently, users can mint TUSD on Ethereum, Binance Smart Chain (BSC), Avalanche, and Tron Chain.

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

When minting TUSD, the platform mints tokens in a 1:1 ratio based on the deposited cash amount, and users can redeem assets at any time, creating arbitrage opportunities to maintain a stable peg ratio. 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 the price of TUSD deviates from the pegged value of the US dollar.

To ensure a 1:1 peg ratio, no fees are charged during the minting and redemption of TUSD. The system invests the custodied fiat assets in interest-bearing projects to generate income.

Features of TrueUSD

The rapid rise of TUSD is attributed to its real-time verification, ensuring its transparency, and its wider promotion and integration.

Reserve Proof

Stablecoins backed by commodities and fiat currency have been criticized for their reserve structures. The value of the reserve fund of stablecoins should be at least equal to the value of their circulation. Although most stablecoins claim to have the ability to pay and sufficient reserve funds, users will only be reassured after personally verifying this point.

To ensure transparency and hold holders fully accountable, TUSD has partnered with Chainlink to advance its Reserve Proof project. TUSD is using Chainlink's real-time decentralized data management technology to develop a Proof of Reserve (PoR) mechanism, which updates reserve fund data in real-time, allowing users to verify the status of the fiat reserve fund.

Support from Multiple Exchanges

Currently, multiple exchanges are integrating TUSD. In exchanges that support TUSD, users can deposit TUSD and trade supported TUSD trading pairs. Mainstream exchanges such as Binance, OKX, and HTX have all supported TUSD trading. On these platforms, users can easily use TUSD for daily trading and investment, with millions of users worldwide having access to TUSD.

Cross-Chain Compatibility

Users can mint TUSD under different smart contract standards, depending on the specific blockchain network. Popular blockchain networks such as 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 committed to improving the transparency and security of TUSD. The improved coinage, reserve, and redemption architecture currently align with this goal. TrueUSD uses custodial accounts for minting and burning TUSD. Before minting TUSD, smart contracts verify the US dollar fiat currency in the custodial account. Once users complete the redemption and the US dollar settlement in the custodial account is completed, the smart contract will automatically destroy the corresponding TUSD.

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

In the case of sufficient reserves and normal operation of the minting and burning contracts, the expected value of TUSD will remain consistent with the US dollar.

It is worth noting that TUSD, as a secure investment channel, is expected to have minimal value fluctuations due to its intentional maintenance of value stability within its system. Therefore, compared to other stablecoins, TUSD has a low probability of value fluctuations. As long as its US dollar pegging mechanism operates normally, the value fluctuation range of TUSD is extremely small, unless there are arbitrage trading opportunities for stablecoins. This means that despite users being able to stake TUSD to earn returns, the token can only fulfill its intended value preservation role.

Conclusion

Due to differences in investors' personal preferences, technical experience, and trading habits, the cryptocurrency field requires a stablecoin suitable for all types of investors. TrueUSD's strict peg to the US dollar, combined with its high transparency and widespread availability, has attracted a large number of investors. TUSD has landed on multiple exchanges, networks, and protocols, greatly enhancing its usability, and investors can easily acquire the token. To reassure investors and ensure the credibility of the audit process and high transparency of the system, TUSD has partnered with reputable companies for the audit of reserve proof data. Compared to other stablecoins, TUSD is becoming increasingly popular, providing investors with a new choice that can both preserve value and be used for consumption at any time.

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

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