What Is TrueUSD (TUSD)?

Stablecoins are a type of cryptocurrency designed to maintain a stable value, typically pegged to a fiat currency such as the US dollar. They are created to address the volatility issues that are often associated with other cryptocurrencies. Prior to the development of stablecoins, users had to sell their crypto for cash in the real world or trade them for another crypto (such as Bitcoin for Ethereum). The use of stablecoins has increased in recent years due to their potential to provide a reliable store of value, while also offering the speed, security, and transparency benefits of blockchain technology. One such stablecoin is TrueUSD (TUSD), which has gained popularity as a dependable alternative to other major stablecoins such as USDC and USDT.

TrueUSD (TUSD) was launched in March 2018 by the San Francisco-based blockchain company, TrustToken, founded in 2017 with the mission to create asset-backed tokens that provide greater transparency and security to the blockchain industry. Since its launch, TrueUSD has gained significant adoption in the cryptocurrency ecosystem. It has been listed on major cryptocurrency exchanges, and is supported by various wallets and trading platforms. In addition to its US dollar-pegged stablecoin, TrustToken has also introduced other asset-backed tokens such as TrueGBP, TrueAUD, and TrueCAD, which are respectively pegged to the British pound, Australian dollar, and Canadian dollar. The company has continued to improve its infrastructure, security, and transparency measures to provide a reliable and trustworthy stablecoin for its users. TrueUSD is a fully collateralized stablecoin backed by U.S. dollars.

How Does TrueUSD Work? Tokenization and Redeemability

As previously mentioned, TrueUSD’s primary function is to maintain a 1:1 peg with the US dollar, making it a reliable store of value for those who wish to temporarily trade their volatile cryptocurrencies.

To achieve this, TrueUSD is fully collateralized with US dollars held in escrow accounts. This implies that an equivalent amount of US dollars is kept in reserve for each TrueUSD token that is currently in use. To ensure transparency and accountability, TrustToken has partnered with independent accounting firms to conduct regular attestations of its escrow accounts. These audits are published on the TrustToken website, providing users with visibility into the collateralization and redemption process for TrueUSD.

Stablecoins backed by the US dollar, such as TrueUSD, are the most common and popular option among users due to their high level of stability and security. Nonetheless, companies issuing stablecoins can use other forms of backing, such as cryptocurrency or precious metals, to maintain a 1:1 peg with any traditional fiat currency. The following list includes the different forms of backing that can be used.

• Fiat backing: The stablecoin is backed by the equivalent value in dollars. The company has to hold dollars in its bank reserve.
• Crypto backing: The stablecoin is backed by other cryptocurrencies such as Bitcoin, meaning that the value of the stablecoin is tied to the value of the cryptocurrency backing it.
• Commodity backing: The stablecoin is backed by certain commodities such as gold or oil, which means that the value of the stablecoin is tied to the value of the underlying commodity.
• Algorithmic backing: The stablecoin is backed by another token that is related to that token. This could mean that the value of the stablecoin is derived from a formula or algorithm that takes into account the value of the related token.

TrueUSD belongs to the first category, as it is fully backed by the equivalent value in dollars.

The tokenization process for TrueUSD involves the creation of smart contracts on the Ethereum blockchain, or on other supported chains. When users want to acquire TrueUSD, they deposit US dollars into an escrow account with a licensed financial institution, and then receive the equivalent amount of TrueUSD tokens. The tokens are then transferred to the user’s wallet, and can be used for various transactions, such as trading, remittance, or payments. For those who do not know: in blockchain, tokenizing an asset refers to the process of representing a physical or digital asset as a unique digital token on a blockchain. This token can then be securely and transparently traded or transferred on the blockchain network, enabling more efficient transactions.

The redeemability of TrueUSD is a crucial feature of the stablecoin. At any time, a user can redeem their TrueUSD tokens for their equivalent US dollar value. This is done by sending the tokens back to the escrow account, and then withdrawing the corresponding US dollars. The redeemed US dollars are then transferred to the user’s bank account. To ensure the security and reliability of the redemption process, TrueUSD uses a third-party auditor to regularly verify the amount of U.S. dollars held in reserve. Additionally, TrueUSD offers a full reserve guarantee, which means that in the unlikely event that the company issuing TrueUSD were to become insolvent, users would still be able to redeem their tokens for U.S. dollars. In order to redeem TUSD for USD, an individual or organization must pass the anti-money laundering (AML)/ know your customer (KYC) checks on the TrustToken platform.

Characteristics of TUSD Coin

TUSD was originally launched as an ERC-20 token on the Ethereum blockchain, and it gained popularity as a reliable and transparent stablecoin option for cryptocurrency traders and investors. Later, in order to increase the availability and accessibility, it became available on other blockchain networks. Today, TUSD is available on several blockchain networks, including Binance Smart Chain, Polygon, Avalanche, and Tron, in addition to Ethereum. The expansion of TUSD to other blockchain networks has helped to increase its adoption and usage in various decentralized finance (DeFi) applications, increasing its flexibility and convenience.

Source: trueusd.com

To summarize the analysis of TUSD, the following are its characteristics.

• Stable value: TUSD is a stablecoin whose value is pegged to the U.S. dollar at a 1:1 ratio;
• Collateralization: TUSD is fully collateralized, which means that for every TUSD token issued, there is an equivalent amount of U.S. dollars held in reserve;
• Transparency: TUSD provides regular attestations from an independent accounting firm that verifies the amount of U.S. dollars held in reserve;
• Redeemability: TUSD is redeemable for U.S. dollars at any time, which means users can convert their coins back into U.S. dollars whenever they choose;
• Fast transactions: TUSD circulates on blockchain technology, therefore it can be sent and received quickly;
• Multi-chain support: TUSD is available on several different blockchain networks, which helps it to increase its accessibility and usability across various DeFi applications.

TUSD Reserves

TrueUSD (TUSD) has recently become the first U.S. dollar-backed stablecoin to secure its minting process with Chainlink Proof of Reserve (PoR). This is a significant development in the stablecoin space as it provides increased transparency and security for TUSD holders. For those who do not know, Chainlink is a decentralized oracle network that verifies the existence and correctness of data by comparing data from multiple sources. In the case of TUSD, Chainlink PoR verifies the existence and collateralization of the U.S. dollars held in escrow accounts that back the stablecoin.

This development is setting a new standard for stablecoins, demonstrating the importance of utilizing decentralized oracle networks for the secure and transparent minting and redemption of stablecoins.

TUSD Use Cases

TUSD can be used in a variety of ways, similar to other cryptocurrencies or stablecoins. Here are some examples:

• Trading: It can be used as a trading pair on cryptocurrency exchanges, allowing traders to buy and sell other cryptocurrencies with TUSD;
• Payments: It can be used to make payments to merchants or individuals who accept cryptocurrency payments;
• Hedging: It can be used as a hedging tool to protect against cryptocurrency market volatility;
• Store of value: It can be used as a store of value similar to fiat currencies, since TUSD’s value is pegged to the U.S. dollar;
• Decentralized Finance (DeFi): Most importantly, it can be used in various DeFi applications, including lending and borrowing platforms, yield farming protocols, and decentralized exchanges.

In the rapidly evolving world of blockchain and cryptocurrency, Decentralized Finance (DeFi) has emerged as a major trend, offering users a range of financial services. Stablecoins like TUSD play an important role in the DeFi ecosystem, as they provide a stable and reliable medium of exchange that can be moved quickly from one chain to another. With hundreds of different DeFi applications available on the market, it is crucial that stablecoins are able to interoperate with different chains, protocols, and services. TUSD’s availability on major DeFi applications has made it a popular choice for users who want to participate in the DeFi ecosystem.

TrueUSD (TUSD) is available on many major DeFi applications, including the now-popular Uniswap, SushiSwap, PancakeSwap, Aave, Compound, and Cream Finance. Overall, TUSD’s popularity in the DeFi space is a testament to the demand for stablecoins in the cryptocurrency industry, and its widespread adoption in various DeFi applications is a sign of the growing maturity and mainstream acceptance of decentralized finance.

Is TrueUSD a Good Investment?

Because TrueUSD is designed to maintain a stable value, it is not typically considered an investment in the traditional sense. However, investors can still use TrueUSD to hedge against the volatility of other cryptocurrencies or to earn a yield by staking or lending it on various decentralized platforms. For less experienced users, there are also centralized platforms that offer lending or staking services. The challenge is knowing how to choose the most reliable one with a solid history.

TrueUSD (TUSD) is considered to be one of the most reliable stablecoins in the market because it is fully backed by USD reserves and is frequently audited by top accounting firms in the US. This gives investors a high degree of confidence that their investment is secure and not subject to the same level of volatility as other cryptocurrencies.

One advantage of TrueUSD is that it provides investors with a lower-risk environment in which they can store significant amounts of money for extended periods of time. This makes it an attractive option for traders and investors who are looking to minimize their exposure to risk while still taking advantage of the benefits of blockchain technology.

Many investors and traders keep a portion of their capital in stablecoins like TrueUSD, so they can quickly take advantage of market opportunities without having to wait for the slow process of converting fiat currency into other cryptocurrencies. By keeping a portion of their funds in stablecoins, investors can significantly reduce the time it takes to move capital in and out of the market, which can be crucial when timing is a critical factor.

News on TUSD

As reported by Coindesk on February 16, 2023, there have been some unusual price movements involving the TRU token, which is the native token of TrueFi. For those who are unfamiliar with TrueFi, it is a decentralized lending protocol that connects lenders, borrowers, and portfolio managers through a smart contract protocol that is governed by the TRU token.

After Paxos announced that it would halt minting BUSD, a stablecoin controlled by Binance, many users were left wondering why Binance had mined $50 million worth of TrueUSD (TUSD). It appears that Binance needs to rely on other types of stablecoins while it works to resolve the complicated situation with BUSD. As a result, the exchange may have turned to TUSD as a viable alternative. Immediately after the news broke, the price of the TRU token soared by 220%. Many people speculated that Binance’s mining of TUSD was a signal of the company’s imminent entry into the DeFi TrueFi ecosystem, which could explain the sudden price increase. However, it’s still too early to draw conclusions as the mining of TUSD could be a temporary solution to cover a small need for liquidity. In conclusion, it appears that the speculation about the TRU token’s price increase may be unjustified.