What Is TrueUSD (TUSD)?
What Is TrueUSD (TUSD)? In the cryptocurrency market, fiat-pegged stablecoins serve an important function: they allow users to keep their winnings in between trades without having to sell them. Production of stable assets, maintenance of the peg, and management of supply are all defined independently by stablecoin facilities. How well a provider built their mechanisms into their stablecoins greatly affects how well they perform. Among these stablecoins is TUSD, which stands for TrueUSD.
With a 400% increase in TUSD stablecoin circulation in 2023 alone, TUSD has made remarkable success in recent months. Also, it’s used as a payment option by big businesses and is a part of other protocols and blockchain networks. After USDT, USDC, and DAI, TUSD has become the fourth biggest stablecoin with about $3.3 billion in issued stablecoin value.
Understanding TrueUSD (TUSD)
The world’s largest cryptocurrency exchange by traded volume, Binance, has stated that it will be replacing the BUSD stablecoin with TUSD due to regulatory difficulties. Exchanges of BUSD for TUSD and USDT will take place on March 17, 2023.
As a stablecoin, TrueUSD’s value is fixed at one dollar per coin. Techteryx, the company behind TrustToken, took over its management after purchasing it from Archblock, Inc. Before the 2020 acquisition, Archblock oversaw TUSD and its associated financial apps, such as TrueFi and TrueFX. Now that it’s part of the TrustToken brand, TUSD runs independently of Archblock’s other apps and services.
The payment sector is another area where TrueUSD finds use, with several partnerships across multiple platforms demonstrating TUSD’s practical applications. As an example of its usefulness and practicality in the tourist business, Travala allows customers to book their holidays using their TUSD. Also supporting TUSD is UQUID, a top Web3 marketplace where customers can buy anything from gift cards to apparel among 120 million things.
To further boost TUSD’s marketability and competitiveness, it is now accepted as payment on HYVE, the biggest Web3 freelancing marketplace. At long last, NOWPayments has arrived, allowing companies to take cryptocurrency payments using TUSD as one of them. Publicly accessible data suggests that TUSD’s management is intent on creating a formal stablecoin issuance mechanism, with the goals of ensuring a smooth minting and circulation process and keeping the stablecoin pegged.
How Does TrueUSD Work?
A system of cash reserves and a collection of smart contracts make up TrueUSD’s system. The amount of TUSD in circulation must be equal to or greater than the amount of fiat USD kept in reserves because TUSD is backed by cash. So, to create TUSD, one must deposit US dollars into the TUSD platform. In exchange for the user’s fiat deposit, the smart contract creates and sends them TUSD. The user’s fiat USD remains in the custody of the site, but the newly created TUSD can be utilized similarly to other cryptocurrencies. At the moment, four different blockchain networks—Ethereum, BSC, Avalanche, and TRON—are capable of minting TUSD.
The user deposits TUSD into the platform, receives USD, and the smart contract automatically burns the redeemed TUSD. The Mint and Burn contract ensures that the ratio of circulating TUSD to fiat currency in reserves remains at 1:1.
One reason for the strict peg maintenance is the arbitrage opportunity presented by TUSD, which is created at a 1:1 ratio with actual dollars and may be redeemed whenever desired. Consider an arbitrager who buys TUSD at market price and sells them at $1 each when TUSD falls below $1. The arbitrager’s profit is proportional to the percentage by which the price deviates from the dollar peg. There are no fees associated with minting or redeeming TUSD, guaranteeing a 1:1 value for the user. By investing the fiat currency in programs that pay interest, the system makes money.
Features of TrueUSD
Rapid adoption and integration, along with TrueUSD’s transparency through real-time attestations, have contributed to the cryptocurrency’s meteoric rise.
Proof of Reserves
Critics have already pointed out problems with the reserve structure of stablecoins backed by commodities and cash. The reserve of a stablecoin should at least match the value of the stablecoins in circulation. Users can only have faith in stablecoins if they can confirm the claims made about their solvency and reserves.
For its Proof of Reserves project, TrueUSD teamed up with Chainlink to ensure complete openness and responsibility to holders. According to TrueUSD, they are developing a Proof of Reserves (PoR) facility that users may utilize to confirm the status of fiat reserves using Chainlink’s real-time decentralized data management technology. The data on reserves will also be updated in real time by the PoR.
Multiple Exchange Support
Several platforms are starting to support TUSD. Users can deposit TUSD on supported exchanges and trade it for matched cryptocurrencies. Binance, OKEx, and HTX are just a few of the prominent exchanges that have added support for TUSD. Trading TUSD against Bitcoin and other stablecoins is possible on these sites. Traders and investors all around the globe have access to TUSD as it is listed on many exchanges, and holders of the newly created stablecoin have easy access to it for everyday transactions and investments.
Cross-Chain Compatibility
Various blockchain networks support different smart contract specifications for minting TUSD. Some of the most well-known blockchains that support TUSD are Avalanche, Ethereum, BNB Chain, and TRON. The ability to manage one’s stablecoin on more than one chain gives TUSD holders more flexibility. Also, TUSD can be simply integrated into protocols on these networks.
Is TrueUSD Safe?
Techteryx has focused on ensuring that TUSD is secure and transparent. Modernizations made to achieve this aim gave rise to the present system of minting, reserves, and redemptions. Minting and burning of TUSD is done by TrueUSD using escrowed accounts. Before minting TUSD, the smart contract confirms possession of the fiat USD in the escrow account. After the USD is redeemed and the escrow account is cleared, the TUSD is immediately burned.
To vouch for its fiat reserve, TUSD has hired the prestigious accounting firm MooreHK as of December 2023. However, The daily attestation services for TUSD and the daily attestation reports for TUSD token holders will be provided by MooreHK beginning in late January 2024. TrueUSD (TUSD): Additionally, Chainlink is one of its partners for its POR facility. The solvency and stability of the stablecoin can be determined at any time using the real-time reserves data. Assuming the mint-and-burn contract keeps working as intended and the reserves remain solvent, the value of TUSD is anticipated to remain equal to the US dollar.
For those considering TUSD as a secure investment, it’s worth noting that the system it runs on is designed to intentionally maintain its value stable, so investors shouldn’t anticipate a lot of volatility. That being said, its value will probably remain stable in comparison to other cryptocurrencies. Assuming the peg system continues to function, stablecoin arbitrage traders will be the only ones affected by TUSD price changes. While users can stake TUSD to earn yield, this means that TUSD can only play the value preservation role it was created for.
Conclusion
A stablecoin that caters to all types of investors is desperately needed in the cryptocurrency market. Here we are talking about things like trading habits, technical expertise, and personal beliefs. The goal of the system proposed by TrueUSD is to both entice investors with its transparent and widely available platform and to secure the USD peg.
Investors may easily purchase TUSD thanks to the stablecoin’s increased availability made possible by the integration of different networks, protocols, and exchanges. An effort to provide investors with a trustworthy audit procedure and keep the system transparent has been made through partnerships with respectable firms for its PoR data and audit. The US Dollar (TUSD) is a stablecoin that is gaining popularity and gives investors another choice to keep their money safe and make purchases simply.
