What Is TrueUSD (TUSD): TUSD Stablecoin Explained

In recent years, the world of digital currencies has experienced phenomenal growth. With over 25,000 cryptocurrencies, global market capitalization is around $1.45 trillion. As of Nov 10, 2023, the total daily crypto trading volume is $137.59 billion, with stablecoins contributing significantly, making up 72.22% of the entire crypto market 24-hour volume at $99.37 billion. From this data, it’s clear that stablecoins are vital in the crypto market. They are fundamental to maintaining the sanity of the crypto trading market, as they’re pegged to less volatile assets such as fiat currencies or commodities, ensuring a steady value amidst market fluctuations. 

With all the buzz surrounding USDT and USDC stablecoins, one can’t help but question if TUSD will live up to its expectation as the first regulated stablecoin fully backed by the U.S. dollar that employs real-time attestations from independent third-party institutions to verify its underlying reserves.

In this article, we zoom in on TUSD: What it is, how it works, steps for buying the stablecoin and more.

Key Takeaways:

• TrueUSD is a regulated stablecoin pegged 1:1 to the U.S. dollar, fully backed by cash reserves.

• Its reserves are highly transparent, due to independent real-time attestations and on-chain availability of collateralization data and minting control through Chainlink's proof of reserves (PoR).

• TrueUSD can be used on multiple supported blockchain networks, such as Ethereum, Tron, BNB Chain and Polygon.

What Is TrueUSD (TUSD)?

The fourth largest stablecoin by market cap, TrueUSD (TUSD) is a fully collateralized/legalized stablecoin that’s pegged to the U.S. dollar at a 1:1 ratio. Built on the TrustToken platform, it was introduced to the market in early 2018. 

TrustToken (since rebranded as Archblock) is a decentralized finance (DeFi) platform with two products: a “basket” consisting of five stablecoins, including TUSD, and an uncollateralized DeFi lending protocol, TrueFi, which supports the borrowing of TUSD and two other major stablecoins, USDT and USDC.

In December 2020, Techteryx, an Asia-based consortium, obtained the intellectual property rights to TUSD, effectively dissociating the stablecoin from TrueFi. 

TUSD recently burgeoned in popularity, as Binance turned to it as an alternative to BUSD when Paxos was ordered in February 2023 by the New York State Department of Financial Services (NYDFS) to halt the minting of BUSD tokens.

Is TrueUSD Safe?

Initially, TrueUSD's dollar holdings were distributed across various bank accounts belonging to different trust companies. All involved parties signed a binding agreement to conduct monthly audits and publish collateralized holdings. The TrueUSD token used multiple escrow accounts to reduce counterparty risk and ensure that token holders are legally protected against theft. The publicly audited smart contracts of TrueUSD then mint TUSD tokens when USD clears the escrow accounts and burn TUSD when USD is redeemed, maintaining a 1:1 parity between circulating TUSD and the USD in the escrow accounts.

While it offered a trustworthy fund management as you could exchange USD directly with third-party escrow accounts instead of going through the network, the TrueUSD team decided to further enhance its transparency through technology.

TrueUSD leads the way as the first stablecoin to utilize real-time attestations for its reserve holdings, independently verified by third-party institutions. Additionally, TUSD is pioneering the transparent on-chain availability of collateralization data and minting control through Chainlink's proof of reserves (PoR). Chainlink’s decentralized oracle service offers greater transparency, reliability and protection. If the fiat reserves in Chainlink’s PoR are discovered to be lower than the TUSD circulating supply, decentralized apps (DApps) can immediately activate measures to secure user funds.

TrueUSD (TUSD): How It Works

TrueUSD utilizes smart contracts to enable a tokenized version of the U.S. dollar to be issued and redeemed. Its four token standards are ERC-20 (Ethereum), TRC-20 (TRON), BEP-20 (BNB Chain) and AVAX C-Chain (Avalanche). 

When a user buys TUSD with U.S. dollars (USD) via the TrustToken platform, the smart contract underlying the platform automatically generates and issues the equivalent amount of TUSD, which becomes a part of the token's circulating supply.

If a user redeems TUSD through TrustToken, a smart contract automatically burns the tokens being redeemed or removes them permanently from the TUSD circulating supply. Simultaneously, the platform credits the user with a USD amount equal to the amount of TUSD redeemed.

TrustToken doesn’t charge purchase or redemption fees on TUSD transactions. Instead, the company generates revenue by collecting interest on U.S. dollars held in its accounts.

With TrustToken, traders are aware of their ability to buy and sell TUSD at a 1:1 ratio, creating a natural opportunity for arbitrage in the market and keeping the token at its peg to the dollar.

Key Features of TrueUSD (TUSD)

Fully Backed by USD

Every TUSD token has an equivalent U.S. dollar value stored in reserves to back it.

Transparent

Using Chainlink's PoR, TUSD offers independent real-time attestations and on-chain availability of collateralization data and minting control. 

Redeemable

The TrustToken platform never discourages or prevents legitimate redemptions from verified customers. If an individual or organization passes the anti-money laundering (AML)/ know your customer (KYC) checks on the TrustToken platform, they can redeem TUSD for USD. At any time, the minimum amount of TUSD for withdrawal is $1,000.

Multi-Chain Support

TrueUSD is compatible with several blockchain networks, including Ethereum, Tron, Optimism and Arbitrum. This enables the stablecoin to be used seamlessly across all of these blockchains.

TUSD Tokenomics

At the time of this writing, the price of TUSD is $0.998, with a 24-hour trading volume of roughly $412 million.

TUSD ranks at #26 on CoinGecko, with a market cap of approximately $3.34 billion and a current circulating supply of about 3.35 billion TUSD coins. TUSD's price is designed to stay as close as possible to that of the U.S. dollar, but slight fluctuations do occur. 

TUSD is natively deployed on five chains: Ethereum, TRON, Avalanche, BNB Smart Chain and BNB Beacon Chain. In addition, it’s supported by seven bridged networks, including Polygon, Arbitrum and Optimism. 

TUSD vs. USDT

USDT is the most popular stablecoin in the crypto sphere. With a market cap of $86 billion, USDT isn’t merely the largest stablecoin by market cap — it’s the third biggest cryptocurrency after Bitcoin and Ether. As the dominant player among stablecoins, USDT is the most liquid and has many use cases. 

Both TUSD and USDT are pegged 1:1 to the U.S. dollar, and are backed by real-world assets (RWA) such as cash reserves and cash equivalents, but their similarities end there. TUSD is licensed and regulated, unlike USDT, which is incorporated in the British Virgin Islands and not regulated in any way despite its claims of being regulated.

Additionally, TUSD is by far more transparent than USDT, and its recent embracement of Chainlink's PoR serves to enhance this transparency. Meanwhile, USDT has been plagued with heavy-handed criticisms about the lack of proper auditing of its reserves. 

Furthermore, it’s been revealed that only a tiny portion of USDT's reserves are in actual cash, 2.9% to be exact. Over 50% of its reserves are in commercial papers, which are unsecured, short-term promissory notes. USDT promptly swapped the commercial papers for U.S. Treasury Notes to assuage users’ worries, but its reluctance to undergo a complete audit casts doubt on the accuracy of its financial information.

TUSD vs. USDC 

The second largest stablecoin, USDC, trails behind USDT with a market cap of $24,35 billion. However, it’s often described as a safer alternative because of its adherence to regulation and transparency. USDC’s parent company, Circle, has been releasing regular monthly audits conducted by third-party firms since 2018. 

TUSD is fully backed by cash reserves. On the other hand, USDC (similar to USDT) is backed by a mix of cash and cash equivalents. Nevertheless, its cash equivalent is an SEC-registered government money market fund, demonstrating a commitment to regulation. TUSD and USDC’s respective compliance with regulations may be equally matched, but USDC’s larger market cap has given it more liquidity and ease of use across crypto platforms.

Is TrueUSD (TUSD) a Good Investment?

Based on its highly regulated nature and transparency, TUSD can be considered a low-risk investment. Its rapid climb to reach the fourth largest position in terms of market cap among stablecoins following BUSD’s fall also highlights its potential to expand its uses across more DeFi channels. 

Since TUSD is a stablecoin, it won’t gain value/appreciation by itself. However, investors can use TUSD as a hedge against volatility, or vault TUSD (i.e., stake, farm or mine TUSD on DeFi platforms on Ethereum, TRON or BNB Chain) to obtain rewards.

That said, the analysis and insights provided here or on any other site shouldn’t be considered investment advice, as cryptocurrencies are highly volatile in nature. We suggest you conduct thorough research before making any investment. When you do invest, the best practice is to invest no more than you can afford to lose.

How to Buy TrueUSD (TUSD)

On the Bybit exchange, you can choose to purchase and hold TrueUSD directly, or to Spot trade TrueUSD (TUSD/USDT). TUSD can also be traded via the Bybit Spot Grid Bot. For a limited period, you can also stake TUSD on Bybit Savings to earn up to 300% APR! 

Bybit currently has two exciting events celebrating its TUSD Spot listing, in which you can win from a 140,000 TUSD prize pool! 

The first event, which runs from Nov 6 through Nov 20, 2023, lets you deposit to earn a share of a 40,000 TUSD prize pool. New users who wish to join must first sign up with Bybit and deposit at least 100 USDT worth of TUSD, or deposit at least 100 USDT to trade TUSD. Existing users can also earn by accumulating at least 100 USDT worth of TUSD in their account, or depositing 100 USDT to buy TUSD.

For the second event, from Nov 7 through Nov 20, 2023, you can stake TUSD with Bybit Savings to win from a 100,000 TUSD prize pool. New users get to earn up to 300% APR by choosing the 7-day Fixed Savings plan, while current users can gain 10% APR with the Flexible Savings plan.

On top of the two 140,000 TUSD prize pool events, you can also win from a 5,000 TUSD prize pool by simply entering a lucky draw from Nov 7 to Nov 14!

Closing Thoughts

As a regulated and transparent stablecoin, TUSD is a safer investment choice than other tokens popular among DeFi apps for liquidity pools and peer-to-peer lending. Theoretically, TrustToken can issue as much TUSD as demanded by users and supply the exact amount of dollars required, making the token attractive to investors of all portfolio sizes.

Stablecoins like TUSD don’t appreciate in value, since they’re pegged to real-world assets. Having said that, you can still invest in TUSD just as you would in foreign currencies. After all, TUSD is backed by the U.S. dollar, which is currently the world's reserve currency and is likely to keep its top spot for the foreseeable future. TUSD is certainly a stablecoin to keep an eye on.

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