TUSD, a stablecoin, was introduced to the market in 2018. Stablecoins are a type of cryptocurrency that are pegged to fiat currencies or commodities. They offer traders the convenience of earning profits through fewer interactions with traditional banks when placing trades.
Key Takeaways
- TrueUSD (TUSD) is a stablecoin, which is a type of cryptocurrency pegged to the value of a fiat currency such as the US dollar.
- It aims to reduce the volatility of other cryptocurrencies by maintaining a stable value relative to the US dollar.
- This is achieved by holding the equivalent amount of US dollars in escrow and backing each TUSD token with a corresponding US dollar.
- TrueUSD can be used for trading, payments and remittances, and can be transferred on a blockchain network.
TrueUSD is designed to be a straightforward, dependable, and transparent stablecoin. It does not utilize any complicated algorithms or secret bank accounts. The dollar holdings for TrueUSD are spread across various bank accounts belonging to various trust companies. All parties involved have agreed to conduct monthly audits and make public collateralized holdings. The TrueUSD token employs multiple escrow accounts to minimize counterparty risk and guarantee that token holders are legally protected from theft.
How does TrueUSD work?
TrueUSD operates on the Ethereum blockchain through the use of smart contracts. These smart contracts facilitate the issuance and redemption of a tokenized version of the U.S. dollar.
When a user purchases TUSD through the TrustToken platform using U.S. dollars, the underlying smart contract automatically generates and issues an equivalent amount of TUSD, which becomes part of the token’s circulating supply.
When a user redeems TUSD through TrustToken, a smart contract automatically burns the tokens being redeemed or permanently removes them from the TUSD circulating supply, and simultaneously credits the user with a U.S. dollar amount equal to the amount of TUSD redeemed.
TrustToken does not charge fees on TUSD transactions, instead, the company generates revenue by collecting interest on the U.S. dollars held in its accounts. With TrustToken, traders have the ability to buy and sell TUSD at a 1:1 ratio, creating a natural opportunity for arbitrage in the market and maintaining the token’s peg to the dollar.
TrueUSD Features
TrueUSD is fully backed by U.S. dollars, meaning that each TUSD token has an equivalent value of U.S. dollars stored in the bank. The TUSD token is collateralized by U.S. dollars held in escrow accounts, making the market recognize the inherent value of TUSD as being equal to the price of the underlying USD.
New TUSD tokens are minted and burned by publicly-audited smart contracts to ensure stability. The TrustToken platform allows for legitimate redemptions from verified customers, and if an individual or organization passes the anti-money laundering (AML) and know your customer (KYC) checks on the platform, they can redeem TUSD for USD. The minimum amount for withdrawal is $10,000.
TrueUSD’s system is set up in a manner that allows for the exchange of USD directly with third-party escrow accounts, instead of having to wire money through the TUSD network.
TrueUSD (TUSD) vs USD Coin (USDC) vs Tether (USDT)
All stablecoins function on the same basic principle: a centralized entity holds assets in a trust account and issues corresponding tokens that represent a 1:1 claim to the underlying assets. However, Tether is generally considered to be more transparent in its operations, disclosures of holding entities, accounts, and regulatory compliance when compared to other stablecoins like TrueUSD and USD Coin.
Tether is primarily issued on the Omni blockchain, but also has a share of ERC-20 tokens, while TrueUSD and USD Coin are issued exclusively on the Ethereum blockchain as ERC-20 tokens, which makes them more compatible with a wide range of software, hardware wallets, exchanges, and other Ethereum projects.
Tether currently has the most active users and the highest number of transactions of the three stablecoins, but its circulating supply has been shrinking while TrueUSD and USD Coin have seen rapid growth in recent months. Tether also has the most trade pairs on exchanges, but TrueUSD and USD Coin are quickly catching up in this regard.
TrueUSD Development
TrueUSD is a stablecoin that was introduced in early 2018, designed to be simple, transparent and reliable. It does not use any special algorithms or hidden bank accounts, instead, its US dollar holdings are distributed across various bank accounts belonging to different trust companies. The involved parties have signed a binding agreement to conduct daily audits and publish collateralized holdings.
The token uses multiple escrow accounts to reduce counterparty risk and ensure legal protection for holders against theft.
TrueUSD is suitable for traders and exchanges as a tool to hedge against market volatility and enter markets without buying into BTC/ETH first, it can also be used by mainstream commerce, developing economies and for long-term financial contracts such as loans, salaries or prediction markets and financial institutions can use it as a trustworthy asset to trade in the crypto markets.
TrueUSD FAQ
What is TrustToken?
TrustToken is a platform that aims to create asset-backed tokens in the cryptocurrency space. The company plans to tokenize a wide range of assets such as oil, movies, timeshares, rental properties, and small businesses. The team at TrustToken is highly qualified, with employees from prestigious universities and companies such as Stanford, UC Berkeley, PwC, Google and Palantir. The company is led by four co-founders, CEO Danny/Jai An, CTO Rafael Cosman, COO Stephen Kade, and product strategist Tory Reiss.
How does the TrueUSD tokenization process work?
The process of tokenizing USD into TUSD on the TrustToken platform involves three steps:
- A user sends USD to the TrustToken platform.
- Once the funds are received, a smart contract is executed to create an equivalent amount of TUSD on the blockchain.
- The newly minted TUSD tokens are then delivered to the user, while the deposited USD are held in a third-party escrow account until they are redeemed.
What makes TrueUSD unique?
- TUSD is fully licensed and regulated in the United States. The token is audited by accounting firm Cohen & Company on a monthly basis to ensure that it is always fully backed by the U.S. dollar at a 1:1 ratio.
- TUSD is highly liquid, making it easy to trade on various leading exchanges.
- As an ERC20 token, TUSD is secured by the Ethereum blockchain, and can be stored in a wide range of software and hardware wallets.
- The bank accounts that hold the U.S. dollars backing TUSD are FDIC-insured up to $250,000.
- In addition to TUSD, TrustToken has also issued TCAD, TAUD, THKD, and TGBP tokens, with plans to issue more tokenized currencies and assets in the future.