Topics Stablecoin
Bybit Learn
Bybit Learn
Intermediate
May 4, 2022

TrueUSD (TUSD): A Truly Reliable Stablecoin

Introduction

In the last few years, the world of digital currencies has experienced phenomenal growth. Data collected by CoinMarketCap in Jan. 2021 suggested that the total number of cryptocurrencies in the world was 7,812, with a combined market capitalization of about $325 billion. As of 2022, the average daily crypto trading volume has hit an astounding $120 billion, with the crypto market predicted to exceed $5 billion in valuation by 2026.

While many people are familiar with crypto market leaders like Bitcoin, which now dominates over 40% of the cryptocurrency market, stablecoins like TUSD are still relatively unknown to the public. Having said that, they are no less important, and should be included in every crypto investor’s portfolio.

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

What Is TrustToken?

TrustToken is a platform designed to create asset-backed tokens in the crypto space. The company's website demonstrates an ambition to tokenize assets like oil, movies, timeshares, rental properties, small businesses, and more.

TrustToken has a driven and competent team, with employees hailing from Stanford,UC Berkeley, PwC,Google and Palantir. The company's core team comprises its four co-founders: CEO Danny/Jai An, CTO Rafael Cosman, COO Stephen Kade, and product strategist Tory Reiss.

What Is TrueUSD (TUSD)?

TUSD is a stablecoin introduced to the market in early 2018.

Stablecoins are cryptocurrencies pegged to fiat currencies or commodities that have helped traders earn trading profits more conveniently through significantly fewer interactions with traditional banks every time they place a trade.

Designed to be simple, reliable, and transparent, TrueUSD doesn't use any special algorithm or hidden bank accounts.

TrueUSD's dollar holdings are distributed across various bank accounts belonging to different trust companies. All involved parties have signed a binding agreement to conduct monthly audits and publish collateralized holdings. The TrueUSD token uses multiple escrow accounts to reduce counterparty risk and ensure token holders are legally protected against theft.

TrueUSD (TUSD): How It Works

TrueUSD works based on Ethereum smart contracts on the Ethereum blockchain. These smart contracts enable a tokenized version of the U.S. dollar to be issued and redeemed.

When a user buys TUSD via the TrustToken platform with U.S. dollars, 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.

When 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 U.S. dollar 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 the 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 the equivalent U.S. dollar value stored in the bank to back it.

High Stability Levels

A TUSD token is collateralized by U.S. dollars held in the escrow account company so that the market recognizes 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.

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 $10,000.

Trustworthy Fund Management

TrueUSD's system is set up in a manner that allows you to exchange USD directly with third-party escrow accounts, instead of having to wire money through the TUSD network.

Compliant with Regulations

The TrustToken platform ensures the long-term survival of the TUSD stablecoin through regulatory compliance. All escrow account holdings are subjected to regular (monthly) attestations that are published openly.

TUSD Tokenomics

At the time of this writing, the price of TUSD is $1.00, with a 24-hour trading volume of roughly $113 million.

TUSD ranks at #65 on CoinMarketCap, with a live market cap of approximately $1 billion and a circulating supply of about 1.4 billion TUSD coins.

TUSD's price is designed to stay as close as possible to the U.S. dollar, but slight fluctuations tend to occur. The U.S. dollars that TrueUSD holds are distributed among a few trusted banks, and the stablecoin issuer doesn't have access to this money — a precautionary measure against any form of price manipulation.

TUSD is compatible with Ethereum as an ERC20 token and with BNB Chain (formerly Binance Smart Chain) as a BEP2 token (known as TUSDB). Both of these tokens act similarly, bringing more liquidity to the crypto markets.

Pros of TUSD

  • TUSD is licensed and fully regulated in the U.S.

  • Accounting firm Cohen & Company performs regular monthly audits to ensure that TUSD always remains fully backed at a 1:1 ratio by the U.S. dollar.

  • It’s possible to trade TUSD on various leading exchanges as the token has excellent liquidity.

  • As an ERC20 token, TUSD is secured by the Ethereum blockchain, giving users access to a wide range of software and hardware wallets for storing their TUSD tokens.

  • The bank accounts that hold the U.S. dollars backing TUSD tokens are FDIC-insured up to $250,000.

  • Apart from TUSD, TrustToken has also issued TCAD,TAUD,THKD, and TGBP tokens. The platform also plans to issue more tokenized currencies and assets in the future.

Cons of TUSD

  • Users who buy or redeem TUSD from the TrustToken platform are required to complete AML and KYC requirements by providing the relevant documentation. While this may strengthen some people’s trust in the platform, others in the blockchain space may consider this to be a breach of their privacy.

  • TUSD and other digital assets created by TrustToken are completely centralized. TrustToken can freeze a user's account or confiscate their tokens if they feel that the user has breached the terms and conditions of use, or disregarded the laws and regulations users of TrustToken must abide by.

  • Today, there are many stablecoins in the market … unlike many years back, whenUSDT was the only option. From USDC to GUSD, there are numerous options to choose from — and what’s great is that the list keeps growing longer.

Is TrueUSD (TUSD) a Good Investment?

The price of TUSD currently stands at approximately $1.00. Based on Cointobuy's TrueUSD analysis, the investment has a 3.0 out of 10 safety rank as of May 4, 2022, with TUSD’s value increasing to $1.01 and +0.9% expected returns in 2022. The algorithm-based prediction provided by Cointobuy is based on a steady analysis of TUSD over the last six months, with market capitalization as the dominant ranking factor.

Since TUSD is a stablecoin, it will not gain value/appreciate by itself. However, investors can use TUSD as a hedge against volatility, or vault TUSD (i.e., ​​stake, farm, 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 should not 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 only what you can afford to lose.

Buying TUSD

Before you purchase TUSD, it’s important to choose a crypto wallet that best suits your needs. A hardware wallet is often considered the safer choice, but might prove inconvenient for active crypto traders. On the other hand, a software wallet is more accessible for regular trading. The caveat is that you’ll have to choose your provider carefully, as not all providers are trustworthy.

When you have your wallet set up and ready, head over to a crypto exchange (e.g., Crypto.com) to acquire TUSD. Create an account on the exchange by filling in your name, email ID and other personal information. Once you’ve successfully registered, you can proceed to either purchase TUSD with fiat money or exchange other crypto assets you hold for it.

If you’re exchanging another crypto for TUSD, the process is quite simple — just select the amount of TUSD you wish to acquire, and choose the crypto you wish to swap it with.

If you want to buy TUSD using fiat money (e.g., U.S. dollars, euros, Brazilian Real), you can do so by paying with one of the following methods:

  • Debit card, credit card or bank transfer

Using a debit card, credit card or bank transfer is the easiest option for new users who wish to purchase TUSD.

  • P2P trading

You can buy TUSD directly from other users on the exchange's available peer-to-peer service.

  • Third-party payment

You can check the exchange to find the available options for third-party payment channels such as Advcash, Flutterwave, GEO Pay, Ininal and Simplex.

Closing Thoughts

Thanks to its near-zero risk of liquidity problems, TUSD is a safer investment choice than other tokens that are popular among DeFi applications (DApps) 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 do not appreciate in value, since they’re pegged to real-world assets. Having said that, investors can still invest in TUSD, just as they 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 #1 spot for the foreseeable future. The bottom line? TUSD is certainly a stablecoin to keep your eyes on.