True USD is a stablecoin in the same asset class as industry favorites like Tether and Circle’s USDC. It is a fiat-backed stablecoin pegged to the dollar’s value at 1:1. Mathematically, this implies that for every TUSD token issued, an equivalent US dollar is held in reserve.
True USD is still a relatively small player in the stablecoin industry compared to giants like Tether’s USDT and Circle’s USDC. The stablecoin makes up a paltry 1.3% of the total stablecoin market, valued at about $235 billion. TUSD’s market cap at the time of this report is hovering between $2.5 billion and $3.5 billion, a negligible figure.
Launched in 2018, TUSD joins the ranks of other stablecoin tokens looking to compete with the two successful stablecoin projects so far. TrustToken, a San Francisco-based company, launched TUSD. In 2021, TrustToken rebranded its stablecoin operations under Techteryx, a separate entity focused on scaling TUSD globally, but TrustToken remains the parent for related projects.
In recent years, several American companies have launched stablecoin projects to vie for a large slice of the booming market. Global Payment giant PayPal launched PYUSD as a side project. Ripple, a crypto-based cross-border payment platform, also launched RLUSD, its stablecoin project, and XRP, its primary product.
The global adoption of stablecoins is booming, with Tether USDT boasting over 350 million users alone. The Europe-based stablecoin firm posted a staggering $13 billion profit in 2023, making it one of the most profitable businesses. Such success attracts competitors like TUSD, who are looking to mirror and replicate.
True USD as a stablecoin
The story of TUSD stems from the need to restore trust in the stablecoin industry after three significant scandals. Its founders intentionally picked Trust USD to signal a keen focus on establishing trust in the industry.
Two significant scandals hit the stablecoin industry, costing users billions and destroying years of trust built by the crypto industry.
- USDC (USD Coin): In March 2023, USDC faced a scare when $3.3 billion of its reserves were trapped in the failing Silicon Valley Bank. This incident caused the USDC to briefly depeg, dropping to $0.87 as investors panicked. Circle, USDC’s issuer, swiftly transferred funds to another bank, restoring the peg. Though no fraud was involved, the incident highlighted the risks of centralized banking ties for stablecoins.
- Terra UST: In May 2022, Terra’s algorithmic stablecoin UST crashed, wiping out $18 billion. A large trade destabilized its peg to the dollar, triggering a death spiral with its sister token, LUNA. Mass withdrawals from the Anchor protocol, offering 20% yields, accelerated the collapse. Founder Do Kwon faced lawsuits, exposing flaws in uncollateralized stablecoins.
These incidents eroded user trust, given that stablecoins are the most stable crypto assets and are largely immune to volatility. True USD was formed on the back of these incidents.
True USD structural makeup
At its core, TUSD operates on multiple blockchains, including Ethereum, TRON, Binance Smart Chain, and others. It uses smart contracts to mint and redeem tokens when users deposit or withdraw US dollars.
The 1:1 peg to the USD is maintained through reserves held in escrow by banking partners, with every TUSD backed by a dollar. Daily attestations by independent US accounting firms verify these reserves, and integration with Chainlink’s Proof of Reserve provides real-time on-chain transparency, a first for stablecoins.
TUSD enjoys a growing global adoption. The stablecoin is recognized as legal tender in Dominica and is traded on over 100 exchanges.
How does TUSD work?
TUSD works like any other stablecoin, pegged to the dollar’s value in a 1:1 ratio. The token functions because four important concepts work together to ensure it remains pegged and accessible to end users.
- Dollar-for-dollar backing — Every TUSD in circulation is backed by an actual US dollar sitting in reserve. This process is very transparent and doesn’t involve any technical obscurity. The 1:1 backing ensures that TUSD remains pegged and keeps a steady value at $1.
- Trusted third-party custodians — TUSD was built to restore trust in the stablecoin industry; hence, it has taken extra measures to handle its reserves. TUSD reserve dollars are stored in Escrow accounts managed by regulated financial institutions.
- Real-time verification—Chainlink’s Proof of Reserve technology allows anyone to verify at any time that the token supply matches the amount of USD in reserves. There is no need to take anyone’s word for it.
- Interoperability: TUSD works with multiple networks, though it follows the ERC-20 standard at its core. This standard works seamlessly with Ethereum wallets and decentralized apps. It is also available on blockchains like Binance Smart Chain and Tron, making it more versatile.
What are the benefits of TUSD?
TUSD offers benefits similar to stablecoins but with some added twists. The project’s focus on transparency and building trust chips gives it an advantage for its users and a slight edge over its competitors.
Stability
This is a generic benefit with stablecoins. Like other stablecoins, TUSD maintains stability by pegging its value to a traditional fiat currency. It solves the long-standing problem of price volatility in cryptocurrencies by providing a more reliable and steady value.
Transparency
As the name Trust USD implies, TUSD is heavy on transparency and runs an open system that anybody can easily verify. Third-party firms regularly audit the stablecoin, allowing anyone to verify that every token in circulation has actual dollars held in regulated financial institutions.
Fast transactions
TUSD leverages its interoperability, giving its users high-speed transfers across multiple blockchains. It runs on Ethereum, TRON, Avalanche, and more. TUSD allows users to send money almost instantly with minimal fees, offering a better alternative to Ethereum’s slow transactions and high gas fees.
Compliance and security
TUSD takes significant steps to stay out of legal trouble by following compliance measures and playing within the rules of every jurisdiction. TUSD strictly follows industry-wide measures like anti-money laundering laws to maintain smooth and compliant operations.
Conclusion
TrueUSD (TUSD), launched in 2018 by TrustToken (now Techteryx), emerged as a fiat-backed stablecoin aiming to restore trust in a scandal-rocked industry. Pegged 1:1 to the US dollar, TUSD’s $3 billion market cap captures just 1.3% of the $235 billion stablecoin market, trailing giants like Tether and USDC.
Daily third-party audits bolster its focus on transparency. Chainlink’s real-time Proof of Reserve sets it apart and addresses the fallout from crises like Terra UST’s $18 billion collapse and USDC’s 2023 de-pegging scare.
Operating across Ethereum, TRON, and other blockchains, TUSD ensures fast, low-cost transactions and broad interoperability, making it a versatile player in DeFi and global payments. Recognized as legal tender in Dominica and traded on over 100 exchanges,
TUSD’s compliance and security measures enhance its appeal. While its small market share reflects the dominance of established competitors, TUSD’s commitment to stability, transparency, and regulatory adherence positions it as a credible alternative.
As stablecoin adoption surges, evidenced by Tether’s 350 million users and $13 billion profit in 2023, TUSD’s growth potential hinges on leveraging its trust-driven model to carve out a more significant niche in the booming crypto economy.
