TrueUSD (TUSD) is the first token issued by TrustToken, a blockchain platform for creating asset-backed tokens that can easily be bought and sold around the world. TUSD is an ERC20 stablecoin backed by the U.S. Dollar. The token uses third-party escrow accounts to limit counterparty risk and provide holders with protections against fraud and misappropriation.
Volatility is the bane of every crypto trader’s existence and it’s one of the main problems that hinders the broader adoption of cryptocurrencies. Investors who deal in traditional assets are unsurprisingly alarmed when they see the price of Bitcoin and other coins go up or down by thousands of dollars over the span of a few days.
TrustToken’s “stablecoins” are a potential solution. Unlike most cryptocurrencies, they don’t experience any changes in price because their value is tied to stable assets like fiat currencies, precious metals, and minerals.
Who TrueUSD is Designed For
Cryptocurrency Traders – TUSD is shielded against volatility because it’s pegged against a stable fiat currency. It can be used by traders in crypto markets without any of the volatility problems that plague established cryptocurrencies.
Businesses – Users and businesses can enjoy the benefits of cryptocurrencies (fast transaction speeds, global reach, etc.) without having to deal with their most common problems (volatility, poor integration, etc.). Businesses can use TUSD to make payments, take out loans, and buy goods and services, and create a new economy of crypto financial applications.
Developing Countries – Countries that have poor financial infrastructure can use TUSD tokens for trade and more.
Banks and Financial Institutions – Banks that want to use cryptocurrencies but have reservations can enjoy all the benefits of the blockchain by using TUSD tokens.
How TrueUSD Works
TrustToken has partnered with several trust companies and banks to establish secure escrow agreements. Users must first complete a KYC/AML process before they can send their U.S. dollars to a trust company to create an escrow agreement.
Once the trust company verifies a user’s identity and receives the funds, their API instructs TUSD’s smart contract to issue an equivalent amount of TUSD to the user’s wallet address. The trust companies handle all transactions directly. TrustToken doesn’t have any access and isn’t involved in the transfer of the escrowed funds.
TrustToken is starting with USD because the currency is the most common base trading pair in the industry. They plan to create TrueEuro, TrueYen, and tokens for goods like precious metals and real estate assets in the future. Users will also be able to create their own tokens using the TrustToken platform.
Why Use Banks and Escrow Accounts?
TrustToken is taking a hybrid approach by using escrow accounts. Currently, smart contracts and DAOs can’t independently access financial institutions and directly own bank accounts. Opening a bank account requires a human representative. Trust companies and escrow accounts are a convenient workaround.
TrustToken acknowledges that escrow accounts aren’t the best option for the management and distribution of decentralized money and tokenized assets. It is using them as a temporary solution until a better, more decentralized option comes up.
TrueUSD (TUSD) vs. Tether (USDT)
TrueUSD shares a lot of similarities with Tether (USDT), a stablecoin issued by Tether Limited that’s tied to the U.S. dollar at a 1:1 exchange rate. Like TUSD, the amount of Tether in circulation is tied to the actual amount of USD held in Tether Limited’s accounts.
Tether sounds great on paper, but the project has come under fire for its issuance practices. Tether Limited allegedly holds far less USD than it claims and is essentially minting USDT out of thin air. This, coupled with the fact that they have never been successfully audited by a third party, has not helped Tether’s reputation.
Tether remains popular (with $2.7 billion USDT in circulation at the time of writing), but there’s definitely room for improvement, and that’s where TrueUSD comes in. Unlike Tether, TrueUSD requires users to pass a KYC/AML check and wire funds to trusted third-party escrow accounts before an equal amount of TUSD is deposited in their wallet address. Each TUSD token a user receives represents a redeemable certificate for $1 USD held in escrow.
How TUSD Improves on USDT
Legal Protection – TUSD holders are legally protected against fraud and misappropriation because their funds are held in trusted escrow accounts that undergo regular attestations.
Trustworthy Fund Management – TrustToken never has access to your escrowed funds. Funds are exclusively managed by third-party trust companies, which reduces a lot of counterparty risk.
Full Collateral for Every Token – All TUSD tokens are fully collateralized by an equivalent amount of USD held in escrow. TrustToken only mints TUSD when a user is confirmed to have sent USD to an escrow account. The minted tokens are burned when the user redeems their USD to ensure a 1:1 parity between the circulating supply of TUSD and the total number of USD held in escrow.
Regular Attestations – TrustToken regularly undergoes evaluations by leading auditing firm Cohen & Co. to ensure best security practices. Cohen & Co. publishes monthly attestation reports to verify that the amount of USD held in escrow matches the available supply of TUSD. You can view all the attestation reports here.
TUSD Trading Volume, Price and Market Cap
The circulating volume of TUSD changes depending on the amount of actual USD that’s held in escrow. When TUSD was officially released in March 2018, the total escrowed funds were $4,777,750, meaning approximately 4.7 million TUSD tokens were in circulation.
91 million TUSD tokens were in circulation as of September 19, 2018, which represents about $91 million held in escrow and TUSD’s total market cap. The price of TUSD has remained quite stable since its release because it is pegged to the U.S. Dollar.
Buying, Storing and Selling TUSD
TUSD can be acquired from a number of exchanges, big and small. These include Binance, Bittrex, CoinTiger, Crex24, Cryptopia, HBUS, HitBTC, IDEX, Koinex, Kuna, Kyber Network, Openledger, Upbit, and Zebpay.
TUSD is an ERC20 token, which means it can be stored in Ethereum wallets such as MetaMask, Mist, Jaxx, Exodus, Parity, and MyEtherWallet (MEW). Hardware wallet options include the Ledger Nano S and the Trezor wallet.
Liquidity of TUSD
TUSD has good market liquidity. It has shown incredible growth since its launch in March 2018, with its market cap rising from just $4.7 million to more than $91 million USD by September 2018. The alpha version was initially launched for traders, organizations, and exchanges, but the token is now accessible to the general public.
TrustToken plans to develop more stablecoin products such as TrueGold, TrueEuro, and baskets of tokenized commodities from 2018 and beyond. This is a project worth keeping an eye on.