TrueUSD cryptocurrency: the real cryptodollar

The first representative of this class of altcoins was Tether. The coin tied to the American dollar is called Tether USD, USDT. It appeared in 2014 and since then has grown dramatically in capitalisation. The resource Coinmarketcap now puts it on the 3rd place by asset value.

Until a specific time, the Tether platform was a monopolist. But gradually, many new projects appeared, including TrueUSD.

Read more about stablecoins

This type of cryptocurrency emerged because of the desire of exchanges, traders and community members to minimize the risks associated with volatility. There was a need for an instrument that would be a projection of the reliability of fiat money in the world of cryptocurrencies.

There was a need for a relatively stable coin that the crypto community could use as collateral. There was a need for an issuer capable of adjusting the number of tokens depending on market conditions.

Reports from the Bittfinex exchange indicated that "loyal and trusted customers" had been asking a lot for such a coin.

The first response to the requests was Tether USD. It started to be actively used for financing margin trading and as a bridge between cryptocurrencies and fiat money.

Therefore, USDT received a large trading volume and high liquidity. In parallel, it was possible to reduce the cost and increase the transparency of transactions. To this was added high anonymity of transactions, which caused users' approval and the regulatory authorities' displeasure.

Tether attempted to defend itself by pointing out that USDT:

• is not money or a financial instrument;
• have no real value in fiat;
• token holders have no rights to it.

But that didn't save the company from being prosecuted by US federal prosecutors. Yes, and the community had a lot of questions for Tether, although they were related to the conduct of business, not to the essence of the stablecoins.

USDT has done many valuable things but has not entirely closed the basic requirements for stablecoins. The demand for a reserve cryptocurrency remained high. This was the reason for the emergence of new stablecoins.

TrueUSD

TUSD is a token of ERC20, TRC20, BEP20, etc. standard. It functions based on the Ethereum blockchain, Tron, BNB Chain and several other popular chains. The value of 1 TUSD = $1, but minor deviations within 1% are possible at times of high market volatility.

The coin is traded on 40+ cryptocurrency exchanges. Daily trading volume is $144 million; capitalisation is $3.1 billion. TUSD is ranked 24th in the Coinmarketcap ranking as of June 2023.

The creators of the token took into account the mistakes of its predecessor and main competitor and did what everyone was waiting for:

• They split the generation of tokens and the storage of dollars between different entities. The tokens are created on the TrustToken platform, and the money is stored in escrow accounts owned by several unrelated licensed trust companies. TUSD creators cannot access the capital, which is the fiat reserve of the tokens issued.
• Mandatory verification of persons buying tokens was introduced according to KYC/AML procedures. This helped to address the claims of regulators.
• Customer identification made it possible to own the token and the funds in the escrow account and legally recognise this fact.
• Tokens are generated equal to the dollars received in escrow accounts. When dollars are redeemed, the tokens are burned.
• The amount of dollars held in escrow accounts is published daily on the website.
• The information is made available and transparent. At the time of writing, it can be seen that 3,140,888,018 TUSD is in circulation, with reserves totalling $3,147,199,355, which means it more than covers the issued assets. This guarantees that, if desired, all owners will always be able to sell tokens and get fiat money for them.

The TrustToken team comprises graduates and employees from Stanford, University of California Berkeley, Palantir and Google. The platform was launched in September 2017.

How TUSD issuance and burning works

Buying and selling tokens officially from an issuer consists of two steps.

Purchase

The customer goes through the KYC/AML identification procedure. He receives an escrow account number and a holding agreement upon completion. TrustToken receives this information upon receipt of dollars and generates a smart contract for that amount. The smart contract issues the appropriate number of tokens and transfers them to the Ethereum address specified by the client.

Selling

The client can always sell his tokens. To do this, they need to send a receipt for the authentication procedure, the smart contract and the tokens. The contract will be completed, the tokens will be burned, and the trust company will send him dollars from the escrow account.

This way, the balance between tokens and fiat is maintained, creating a safe, secure and transparent mechanism for converting fiat to stablecoin.

Conclusion

A true cryptocurrency dollar has the following pros:

• security;
• reliability;
• separation of financial flows;
• high level of trust;
• high transaction speed;
• low commissions.

From the minuses, it can be noted that not all crypto exchanges and exchangers support it, and it is still significantly inferior to Tether in capitalisation.