Price instability is one of the major reasons why a vast majority of people are reluctant to use cryptocurrencies as a payment gateway. Stablecoins are some of the popular crypto projects dedicated to building a connection between blockchain technology and the current financial paradigm.
TrueUSD is a leading name in this category that is contributing to the mass adoption of cryptocurrencies.
What is Stablecoin?
Stablecoins are cryptocurrencies that are pegged to physical assets that are less volatile as compared to the crypto market. Usually, these cryptocurrencies are pegged to the U.S dollar but some of them are pegged to precious metals and oil. Similarly, some stablecoins are pegged to other cryptocurrencies.
The core purpose of these coins is to maintain a stable value over time while overcoming the drastic price swings. It enables a vast majority of people to access the benefits of the blockchain industry. In fact, traders and decentralized organizations can also park their assets or gains in the form of stablecoins.
Tether (USDT) is a leading name in the crypto ecosystem that is pegged to the U.S Dollar. It has maintained its reputation as the most trusted stablecoin since its launch. However, Tether has recently lost its reputation due to several allegations.
In this situation, TrueUSD and other new-generation stablecoins have appeared as a greater alternative to Tether.
What is TrueUSD (TUSD)?
TrueUSD is a fiat-collateralized stablecoin blacked by USD cash. But it’s different from Tether and USDC because the organization (TrustToken), which is managing this project’s operation, can’t access the reserved U.S Dollars because these dollars are stored in escrow accounts.
The reason for choosing escrow accounts is that traditional businesses feel satisfied using these accounts for the management and distribution of assets. The TrustToken organization will start using smart contracts once the businesses realized the importance of these contracts.
Till then, the escrow accounts will be used as an alternative to satisfy the users who are willing to use cryptocurrencies without being affected by the volatility. TrustToken publishes monthly auditing reports of the reserves prepared by Armanino LLP.
TrueUSD can be used for several purposes:
Traders and Exchanges – The traders can enter the crypto market by purchasing TrueUSD (TUSD) instead of BTC and Ethereum. These tokens provide ultimate protection against market volatility.
Long-term Financial Contracts – The companies can use TrueUSD to pay their employees globally. Similarly, the banks and other financial institutions can release loans in the form of TrueUSD.
Mainstream Commerce – Individuals and businesses can use this token for online purchases without worrying about the massive price fluctuations.
Developing Economies – The developing economies can avoid the high transaction fees required for traditional trading. They can easily access global markets while paying a very low transaction fee.
How Does TrueUSD Work?
TrustToken team doesn’t collect the money itself but it has organized publicly audited smart contracts for this purpose to build trust with the people. TrustToken team can’t access the investors’ dollars at any stage. TrustToken has shared details of escrow accounts on its official website.
The users can send U.S Dollars to these accounts to receive the TUSD. Once the funds are added to an escrow account, the platform will automatically mint TUSD of the equal amount. The TUSD tokens are instantly burnt once a token holder redeems U.S dollars. Thus, TrueUSD’s value is maintained over time.
The users need to verify their identity by submitting a KYC form at one of the TrueUSD’s trust partners before they could access these services. The escrow company initiates a request to release an equal amount of funds after verifying the funds.
TrueUSD’s smart contract generates the required tokens and transfers them to the provided wallet. The users can then use these tokens to buy other cryptocurrencies or hold them as assets. A reverse procedure is conducted whenever a user wants to convert TUSD into USD.
The user sends the tokens to the smart contract and the fiat currency is transferred to the user’s account through the trust company. The users need to pay 0.1% of the total transaction amount at the time of purchasing or redeeming the TrueUSD tokens. Similarly, a 0.1% fee is charged when TrueUSD tokens are transferred between different Ethereum wallets.
Benefits of TrueUSD
TrueUSD is considered a better alternative to Tether because it eliminates the need to deal with an intermediary to buy the cryptocurrency.
Legal Protection – TrueUSD is directly associated with the escrow accounts and the TrustToken organization publishes monthly auditing reports of these accounts to keep everyone aware of their total reserves.
Full Collateral – Unlike Tether and other USD-backed stablecoins, TrustToken can’t issue new TUSD tokens unless an equal amount of U.S Dollars are added to the escrow account. Smart contracts create and burn TUSD tokens according to the user’s request.
Instant Redemption – Whenever a user wants to redeem U.S Dollars, he/she can send TUSD tokens to the smart contract and the fiat currency will be added to his/her account within a few minutes. However, the minimum withdrawal amount is $10,000.
Regular Attestations – Armanino LLP, a renowned auditing firm, attests to the reports of escrow accounts on a monthly basis, and the reports are publicly published by TrustToken.
TUSD Tokenomics
TUSD is an ERC-20 token designed to support the mass adoption of cryptocurrencies. With a circulating supply of 1.2 billion tokens, it has a market cap of $1.2 billion. It ranks among the 40 best cryptocurrencies in terms of market cap.
Conclusion
TrueUSD is a smart stablecoin designed to facilitate the users who are reluctant to use cryptocurrencies due to volatile price movement. It’s pegged to the U.S dollar and consistently maintains a stable value. Unlike Tether and USDC, TUSD is operated through smart contracts so that no one can tamper with the figures.
If you need more information about how TrueUSD works, feel free to get in touch with us.
