Company:TrustToken

From HandWiki

TrustToken is a financial services company whos main projects are the asset-backed stablecoins TrueUSD (TUSD), TrueCAD (TCAD), TrueGBP (TGBP), TrueAUD (TAUD), TrueHKD (THKD) and unsecured lending protocol TrueFi[1][2].

TrustToken Inc
TypeFinancial Services
IndustryCryptocurrency
FoundersDanny An, Rafael Cosman, Stephen Kade
Headquarters
San Fransisco[3]
ProductsStablecoins
Number of employees
20 (2018)
Websitetrusttoken.com

Their stablecoin project, TrueCurrencies, is independently-verified[4] with fully collateralized stablecoins that are available on major cryptocurrency exchanges[note 1][5].

TrustToken is backed by the cryptocurrency fund of venture capital firm Andreessen Horowitz [6].

TrueUSD

TrueUSD
Ticker symbolTUSD
Development
White paper"TrueUSD: A Regulated and Tokenized Version of the US Dollar"
Initial releaseApril 2018 (6 years ago) (2018-04)
Development statusActive
Websitetrueusd.com
Ledger
Circulating supply1,230,000,000 TUSD (est. August 2022)
Valuation
Exchange ratePegged to the US Dollar
Market capUS$1.23 Billion (21st August 2022)

Launched in March of 2018[6], TrueUSD (TUSD) is the first stablecoin by TrustToken.[7] Originally launched on the TRON network[8] is now also an Ethereum token. It is pegged to the US Dollar through full collateralization to US dollars held in escrow accounts[note 2]. TUSD is minted in an equivalent amount to US dollars deposited into the escrow account.[9] TrueUSD earns revenue from the interest on the USD that it holds in these accounts[10], this allows it to operate without charging any trading fees[11]. TrueUSD has since been gaining ground as a popular stablecoin, particularly in South Korea where it is the most popular stablecoin[12].

TUSD, similar to coins by other companies such as Tether and USD Coin, are backed by fiduciary currencies and are criticized by their inherent high counterparty risk, the reserves are held by third parties need to be frequently audited to maintain transparency and prove that there is actually an equivalent amount of money within these reserves as the total circulating supply of the coin. This is contrary to the main idea behind cryptocurrencies which are meant to function without any single point of failure but be decentralised.[13][14] As of at least March 2021 Armanino, a Fintech company, is supposed to provide real-time reports on the state of the collateral for TUSD that is held in these escrow accounts[13][15] as well as on-chain proof-of-reserves by Chainlink[16].

The trade price on exchanges of TrueUSD is intended to be kept at one US Dollar through arbitrage. This is dependent on the maintaining of a financial incentive for arbitrageurs who will sell TrueUSD when its price rises above $1 and buy when it drops below $1, USD Coin, Tether, Carbon, Paxos and Gemini Dollar work in the same way [17]. A criticism of this technique as employed by TrueUSD are the high fees which make it less feasible for small time arbitrage to take place[18].

Around March 2021 TrueUSD was sold to a third party.[15]. The new owner is Shenzen based Techteryx, Ltd, and Armanino still provides attestation reports as to the state of the collateral. According to their 15 June 2021 report these collateral consist of a US Dollar balance held in escrow accounts in the US but also in Hong Kong depository institutions and are not only cash but cash equivalents including "short-term, highly liquid investments of sufficient credit quality[19]."

TrueUSD is natively available on Avalanche [16].

Legal

The fair value of TUSD, as with all stablecoins is equivalent to the expected amount that can be redeemed with it. With TUSD the trust in its value comes from good faith in the company as the person does not have any legal rights to redeem the token for US Dollars. In TrustTokens legal terms it is written that "the Company itself does not guarantee any right of redemption or exchange of TrueCurrency tokens for fiat currency"[20]. TrueCurrency referring to all the stablecoins that TrustToken offers not just TUSD.

TrueGBP

TrueGBP, TrustTokens British pound backed stablecoin was launched in early April 2019 [6].

TrueAUD

TrueAUD, the Australian dollar pegged stablecoin by TrustToken was launched in April 2019. At launch TrustToken claimed that TAUD will, similarly to TUSD, hold Australian dollar collateral in third-party escrow accounts which Cohen & Co will regularly attest [6].

In 2021, Finder, an Australian Fintech firm, launched Finder Earn accounts that pay interest on deposited TAUD [3][21]. Similarly, the now bankrupt crypto lending platform Celsius Network was offering 10.02% annual returns on TAUD deposited on to the platform [3].

TrueFi

TrueFi is a decentralised lending protocol. Unlinke the standard in the industry where a lender is required to put up collateral assets, such as Bitcoin, to take out a loan, TrueFi provides uncollateralised loans based on information such as credit scores from data both on chain and off chain. [22][note 3] The risk assessment and credit rating is done algorithmically using an "automated credit rating"[23].

The TRU token holders are able to vote to approve new loans [24].

BlockTower Capital, Andreesen Horowitz, and Alameda Research invested in TruFi via its native token TRU[22].

Research

Around January 2019 TrustToken came up with a new method for exchanges to manage their millions of ERC-20 addresses in a cheaper way that would save on Gas fees. A smart contract that funnels the clients deposited coins from a smart contract deposit address directly to the exchanges central wallet, as opposed to having separate unique wallet addresses for every customer. The smart-contract is open-source[25] and the method has since been used by many crypto exchanges for ERC-20 token deposits.

References

Notes

  1. ↑ such as Binance, Huobi, and OKEx
  2. ↑ "The contents of the TrueUSD escrow account are verified by an independent third-party accountant (Cohen & Company) that publishes monthly attestation reports of the amount of dollars held as collateral [4]."
  3. ↑ Celsius Network, a crypto lending platform that advertised themselves as only involved in over collateralised loans, collapsed in debt and froze its users funds, behind the scenes it was providing some uncollateralised loans which played a part in its collapse [22].

Citations

  1. ↑ Yahoo Finance 2022.
  2. ↑ Mizrach 2021, p. 2.
  3. ↑ 3.0 3.1 3.2 Rose 2021.
  4. ↑ 4.0 4.1 Takahashi 2018.
  5. ↑ ACN Newswire 2022.
  6. ↑ 6.0 6.1 6.2 6.3 Khatri 2019.
  7. ↑ TrueUSD.com.
  8. ↑ Urban & Tjandra 2022, p. 7.
  9. ↑ Walters 2019.
  10. ↑ Lipton et al. 2020, p. 14.
  11. ↑ Coinspeaker 2021.
  12. ↑ Singapore Management University 2019.
  13. ↑ 13.0 13.1 Yeung 2020, p. 208.
  14. ↑ Roberts, p. 2.
  15. ↑ 15.0 15.1 Mizrach 2021, p. 4.
  16. ↑ 16.0 16.1 Hedgeweek.
  17. ↑ Bonneau & Heninger 2020, p. 180.
  18. ↑ Bonneau & Heninger 2020, p. 187-188.
  19. ↑ Mizrach 2021, p. 5.
  20. ↑ Lipton et al. 2020, p. 11-12.
  21. ↑ Collett 2021.
  22. ↑ 22.0 22.1 22.2 Yue 2021.
  23. ↑ Grassi et al. 2022, p. 334,336.
  24. ↑ Grassi et al. 2022, p. 338.
  25. ↑ Madore 2019.

Bibliography

"What Is TrueUSD (TUSD) Stablecoin?". Coinspeaker. 24 May 2021. https://www.coinspeaker.com/guides/what-is-trueusd-tusd-stablecoin/. 

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