TrueUSD analysis
Until recently, Tether which has Bitfinex behind it was the only liquid dollar counterpart on cryptocurrency exchanges. Today, it becomes increasingly popular among traders and ranks second, after Bitcoin, in terms of trade volume. On the other hand, Tether is surrounded by scandals that remain a matter of serious concern to its investors.
TrueUSD is another dollar counterpart which also struggles to meet the demand of the market in a stable and reliable cryptocurrency. TrueUSD is an official USD-backed quote currency. It was launched by TrustToken in March, 2018. On June, 19, this company conducted an ICO and raised $20 million USD.
Let’s analyze what the difference between TrueUSD and Tether is and how TrueUSD is protected from the market’s volatility.
General information
Stock symbol: TUSD
Consensus algorithm: Ethereum-based token
Industry: FinTech
Area: Asset-backed
Capitalization (on June, 26): $80,327 million USD
Changes: Binance, Bittrex, Upbit
Mining: not possible
TUSD tracker: etherscan.io
Web-page: trusttoken.com
What is TUSD’s aim?
TUSD is an Ethereum-based token. Asset-backed cryptocurrencies are also called stablecoins. Their key role includes saving investors’ capital in times of price volatility. They also allow traders to convert income into fiat, or traditional, currencies in the ratio of one to one.
TrueUSD’s launch during the fall in prices of cryptocurrencies which has been running since early 2018 seems to be extremely timely.
How does it work?
USD to TrueUSD conversion and further reverse withdrawal of funds are conducted via trust corporations which operate in traditional financial market. To be assisted, the company should pass a KYC/AML (Know-Your-Customer/Anti-Money-Laundering) verification — in other words, to provide its passport and financial documents. Later on, the parties conclude an escrow agreement, and the trust corporation receives dollars. Simultaneously, the smart contract receives an instruction to transfer their TrueUSD equivalent to a certain public Ethereum address.
When a client wants to return dollars, this algorithm acts in a reverse order. A customer transfers his or her tokens and receives money from an escrow account set up at a trust company.
Fundamental factors
Competition
Tether is a recognized leader among stablecoins.
Regular USDT emissions demonstrate that the demand for fiat counterparts is remarkably high. Owing to the fact that one USDT equals one USD, USDT’s capitalization is gradually rising. Since early 2017, it has increased 27 times — from $10 million USD to $2,7 billion USD.
Tethers’ enhanced emission matches periods of the market’s intensive development. That is why bloggers and experts frequently accuse Tether and Bitfinex of issuing unbacked tokens with intent to speculate.
In terms of liquidity and availability on leading platforms, TrueUSD is losing.
At the same time, TrustToken struggles to take an advantage of its rival’s weaknesses. For instance, it has hired Cohen & Company, an American accounting and consulting firm, to ensure a proper audit of its escrow accounts.
Importantly, TrustToken does not have any cryptocurrency exchange behind itself. That means it is less exposed to financial and legal risks.
Centralization
TrueUSD is a centralized currency. Three-quarters of all tokens are stored on five addresses. The ownership structure is not clear as well, and the results of audits are not presented fully.
Economics and monetization
The current fees are 10 basis points (0,001 per cent) of the total sum or $75 USD (to purchase and redeem TrueUSD for USD). 10 basis points on transactions of TrueUSD between the wallets will also be charged but only once the TrustToken platform launches.
According to TrustToken, stablecoins will serve as a basis for the so called tokenized economy. The company plans to assign each asset its digital counterpart which will then be traded on cryptoexchanges. For this purpose, TrustToken conducted an ICO on June, 19 and raised $20 million USD. American venture capital funds were the ones who invested in the idea.
TrustToken’s capitalization is trending upward. It has doubled since the beginning of June — from $40 million USD to more than $80 million USD — owing to TrueUSD being listed on Binance, Bittrex and Upbit.
TrueUSD SWOT-analysis
