TUSD image: https://coinswitch.co/

TUSD Stable Coin

What is TUSD?

TrueUSD (TUSD) is a token that is living on the Ethereum blockchain, its value is pegged to the USD which makes it a stablecoin. 1 TUSD maintains its value to 1 USD. This is fully collateralized, meaning the total supply of TrueUSD has the same USD held in reserves by the issuing company.

The issuing company is called TrustToken platform, which was founded by previous employees of UC Berkeley and Google. The company has made steps in order to secure the stablecoin and make it possible to have a stable pegged price through partnering with trust companies that hold the escrowed funds. Everything is also regulated and audited.

These third-party escrow funds can not be directly accessed by the TrustToken team for added trust and security. Top accounting firms also regularly audit these escrow with scheduled reports.

TrueUSD (TUSD) tokens can be bought and redeemed for USD fiat on the TrustToken website or app.

How TUSD Works?

This stablecoin is not just being printed out of nowhere. The issuing company TrustToken has guaranteed that every TUSD token will be backed with a single US dollar currency. This process of using US dollars to get/mint TUSD tokens is called tokenization.

Purchase/Tokenizing process of TUSD from TrustToken.com.

Tokenization of TUSD

There is a 3-step process that you can follow in order to tokenized US Dollars into TrueUSD tokens:

1. Users can send their USD amount to the TrustToken platform (site/app).

2. Once the funds in USD are received by the platform, it starts a smart contract that will create an equivalent amount of TrueUSD tokens on the blockchain.

3. These newly minted TUSD tokens are then delivered to the user, while the deposited/collateralized US dollar amount will be held in a 3rd-party escrow account until it is redeemed by the user.

Redemption process of TUSD from TrustToken.com.

Redemption of TUSD

The same thing applies fto redeeming the TUSDs back into USDs. It's just a reverse process:

1. Users will have to submit a request on the TrustToken platform/site/app to redeem a certain USD amount. They do this by sending TUSD tokens of an equivalent amount.

2. Once the platform receives the TUSD amount from the user, the TUSD smart contract will then execute the command to get an equivalent amount of TUSD from the supply.

3. While that's happening, the platform also sends the requested USD amount from the reserves to the user’s chosen bank account, minus any necessary fees.

Investing Money graphic from https://www.interest.co.nz.

Investing in TUSD

The same with any financial asset, be it digital or the traditional ones like fiat or gold, there are advantages and disadvantages that you should consider. Here are the ones for investing in TUSD:

The Advantages:

Funds deposited to the escrow for collateral are regularly verified by trusted auditing firms.
These escrow accounts are handled by unaffiliated third-party companies and TrustToken does not have direct contact with these funds.
We can be sure that TUSDs are always backed by equivalent amounts in USDs because of the automated smart contracts handling the minting and burning of tokens.
KYC/Amla rules are applied to keep unnecessary people away from the project.
There are lower fees and faster transactions when using TUSD vs fiat USD.

The Disadvantages:

TUSD is not the biggest stablecoin based/pegged to USD. The current one is Tether, which is a big competitor of TUSD.
Any disadvantage that is applied to ERC-20 tokens can apply to USD too, like blockchain congestion and high gas fees.

Although there are improvements that need to be done and bigger adoption might be needed for stablecoins like TUSD, with the influx of new investors, that may improve the current situation especially with the user-base and marketing.

---

Closing Remarks

I hope that you were able to learn a lot in our new discussion on the stablecoin TUSD - what is it, how it works, how to tokenized and redeem it; as well as t he pros and cons to keeping it. Thanks a lot to @yohan2on for creating this homework task for us. To @steemitblog for the initiative, and to @steemcurator01 & @steemcurator02 for the support!

Thanks so much, see yah!