Hi everyone and welcome to my homework post week 7. An excellent lecture delivered by Professor @yohan2on in which I continued to learn new things.

What is TrueUSD (TUSD).

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TrueUSD came into limelight in early 2018. The purpose of TUSD was to facilitate users with simple, transparent and a reliable stablecoin. To fulfill this purpose, there is no hidden bank account nor is any special algorithm being used.

TUSD is an ERC-20 token that runs on Ethereum Blockchain. It is pegged to US Dollar with the ratio 1:1. It means its value is maintained at 1 US Dollar. TUSD is fully collateralized that means it is fully backed up by the US Dollar reserves. Total supply of TUSD is backed by the same amount of US Dollar. That is why it is a stable coin.

TrustToken is a platform that is responsible for creating and issuing tokenized crypto assets. The team behind TrustToken consists of experienced people from Stanford, UC Berkeley, PwC, Google and Palantir. TUSD’s collateral holdings are distributed among different trust companies. These trust companies hold these US Dollars in their banks accounts. There is also a contract between the trust companies to daily publish the collateralized holdings and to conduct a monthly audit. This has been done for the security of stable coin and to have stable pegged price. TrustToken team cannot even touch these escrowed funds directly.

How it Works?

TrustToken website or app can be used to buy or redeem TUSD for fiat USD. TrustToken guarantees that single TUSD token is backed by Single US Dollar. The whole process of buying TUSD is called tokenization. Now we will discuss tokenization process in detail.

TUSD Tokenization.

Any user who passes KYC and AML requirements can purchase/mint TUSD. Automatic smart contracts are used to mint TUSD tokens. When payment is received in any escrowed account, new TUSD is minted automatically. The process of mint/tokenization is carried out in 3 steps that are given below.

1. User will send US Dollars directly to TUSD’s trust partners. User will also send Ethereum Wallet address.
2. Once funds in US Dollars are received in escrowed accounts and verified by the escrow company, API interacts with smart contracts of TrueUSD. In this process, new TUSD tokens equal to the value of US Dollars will be issued.
3. Then the user is delivered with newly minted TUSD tokens. The US Dollars deposited will remain as collateral in the escrowed account until the redemption of TUSD.

Tokenization Process

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TUSD’s Redemption.

Reverse process of tokenization of TUSD is used while redeeming TUSD tokens. When TUDS tokens are redeemed, smart contracts automatically burns these tokens in order to gain stability of the coin. It is explained in 3 steps below.

1. Redemption process starts with a request from the user to the smart contract address. TUSD tokens are sent back to smart contract address.

2. Once TUSD tokens are received in smart contract address, it notifies the relevant trust company.

3. Trust company will send fiat currency US Dollars to the user bank account after deducting necessary fees.

Redemption Process

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Features of TUSD.

1. Regular attestations of escrowed accounts are published by the company that gives users a strong legal protection. Moreover, monthly audit is carried out by audit firms. This feature of security attracts the investors.

2. TrustToken cannot handle the collateral funds directly and these escrowed funds are handled by third-party companies.

3. Automated smart contracts handle the minting and burning of these tokens, so one can be sure that an equivalent amount in US Dollars is backing TUSD’s supply.

4. Any individual or organization having passed the AML/KYC check by TrustToken platform is capable of redeeming TUSD to US Dollars. The feature of AML/KYC check is also helpful in keeping irrelevant people away.

5. Features of faster transactions and lower fees are also helpful in attracting new users.

6. TUSD has a stable price at 1 US Dollar with no or little volatility.

1. TUSD can be traded on exchanges like Binance, Bittrex, KuCoin etc. Screenshot is given below where many pairs are available for trading.

Conclusion.

Although, there are many advantages, but there are also some disadvantages like i). TUSD is not a biggest stablecoin as compared to Tether, ii). and also having same problems faced by other ERC-20 tokens of gas fees and blockchain congestion. There is always space for improvements that should be done for the purpose of bigger adoption. I hope for good future of TUSD stable coin.

Special mentions.
@steemcurator01
@steemcurator02
@yohan2on
@trafalgar

Regards,

@mawattoo8