TUSD market update proposal

Proposals
1

Hi Compound community!

This is Joyce from the TrueUSD (TUSD) team. We are planning to launch a new proposal for adding TUSD as a collateral asset on Compound. I’m hoping to know the Compound community’s thoughts and perspectives regarding this proposal, especially regarding the proposed parameters.

About TUSD?

TrueUSD (TUSD) is the first independently-verified digital asset redeemable 1-for-1 for US Dollars. The ERC20 stablecoin uses multiple banks, escrow accounts, and third-party attestations to reduce counterparty risk, provide transparency, and prevent fraud.

TUSD offers liquidity on dozens of leading exchanges, DeFi protocols, and is supported by major OTC desks. TUSD also supports nearly instant minting and redemption speeds through the Silvergate Exchange Network (SEN) and PrimeX by PrimeTrust.

Reasoning behind our Collateral Factor update proposal

TUSD was first launched on Compound as an integrated asset in May 2021, and has since performed well. As performance has also been steady, I believe now brings an opportunity to upgrade TUSD into a Collateral Asset on Compound to bring users a trusted, reliable, fiat-backed stablecoin for (what collateral assets are used for).

（1) Risk assessment perspective

Having TUSD as a collateral asset on Compound has always been something the TUSD team aim to achieve. We are happy that we’ve made progress with the risk assessment since our last proposal, where we received valuable feedback from @pauljlei (from Gauntlet) and @cylon (from OpenZeppelin). This time, we would like to express that we are fully prepared.

The market risk assessment by @pauljlei was extremely valuable information for us in learning about the parameter while assessing the safety of a stablecoin from a lending protocol’s perspective. From the analysis, we are pleased to see that the Gauntlet team concluded their report by deeming the TUSD token as an asset that is ‘safe to enable TUSD as collateral’. Currently, we are in contact with the Gauntlet team to see if they are able to provide another updated TUSD market assessment. For the TUSD contract security, our Devs worked together with OpenZeppelin @cylon to successfully identify and patch the Compound-TUSD integration bug. The experience and process was shared in OpenZeppelin’s Twitter space, which can be found here, and more details on the blog.

During the time preparing for this proposal, we’ve been paying attention to the Compound protocol updates and would like to give our congrats on Compound III! We’ve also put TUSD market on Compound accessed to a wider range of users by integrating TUSD market on Compound to one of the leading exchange OKX staking business. By doing this, it has increased users’ attention on Compound TUSD market and will further deepen their understanding of Compound protocol.

(2） TUSD in DeFi

TUSD has made efforts to expand on different networks and cooperate with the best DeFi projects on those chains to provide DeFi users with a safe, secure, and reliable stablecoin. Ethereum remains as the network we care the most about. Take Curve as an example, the TUSD pools TVL on Curve has exceeded $100M. Increasingly more users in Ethereum network are getting access to TUSD and using it.

As for TUSD becoming a collateral asset, we believe it is safe and secure. Other major lending protocols like AAVE, Venus, and JustLend have set TUSD collateral factor as 80%.

I’d also like to bring forward that we are also working with ChainLink and Armanino to take the transparency and safety of TUSD to a next level in the near future. This awesome integration will be officially announced in more detail soon!

Proposal Specification

Update the TUSD Market Parameters with the following parameters:

TUSD Market Parameters (Open to Suggestions!)

  • Collateral Factor: 80%
  • Reserve Factor: 7.5% (as Current Market)
  • TUSD Borrow Cap: No Limit
  • Interest Rate Model: Stablecoin Standard
  • Price Feed: Chainlink

Next Step

If there is any question and concern from the community, we will try our best to answer and resolve. If there’s no further question within the following two weeks, the on-chain proposal to add TUSD as a collateral asset will be created accordingly. We hope the approximate 2-week notice period is enough time for Gauntlet, OpenZeppelin, and community developers to review and assess TUSD’s smart contract and technical security, as well as room for our teams to discuss anything if necessary.

References

In summary, TUSD hopes to communicate more with the Compound community and would love to get your support. We look forward to hearing back from you and moving our collaboration further!

Thank you!

2 Likes
2

Thanks, @Joyce and the TUSD team. Just to clarify the below:

Gauntlet only evaluates the market risk side. Our assessment at the time deemed the asset safe to enable as collateral from a market risk lens, not overall. The community should also assess the smart contract, peg mechanism, and other technical risks as stated below.

Please see here for Gauntlet’s Asset Listing Framework.

4

Enabling new collateral can be important for the growth of Compound and DeFi. I was wondering if you could talk more about the following:

  1. More information on TUSD’s proof of reserves and stability
  2. In Gauntlet’s guide for listing assets as collateral, They mentioned a few metrics such as market cap, liquidity sources, etc. Could you provide those information as well?
5

Hi, Paul! Thank you for the clarification and understand that it is the conclusion of market risk analysis at that time. And yes, we sincerely wish to have more communication with the Compound community and hear feedback from you all!

  1. We are happy to provide any materials needed to proceed with required analysis and assessments. We will very much appreciate knowing how we can get a start on that!

  2. TUSD was listed on Compound last year, do we need to go through the checklist framework?

Thank you very much for your feedback and guidance!

6

Hi, Guangye. Thanks for your comments and questions, and I’m happy to see that we agree on the importance of adding new collateral asset into Compound protocol! Regarding your questions, please see my answers below:

  1. For the PoR mechanism, we hope to release the mechanism details publicly upon ensuring it operates and runs smoothly after completion. We can have a call to go over the mechanism to you privately before we release it out publicly, if you like.

  2. Yes sure, we will be happy to provide a data dashboard. Here’s the data:

  • Market Cap and Total Supply

$1,077,105,503 backing 1,067,893,770 TUSD, of which there are 739,186,944 TUSD on Ethereum. More info can be checked on TrustExplorer - Real-Time Attest: TrustExplorer by Armanino: Real-Time Attest for TrueCurrency

  • Largest liquidity sources (exchanges including CEX and DEX) on Ethereum

Regarding AAVE V2 Ethereum market, TUSD currently has a total supply of $43.67M and a total borrow of $26.76M (38.73% of utilization rate), making it a good choice for stablecoin lending on AAVE. The LTV is 80%, and reserve factor is 10%.

Regarding TUSD market on Curve, there are tusd pool (TUSD + 3Crv) which has $83.40m TVL and TUSDFRAXBP pool (TUSD + crvFRAX) which has $20.98m TVL.

TUSD is one of the top traded assets on all CEXs. Currently TUSD trading pairs are active on OKX, Poloniex, Huobi, Mexc, Bitfinex etc. The total trading volume of TUSD for the last 24 hours is $162,779,017.

I hope my answers suffice, and I’ll be happy to answer more if you have more questions.

7

Hi everyone,

Ross here from a16z. This is a great proposal from Joyce and the TrueUSD team that will increase collateral options for Compound borrowers. Notably, the proposed collateral factor is below that of both USDC and DAI. Market risk is favorably assessed by the Gauntlet team, previous integration bugs have been resolved, and TUSD is demonstrably backed 1:1 via its Armanino attestations. We also look forward to hearing more about the transparency efforts TrueUSD is working on with Chainlink.

Some questions for the TrueUSD team and wider community that may be helpful for community members that aren’t intimately familiar with TUSD:

  1. What differentiates TUSD from other fully backed stablecoins on the market?
  2. Why is the launch of TUSD ultimately beneficial for the Compound community as a whole?

Looking forward to the discussion – thanks so much!

*a16z maintains a financial interest in TrustToken. See https://a16z.com/disclosures/ for more info.

1 Like
8

Hi Ross,

Thank you and your team A16Z for acknowledging TUSD! These questions are great and, I do believe it will help community members better understand TUSD and the mechanics behind it!

TUSD is the first digital asset with live on-chain attestations by independent third-party institutions and is backed 1:1 with the U.S. dollar.

(1). Full-collateral assurance

TrueUSD is backed 1:1 with the U.S. dollar and fully collateralized to ensure a 100% collateral ratio, which has enough real world value support and one of the lowest levels of price deviation. In the meantime, we are working with ChainLink about the Proof of Reserve price feed of TUSD, which is scheduled to be live later this Autumn. An announcement will be made when the Chainlink Proof of Reserve price feed launches.

(2). Transparency assurance with real-time attestation

TUSD is one of the most transparent stablecoins with live on-chain attestation by Armanino, which provides independent attestation reports in real-time. Users can check circulating supply and bank balances at any time, 24/7. Please see here for the highly-available and transparent TUSD data backed by Armanino’s full audit examination standards and opinion.

(3). Security assurance with independent trusted banks

At present, TrueUSD collaborates with five trusted partner banks, including Signature Bank, Signet, Silvergate Bank, Prime Trust, First Digital Trust, BitGo and Customers Bank.The banks (or custodians) matter as they are responsible for holding the USD assets that back the value of TUSD for safekeeping clients’ assets.

(4). Compliance assurance with legal license

TUSD is a fully compliant and regulated money service business (“MSB”) under FinCEN’s purview. We will continue to uphold the highest standards of KYC/AML practices for all individuals/entities that purchase or redeem TUSD for USD, ensuring the long-term survival of the stablecoin through regulatory.

(5). Wide Application with extensive cooperation

TUSD has been live on 12 mainstream public chains including Ethereum, Polygon, TRON, Avalanche, BNB, Fantom, HECO, Arbitrum, Cronos, Optimism and Aurora with its total supply surging past 1.1 billion and will surely explore more in the near future. We’ve been integrated with 40+ top DeFi projects like Curve/ AAVE/ Sushi on Ethereum, PancakeSwap/ BiSwap/ Ellipsis/ Venus on BSC, Quickswap/ Dystopia on Polygon and JustLend on Tron. Among them, TUSD enjoys outstanding performance on Curve with TUSD pool (TUSD + 3CRV) which has $94M TVL and TUSDFRAXBP pool (TUSD + crvFRAX) which has $22.6M TVL.

TUSD is one of the top traded assets on all CEXs. Currently TUSD trading pairs are active on OKX, Poloniex, Huobi, Mexc, Bitmart, Bitfinex etc. What is worth mentioning, we are working with CEXs to integrate TUSD pools on DeFi protocols including Compound.

Adding TUSD market as a collateral asset will diversify the collateral assets portfolio and attract more users who are interested in TUSD to deposit TUSD and borrow assets on Compound. As one of the most reliable, transparent and safe stablecoin, TUSD will surely help to lower the potential depegging and possible systemic risk for the Compound community.

Now Compound has USDC and DAI being used as its stablecoin collateral asset. And USDC is the only USD-based stable coin. TUSD will give compound users another choice. If users have their preference on TUSD , they can exchange the tokens and stake TUSD on the compound to borrow other assets.

And if you check the data, TUSD is the No.6 stablecoin from market cap. the market cap is over 1 billion. After adding TUSD as a collateral asset, those TUSD holders will become potential users of Compound to lend and borrow. In my opinion, It’s a win-win strategy for TUSD holders and Compound.

The extensive cooperation and connections built by TUSD will also lead to a positive overflow effect for the Compound Community, creating more possibilities for both sides. For example, we are working with OKX to carry out the Web3 Invest activity, integrating TUSD pools on Compound to allow users to invest in the DeFi pools through CEX, which is an interesting collaboration direction.

It is my pleasure to discuss this with the Compound community and I am willing to answer more questions from Compound community members. We deeply believe TUSD will be an important asset for the whole community.

1 Like
9

Seems like cTUSD 0x12392F67bdf24faE0AF363c24aC620a2f67DAd86 does not have a Uniswap market listed in Uniswap Anchored View 0x65c816077C29b557BEE980ae3cC2dCE80204A0C5. I was under the impression high liquidity on UniswapV2 is a metric for quality collateral-enabled assets until UAV3 is live and compound supports v3 markets as a fallback oracle. Am I correct that cTUSD does not have a fallback oracle currently specified? Is no fallback oracle okay for 0% CF assets and only introduces risk when the asset is enabled for collateral? TUSD V2 market currently has <$5mm TVL and ~$700k 24h vol. Would be great if @CL_Michael can weigh in on this.

10

Hi Deven,
Thanks for the question. Let’s break it down:

Traditionally, Uniswap market liquidity is a metric for Compound listings, but it’s not a sole requirement for Chainlink as Price Feeds pull from several sources.

That is correct because it launched hard-pegged to a dollar like other stablecoin markets on Compound v2. It introduces risk when collateral is enabled, which is why we recommend using a primary Price Feed like Compound III and can add Proof of Reserve as an additional safety feature. Otherwise, the legacy route uses the UAV that would require an underlying liquid market on Uniswap V2/V3.