[Daily] We need to talk about TrueUSD

Good morning! Welcome to The Daily Moon. It’s a brand new week. Finally, there seems to be some sense prevailing. The AI bubble seems to be slowly deflating. According to research, the market cap of 74 AI-related tokens have seen a downturn. These tokens, which had zoomed to $4 billion m-cap have seen losses of $730 million. More to go, we say. Strap in. 

Moving on, today we talk about TrueUSD’s intriguing growth and is Polygon well?

As of Sunday, 1PM IST

The markets were cautiously optimistic. Bitcoin was bullish even as a few investors went back to bank deposits. Ethereum erased the Shanghai gains but continued to see buying. S&P 500 and Nasdaq saw a marginal rise in technology stocks. Back home, Sensex and Nifty ended flat on weak global cues. 

Who’s Behind TrueUSD’s Rally?

When Silicon Valley Bank collapsed, stablecoins such as USDC and DAI depegged. The market was wary of such assets. But there was an outlier, TrueUSD. It called itself “maximally transparent”, the stablecoin suddenly surged in popularity after Changpeng Zhao endorsed it. Investors, however, are suspicious. 

Tether, USDC, DAI, USDD—all have something in common. They are stablecoins, yes but beyond that, these tokens are backed by recognised companies with well-audited financial statements. Meanwhile, the owners of TrueUSD are shrouded in mystery. There’s a management team listed, however, too many other people seem to be in control. 

Cryptopreneur Justin Sun used to be listed as the “Asia Market Advisor” on TrueUSD’s website but his name disappeared. What’s happening with this new token?

The storyLong before verification of stablecoin reserves was a thing, TrueUSD did it. Just that, we don’t know too much about the process. 

TrueUSD was launched in 2018 by a California-based company called TrustToken. It was titled, “the first independently verified asset-backed” stablecoin. Danny An, then the CEO and co-founder of TrustToken had claimed that TrueUSD was 100% USD collateralised. He quit the company in 2020. 

In its early days, TrueUSD lagged behind its peers Tether and USDC. These two stablecoins took a lion’s share of the market. 

To attract mainstream investors, TrueUSD added live audits by Armanino (yes, the FTX auditor) as well. Nothing materially changed. But there was a shift when TrueUSD partnered with Sun’s Tron blockchain in 2021. TrueUSD crossed the $1 billion market cap mark soon after. And Sun pushed the token a little too much. 

New owners and a facelift As TrueUSD was expanding, something else had changed. The stablecoin had a new owner, who was initially unnamed. On further prodding, a TrueUSD employee posted on a MakerDAO forum that the owner was an Asian conglomerate called Techteryx. Again, they reiterated that Justin Sun “was not involved”. 

Meanwhile, the Trust network grew and added new stablecoins such as TrustGBP, TrueCAD, TrueAUD, and TrueHKB. Soon after, TrustToken itself was rebranded to Archblock. However, both websites still exist independently with different leaderships. 

TrustUSD also started establishing deeper connections with Tron. Its developers helped Tron launch an offshore Chinese yuan stablecoin called TCNH. 

What comes next?A lot of the future roadmap is still unclear. TrueUSD’s website has vague details like this: 

Regulators in the Caribbean nation Dominica seem to be impressed though, because they made TrueUSD an authorised digital currency in the country.  

The Sun+CZ effect?Amidst the slew of bank collapses in March 2023, TrueUSD has been mostly unaffected. Fearing regulatory crackdown in the US, Archblock has moved $1 billion in reserves backing the token to a bank in the Bahamas. 

CZ added the stablecoin to his network with a zero-fee promotion, following which TrueUSD’s market cap zoomed to over $2 billion. TUSD toppled Frax to become the fifth largest stablecoin. It’s the second largest token on the Tron blockchain. 

The community, however, still has concerns. They want to know TrueUSD’s audits after Armanino’s exit and the Sun connection. The stablecoin developers were tightlipped about Sun but said this:

A lot of the questions still remain unanswered.

Polygon Is Riding The NFT Wave?

Polygon is riding the NFT wave once again. The L2 application saw a ~19.5% rise in NFT activity, with transactions worth ~$15 million going through on the network in the last week alone. This was second to just Ethereum.

Time to celebrate?Not really. Even though NFT activity saw an uptick, the total number of transactions on the network dipped by ~17%. The daily active addresses, meanwhile, were also down ~30%. The dApps on the network have not been finding enough users and those that the network bet on to become viral sensations failed to live up to the promise. 

A silver lining?There is one. The company has been working hard to improve the performance of the network.

All of this explains Matic’s sluggish performance over the past month. Maybe this will help. 

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Who are we? This newsletter’s ambition is to educate (and to entertain). The world of money is changing everyday and we want to help you decode what’s happening in the world of crypto, public markets in the US and India.