02 March, 2024



True USD (TUSD) Faces Significant Devaluation, Dipping Below $1 Amid Market Concerns

2 months ago

16 Jan, 2024

  • TUSD experienced its largest drop in six years, falling to $0.984, causing a shift in investor confidence and capital.
  • The lack of clarity in TUSD’s real-time reserve attestations fueled concerns, leading to a notable increase in USDT investments.
  • Binance’s focus shifts to FDUSD, impacting TUSD’s market stance after ending the zero-fee trading benefit for the pair.

TUSD, the fifth-largest stablecoin known for its 1:1 U.S. dollar backing and live on-chain attestations, recently experienced a significant depegging event, causing its value to fall below the $1 mark. This occurrence marks the most substantial drop since TUSD’s inception nearly six years ago, with a recorded low of $0.984 as of January 15 at 11 am UTC. The repercussions of this devaluation were immediately felt across the cryptocurrency market.

As news of TUSD’s depegging spread, a notable surge in sell orders was observed on the prominent cryptocurrency exchange Binance. This was evidenced by the substantial outflows from Binance, with DeFiLlama reporting a staggering $128 million leaving the exchange in just 24 hours. Concurrently, a significant influx of capital was noticed in USDT (Tether), the leading stablecoin in the market. This trend suggested that many investors were exchanging their TUSD holdings for USDT amidst the growing uncertainty.

The underlying concerns about TUSD’s stability were amplified due to difficulties accessing real-time information regarding its reserve attestations. This raised alarms about the possibility of TUSD being under-collateralized, which could spell trouble for redeeming the currency during a market downturn or crisis.

Adding to TUSD’s challenges, Binance’s decision to exclude TUSD from its recent MANTA launchpad initiative raised several eyebrows. The launchpad, which rewards investors with new tokens for locking up assets, did not offer any options for TUSD, potentially prompting holders to switch to FDUSD, Binance’s newly favored stablecoin. This move came after Binance had previously supported TUSD, particularly following the regulatory issues faced by Binance USD. Binance had actively promoted TUSD, especially with its zero-fee trading program, which notably ended in early September.

Removing this zero-fee trading benefit for TUSD, alongside circulating rumors of TUSD’s exposure to the bankrupt crypto custodian Prime Trust, added to the growing skepticism around the stablecoin. Consequently, TUSD’s market capitalization has significantly declined, while FDUSD has been on an upward trajectory during the same period. This shift indicates a clear realignment of Binance’s focus towards FDUSD, leaving TUSD to navigate the market uncertainties independently.

Today, TrueUSD’s trading price hovers around $0.9878, with a 24-hour trading volume of $617,495,185. Despite a 0.90% decrease in the last 24 hours, its market cap stands at approximately $1.9 billion, ranking it 45th on CoinMarketCap. The circulating supply of TUSD is currently 1,922,988,408 coins, with the maximum supply not disclosed.

This recent devaluation of TUSD has rippled through the cryptocurrency market, highlighting the inherent risks and volatility of stablecoins, particularly those pegged to fiat currencies like the U.S. dollar. The incident underscores the importance of transparency and trust in managing stablecoin reserves, which are crucial for maintaining their peg and investor confidence.

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