TrueUSD (TUSD), a stablecoin boasting a market capitalization surpassing $3.1 billion, exhibited signs of instability and temporarily deviated from its peg on November 22, experiencing a momentary dip to as low as $0.9976 before reestablishing its peg. The brief departure was attributed to a surge in sell orders, as reported by Kaiko, a blockchain analytics firm.
Momentary Depreciation of TUSD, Driven by Substantial Sell Orders
Kaiko’s researcher, Riyad Carey, highlighted that the upheaval leading to the stablecoin’s price falling below the dollar peg was triggered by significant sell orders, including one valued at $3 million. This transient deviation resulted in TUSD redeemers receiving less USD than the expected 1:1 reception of collateral for a fiat-backed stablecoin.
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The incident underscores the potential impact of large order blocks on liquidity and the susceptibility to slippage. TUSD, theoretically backed by USD and issued by TrustToken, enjoys popularity on Binance, an exchange that removed USDC and 2023.
Despite its liquidity, TUSD trails behind Tether (USDT), the world’s largest stablecoin by market cap.
The Enigma of TEURO
This depegging incident occurred a few weeks after concerns regarding TUSD’s security were raised. In mid-October, the issuer disclaimed TEURO, a token originating from the same address, suggesting a compromise of private keys associated with TUSD. Interestingly, funds linked to the fake token TEURO were also connected to the deployment of TCNY, another counterfeit token unrelated to TrueUSD. Subsequently, questions arose within the community regarding the stablecoin’s security and its foundational infrastructure.
This scrutiny is unsurprising given that TUSD is issued by a centralized entity, although all transactions are on-chain.
Despite these challenges, TrueUSD maintains the security of its smart contracts, emphasizing ownership of the TUSD minting contract since the conclusion of 2020.
In early May 2023, TUSD temporarily deviated, reaching as high as $1.20 on various exchanges, notably on Binance. This was attributed to increased activity in the SUI farming pool.
Persisting Challenges in Stablecoins
Nevertheless, the depegging of popular stablecoins is not a novel occurrence. In March 2023, both USDC and DAI, two of the world’s largest stablecoins, depegged, causing widespread market concerns. However, the respective teams promptly restored parity. Additionally, stablecoin issuers routinely release attestation reports to enhance confidence in their stability.
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