Exclusive: TrueUSD Answers Questions on Transparency, Dollar Backing

What’s coming for the brand-new fixed price token – answers by Rafael Cosman, TrustToken co-founder and CTO.

TrustToken recently launched TrueUSD, a fixed price token that has shown a real capability of being changed back into fiat currency. At the moment, TUSD is tradable against Ethereum and Bitcoin. The token gives an indication of actual fiat funds entering the market, as well as the size of the potential fiat selling possibility.

The project regularly publishes an attestation of funds as evidence that each TUSD is backed by dollars in a bank account:

At this point, the biggest hurdle for investors is the KYC procedure, and actually achieving the withdrawal of funds. So far, this has been ensured by the smart contract and is transparent.

Cryptovest asked further questions on how TrueUSD ensures its fixed price and acts as a stable-priced digital asset:

Q: How did you get the banks on board to support the project? I realize you may want confidentiality, but so far, there is scarce information.

We’re being intentional about which banks we work with and we’ll be announcing those over the coming months.

We’ve partnered with professional trust companies to manage the escrow accounts that hold the TrueUSD collateral. Many of the trust companies we’ve worked with are listed on our website. They have correspondent banking relationships in which they store the funds.

The fiduciaries open escrow accounts with their correspondent banks to hold the escrowed funds. To purchase TrueUSD (TUSD), users complete a KYC/AML process and then wire funds directly to an escrow account with one of the banks mentioned above. The trustees have automated transfer systems integrated with the banking partners. These systems electronically confirm the receipt of the funds, then alert the TrueUSD smart contract to mint new tokens corresponding to the number of dollars transferred. The TUSD smart contract sends the new tokens to the Ethereum address associated with the account owner who sent the wire.

Likewise, when someone wishes to redeem TUSD tokens for USD, they complete a KYC/AML check and provide their wiring information to our fiduciary partners. They are then added to a whitelist which allows them to burn TUSD tokens. Next, they send tokens to the TrueUSD smart contract, where the tokens are burned (deleted from circulation), and the user receives a wire for the corresponding amount of USD. This way, there is always a 1:1 ratio between TUSD tokens in circulation and escrowed USD.

Q: In which jurisdiction are the bank accounts?

Most of the trust companies that we work with are in South Dakota and Nevada (the United States).

Q: Can you show me the minting wallet for the token? How does token generation work?  

The TrueUSD system mints each new token after receiving confirmation from our trust company partner that funds have been deposited and cleared in the escrow account. Minting involves sending a requestMint transaction to the smart contract and then a finalizeMint transaction to confirm the mint. These transactions must be signed by private keys which only TrustToken holds.

The TrueUSD token smart contract is located at https://etherscan.io/token/0x8dd5fbce2f6a956c3022ba3663759011dd51e73e. There, you can see the history of transactions and mints, and the current token holders.

Q: How does the smart contract work, in plain language?

Mints happen after funds have been received and confirmed as cleared by our trust company partner(s). There may be some delays before tokens are minted and we may batch multiple mints together for security reasons. Tokens are never minted before funds are confirmed to be cleared by a trust company partner. This is what maintains the invariant that the number of TrueUSD tokens is always less than or equal to the amount of money in the escrow account.

Q: Is it audited? By whom?

The TrueUSD smart contract has been audited; we have a confidentiality agreement in place with the fiduciary institution until the results are finalized and published.

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