TUSD Depegs, but to Over $1 for a Change

TrueUSD (TUSD) is quickly climbing the stablecoin dominance charts, thanks to Binance. 

In top stablecoins by market capitalization, TUSD is now ranked number 29. The token’s market capitalization increased from around $755 million at the end of 2022 to $2.4 billion on Monday.

The stablecoin, which was relatively unknown until recently when Binance made BTC-TUSD a zero-fee trading pair, lost its dollar peg Monday, hitting a high of $1.20 relative to USDT on Binance. 

Binance’s BTC-TUSD pair is now one of the highest-volume trades in the entire industry, researchers from Kaiko said. 

“TUSD liquidity has not kept pace with its volumes, making a depegging like this more likely,” Kaiko analysts added.  

Monday’s TUSD depeg coincided with a number of users on Aave and Compound borrowing large amounts of the token, apparently with organic transactions, Kaiko said. 

“The most common strategy was borrowing TUSD and swapping for USDC, effectively shorting TUSD from its elevated price,” analysts added. “However, neither Aave nor Compound have a large supply of TUSD, which meant that borrowing rates quickly surged, hitting over 100% APR on both protocols.” 

The move also coincided with Tron founder Justin Sun depositing over $50 million worth of TUSD on Binance, spurring speculation that Sun was trying to farm the SUI liquidity pools on Binance, which requires users to stake TUSD or BNB. Binance CEO Changpeng “CZ” Zhao threatened Sun with legal action, and Sun then admitted someone on his team was using a portion of the funds to farm, but most were to be used for market making TUSD on the exchange.

“Looking at market depth for the TUSD-USDT pair on Binance, someone has been adding liquidity in massive size: the pair is now the most liquid pair on Binance after a huge $200mn injection of orderbook liquidity at the 1% level,” Kaiko added. 

With increased depth and surging demand — thanks, SUI launchpad — TUSD is securing its spot as a top player in the stablecoin landscape.

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