[TUSD] - Adding as collateral to MCD (Second Application)

  1. Who is the interested party for this collateral application?
  • TrueCoin, LLC (the entity behind TrueUSD (“TUSD”))
  1. Provide a brief high-level overview of the project, with a focus on the applying collateral token.
  • TUSD is a USD-backed stablecoin that is fully-collateralized (1:1 backed) with USD held by banks and trust companies.
  1. Provide a brief history of the project.
  • TrueUSD was announced in January of 2018
  • TrueUSD was launched in March of 2018
  1. Link the whitepaper, documentation portals, and source code for the system(s) that interact with the proposed collateral, and all relevant Ethereum addresses. If the system is complex, schematic(s) are especially appreciated.
  • TUSD does not have a white paper. The blog can be found here (link)
  • Portal to create and redeem TUSD w/ USD (link)
  • Etherscan (link)
  1. Link any available audits of the project. Both procedural and smart contract focused audits.
  1. Link to any active communities relating to your project.
  • Our Telegram community (Link)
  1. How is the applying collateral type currently used?
  • TrueUSD is a USD-backed stablecoin. It’s mostly used by traders exchanging it for other assets on cryptocurrency exchanges.
  1. Does one organization bear legal responsibility for the collateral? What jurisdiction does that organization reside in?
  • TrueCoin, LLC, manages the smart contracts of TUSD. It is a wholly-owned subsidiary of TrustLabs, Inc. This is a Delaware, USA registered company.
  • Independent, third-party banks and trust companies in the United States and Hong Kong manage the fiat collateral backing TUSD in escrow accounts held for the benefit of all TUSD holders.
  1. Where does exchange for the asset occur?
  • On many trading venues. Per our calculations, the most real volume takes place on Binance. (Link to Coinmarketcap)

This is TrueUSD’s second application. Below you can view TUSD’s first application and some of the discussion that followed TUSD’s initial application.

  1. (September 11, 2019) TUSD’s first application with lots of productive discussions
  2. (September 14, 2019) Rune’s post in the forum “What’s the point of adding stablecoins as collateral?
  3. (September 20, 2019) A Reddit discussion in r/ethfinance that Rune called out on Twitter as being high-quality discussion on this topic.

Let me know if there is anything that I can help to clarify.

-Ryan

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Appreciate this @RyanRodenbaugh , sorry for making you guys jump through hoops with the first application.

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Oracle Team Collateral Onboarding Evaluation

V1.0.5
Author: Niklas Kunkel (Oracle Team)
Contributors:
Date: 05/13/20

Explanation of the Oracle Team Collateral Onboarding Methodology

Economic Impact

How much Dai can be expected to be generated against TUSD?

Concrete Data:
Token Contract Address: 0x0000000000085d4780B73119b644AE5ecd22b376
Circulating Token Supply: 138,288,895.50 TUSD
Token Market Cap of Circulating Token Supply ( TMC ): $138,288,895.50
Total Number of Holders: 26,668
Token Distribution: Top 20 holders hold 49.50% of Circulating Token Supply
Avg Collateralization Ratio of Maker Protocol ( avgCR ): 361.38%

Assumptions:

  1. Assume a reasonable minimum collateralization ratio ( minCR ) based off empirical values in collateral portfolio. Since this token is a fiat backed stablecoin with similar centralization risks to USDC let’s assume minCR = 120%.
  2. Market Cap Utilization ( MCU ), the amount of the TMC that can reasonably expect to be deposited in the Maker Protocol, is bounded by empirical values in collateral portfolio.
    Currently the lowest and highest MCU in the Maker Protocol are [0.73%, 3.73%]

Formulas:

Estimated Lower Economic Impact = TMC * MIN(MCU) / avgCR 
Estimated Lower Economic Impact  = $138,288,895.50 * .0073 / 3.6138 = 279,348.314 DAI

Estimated Upper Economic Impact = TMC * MAX(MCU) / minCR
Estimated Upper Economic Impact  = $138,288,895.50 * .0373 / 1.2 = 4,298,479.84 DAI

Due to the average of the estimated lower and upper economic impact, the Oracle Team is assigning TUSD a High Economic Impact label

Given the distribution of token holders relative to the total number of token holders, how many users with significant sums of the proposed collateral are we reasonably targeting with this integration?
~550 people (90th percentile)

Technical Complexity

Determine how complex integrating Oracles for this collateral type would be and how long it would take to implement such a solution.

Is a solution currently not possible because of a key missing component?
There is no immediate indication that TUSD would be hard to support from an Oracle perspective.

Are there enough high quality data sources available to construct a reliable, resilient, and secure Oracle for the proposed collateral asset?
Yes, just browsing coinmarketcap there are a reasonable number of quality exchanges we can query price data from if we want to go in that direction. Alternatively we can use the same Oracle model we use for USDC and set a constant value of 1 as the value of TUSD should be binary (1 or 0) due to its redeemability property.

Can the current tooling support the types of data sources that are needed?
Yes, the sources are simple to integrate.

Can the current tooling support the types of data modeling that are needed?
Yes, the median model is already supported in the Oracle stack.

Does adding these features interfere with ongoing or planned development of new tooling on the Oracle Team roadmap?
No this should be fairly simple to add and won’t interfere with longterm projects in a meaningful way.

What dependencies (both technical and system), risks, costs, and latency are added to the Oracle Protocol as a function of these added features?
No added dependencies, risks, costs, nor latency associated with adding support for TUSD to the Oracle stack.

Does adding these features require work from other stakeholders such as the Smart Contracts Team(s)?
No.

How long would it take to design, implement, test, and deploy such a solution?
About 1 week to develop and test.

Given the simple nature of the TUSD integration the Oracle Team considers this a low technical complexity project.

Evaluation

The combination of Economic Impact mapped against the Technical Complexity of onboarding a new collateral type can paint a picture of whether an Oracle Team ought to accept, decline, or defer a collateral onboarding application.

Low Technical Complexity High Technical Complexity
Low Economic Impact maybe decline
High Economic Impact accept maybe

High Economic Impact x Low Technical Complexity => accept

Reccomendation

TUSD can serve the same role as other fiat-backed stablecoins in the Maker Protocol (such as USDC) in that it can provide liquidity to keepers and market-makers to participate in liquidation auctions and stabilizie the peg respectively.

The combination of high economic impact and low technical complexity to implement an Oracle inclines the Oracle Team to accept the TUSD onboarding application should the governance community decide to greenlight

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