TrueUSD (TUSD) Blames Binance Launchpool Mining Activities for Depegging
TrueUSD (TUSD) has attributed the recent depegging of its value to mining activities on Binance Launchpool. The stablecoin issuer clarified that regular attestations are ongoing as part of their standard operations and any claims suggesting otherwise are incorrect. They observed community mining activities associated with Binance Launchpool, which created short-term arbitrage opportunities.
The Depegging of TrueUSD (TUSD)
The depegging of TrueUSD (TUSD) from its $1 peg and its subsequent drop in value to as low as $0.97 has caught the attention of the crypto community. This event was closely linked to the activities on Binance Launchpool.
Sell-Off on Binance
A significant sell-off of TUSD was witnessed on Binance, leading to a noticeable depegging from the US dollar. Within 24 hours, traders sold more than $339.2 million worth of TUSD, resulting in a net outflow of $42.3 million from the exchange.
Technical Difficulties and Trading Discrepancies
TrueUSD faced issues with real-time attestations of its reserves, raising concerns about undercollateralization. Technical difficulties in the API prevented accurate valuation of collateral assets. On Poloniex, TUSD traded below its peg for weeks while maintaining a relatively steady price on Binance.
Linking Depegging to Binance Launchpool Activities
The TrueUSD team connected the depegging incident to activities associated with Binance Launchpool, specifically community mining activities that created short-term arbitrage opportunities. They reassured users about market dynamics and liquidity adjustments, highlighting the smooth operation of redemption channels and TUSD minting and redemption services.
Broader Questions about Stablecoin Stability
This depegging incident raises concerns about the stability and transparency of stablecoins in the crypto market. TrueUSD had previously halted attestations due to balance discrepancies and later upgraded its reserve audit system. Transparency and trust in stablecoin management are crucial for maintaining investor confidence and market stability.
The Impact of Rival Stablecoin FDUSD
The decline in TUSD’s value coincided with the introduction of rival stablecoin FDUSD into Binance’s staking program. Speculation suggests that investors sold TUSD for FDUSD to participate in Binance’s rewards programs, potentially contributing to TUSD’s depegging.
Hot Take: The Fragility of Stablecoins
The depegging of TrueUSD highlights the fragility of stablecoins in volatile market conditions and emphasizes the need for robust mechanisms to maintain pegs to underlying assets. Transparency and trust in reserve management are essential for maintaining investor confidence and overall market stability.
By
By
By
By
By