A stablecoin with a market value exceeding $3.1 billion, TrueUSD (TUSD), showed signs of weakening. TUSD’s value dropped from its $1 peg to $0.9967. According to blockchain analysis firm Kaiko, this loss in value was due to accumulating sell orders in the market.
Kaiko researcher Riyad Carey pointed out that a $3 million sell order among other large orders played a significant role in TUSD’s drop below its stable $1 value. This situation led to TUSD users transacting with less USD. Under normal circumstances, a stablecoin backed by fiat currency should be supported by a 1:1 collateral ratio.
This incident highlighted the potential impact of large orders on liquidity. As a result, TUSD stands out as one of the most liquid stablecoins in the market, with trading pairs including leading cryptocurrencies such as Bitcoin (BTC). However, it still trails behind Tether (USDT), the world’s largest stablecoin by market value.
This price movement occurred a few weeks after concerns about the security of TUSD emerged. In mid-October, a miner had to reject a token named TEURO, which was distributed from the same address as TUSD, raising concerns that the private keys associated with TUSD could potentially be exposed.
Despite this, the funds associated with the fake token TEURO appeared to be linked to the distribution of another fraudulent token, TCNY, which has no connection to TrueUSD. Following these events, the community began to question the security of the stablecoin.
Even though all transactions occur on-chain, considering that TUSD is issued by a central authority, such incidents are not unexpected. Despite these challenges, the TrueUSD team continues to claim the security of their smart contracts.