TrustToken Introduces Proof of Reserve for TUSD Stablecoin in Collaboration With Chainlink and Armanino
With the support of Armanino and Chainlink, TUSD becomes the world’s first stablecoin with live, on-chain attestations
TrustToken is utilizing our existing, independent real-time attest provider, Armanino, to push trusted data on-chain via leading oracle network, Chainlink, to power the trust and risk measures that DeFi and future on-chain uses require.
TrustToken is proud to continue our leadership in standards for stablecoin transparency through independent, real-time attestations of fiat reserves. Now, for the first time, this collateral data is consistently accessible directly on the blockchain.
Through a collaboration with Chainlink, the industry-leading decentralized oracle solution, and Armanino, a top 25 accounting firm in the United States, we’re introducing the TUSD Proof of Reserve & Supply reference contracts, which extends our unparalleled transparency to on-chain environments. The data currently underpinning real-time audit reports through Armanino’s TrustExplorer will now also be made available to on-chain smart contracts via a secure and reliable Chainlink-powered decentralized oracle network.
TrustToken, Armanino, and Chainlink believe on-chain trust is critical for decentralized finance (DeFi), as many lending and swap protocols rely on stablecoins as the backbone asset and collateral for such dApps. Importantly, the trusted collateral data provided is both independent and decentralized: TrustToken is not involved in the process of reporting. All data comes directly from Armanino’s TrustExplorer API, creating a critical level of separation between the makers of TUSD and the verification of its reserves. Additionally, the Chainlink oracle network fetching data from the Armanino API and delivering it to the blockchain is decentralized.
“TUSD is one of the fastest-growing assets on the Maker platform. We wish more projects had their Proof of Reserve feature. It’s a huge step towards increased trust and transparency, and makes risk assessment much easier.”
— Maker Community Members
Improving the Building Blocks of DeFi
Stablecoins are an essential part of the DeFi ecosystem, establishing themselves as the most dominant cryptocurrency asset to trade against and borrow. They not only comprise 80%+ of market activity on Aave and Compound alike, but stablecoins also fetch the highest APY rates for lenders.
Since the launch of TrueUSD (TUSD) in 2017, TrustToken has been integral in the rise of stablecoins, currently standing at over $300M US Dollars tokenized and bridged onto the Ethereum blockchain through TUSD, and collateralizing over $50M of DAI in the Maker protocol.
Alongside this rapid growth comes the need for ever higher levels of transparency into the fiat collateral backing each TUSD token. Through Chainlink’s decentralized oracle network and Armanino’s source of truth API endpoint, the Proof of Reserve & Supply reference contracts allows DeFi applications on the Ethereum blockchain to verify in real-time the true collateralization of all minted TUSD tokens.
The TUSD Proof of Reserve automates the protection of users’ funds from any fractional reserve practices or potential black swan events.
The on-chain Proof of Reserve for TUSD is an industry first for fiat-backed stablecoins and we are excited to see how this additional layer of transparency will boost the already growing adoption of TUSD within the DeFi economy.
“We are proud to collaborate with the Chainlink and Armanino teams to launch an independently managed and tamper-resistant TUSD Proof of Reserve,” said Rafael Cosman, Co-founder of TrustToken.
“By providing DeFi applications with TUSD collateralization data, users are afforded increased levels of transparency and trust in TUSD as a new form of payment and collateral. This will have compounding effects for both DeFi and traditional finance.”
How Chainlink’s Proof of Reserve Feature Is Applied to TUSD
In order to provide highly transparent and fully autonomous readings of TUSD’s reserves on-demand, Ethereum DeFi protocols are now able to connect to a Proof of Reserve & Supply Reference Contracts that is continually updated on-chain by a Chainlink-powered decentralized oracle network.
All dApps have to do is query the Proof of Reserve Contract (within a single transaction) and instantly receive the latest update on the collateralization ratio. This provides highly trustworthy information on whether or not TUSD tokens are fully backed 1:1 by an equal reserve balance of US Dollars held in a federally regulated escrowed bank account. Interested parties can also visit TrustExplorer directly to download industry-standard audit reporting for a periodic manual review of the independent accountant’s reporting.
The source of collateralization data for TUSD is collected every thirty seconds directly from the multiple banking and trust company partners that support Trust Token’s TrueCurrency products. Armanino’s Trust Explorer Real-Time Audit platform aggregates collateral data, performs reconciliation and other automated checks against the Armanino-hosted Ethereum and BinanceChain nodes, timestamps the data, and makes that data available to the Chainlink oracle network via a highly-available API endpoint.
Upon each review, Chainlink oracles will fetch this collateralization data from Armanino’s API endpoint using a Chainlink External Adapter. If the account balance has changed beyond a predefined deviation, then the Chainlink oracle network broadcasts an update to the reference contract on the Ethereum blockchain where it can be easily read by smart contract applications.
Any instance where the fiat holdings reported by the Proof of Reserve contract is lower than the amount of circulating TUSD, dApps can employ a customized circuit breaker to swiftly and safely protect user funds, such as preventing a transaction from being approved. This is especially useful for DeFi applications that utilize TUSD directly as collateral like Aave and Maker, allowing them to increase user trust by an order of magnitude. Using Chainlink Proof of Reserve as an autonomous circuit breaker for TUSD interactions enables DeFi applications to operate in a more autonomous manner, reducing the need for any manual checks or interventions by developers during black swan events.
Through these new user protections, the DeFi ecosystem is able to support higher-value applications with superior guarantees on the state and execution of transactions that truly begin to challenge traditional finance.
To automate and ensure the data delivered to the Proof of Reserve contract has not been manipulated, it is imperative to use highly secure and reliable oracles to transfer data between the two environments. Upon researching various oracle solutions, we found Chainlink’s oracle network to be the most secure and production-ready solution on the market. It uses a decentralized network of independent, security reviewed oracle nodes to source and deliver data in order to prevent Sybil attacks and eliminate downtime. It’s also extremely flexible, which was critical for connecting to Armanino’s custom authenticated API endpoint and obtaining the specific dataset. With a proven track record of securing over $4B in the DeFi ecosystem, we are confident that Chainlink will continue to provide high-quality oracle services in a manner that is both highly reliable and tamper-resistant.
“We’re thrilled to work with a leading auditor like Armanino to bring additional security features to TUSD users by providing highly secure and reliable automated audits of the off-chain reserves backing its on-chain tokens,” stated Sergey Nazarov, Co-founder of Chainlink. “Empowering the DeFi ecosystem with on-demand access to data from a highly trusted auditor in Armanino will further enable both retail and enterprise users to feel more comfortable storing value in TUSD and using it as collateral within other DeFi applications, knowing it’s not engaging in any secretive fractional reserve practices.”
“As a continuation of our work with proof of reserve systems, we’re excited to leverage our unique tools and expertise to make collateralization reviews on TUSD accessible directly on-chain via Chainlink’s secure and reliable decentralized oracle network,” said Noah Buxtom, leader of Blockchain & Digital Assets at Armanino.
“This is the first time an accounting or auditing firm has made collateralization data directly available to on-chain applications; an important first step to facilitate the bridge between on-chain and off-chain data. The future of finance and capital markets is on-chain, but not without trustworthy oracles, oracle networks, and valuable off-chain data. We’re excited to continue working with both the TrustToken and Chainlink teams to further expand this proof of reserve model to other TrustToken assets.”
We are excited to see how smart contract applications begin using TUSD in new and unique applications now that they have access to increased levels of trust via the Proof of Reserve contract. We plan to continue working with the Chainlink and Armanino teams to ensure projects can seamlessly integrate this new functionality.
Additionally, we are already exploring launching more Proof of Reserve contracts for our various other fiat currency-backed stablecoins including TCAD, TAUD, TGBP, and THKD.
TrustToken builds modern financial infrastructure to make economic opportunity open to all. Our TrueCurrencies (TUSD, TGBP, THKD, TCAD, TAUD) are the world’s first and only independently live-attested, fully collateralized stablecoins — now with on-chain feeds.
Collectively trading on over 100 exchanges and OTC desks, TrueCurrencies generate billions in monthly volume in 150+ countries. Enjoy near-instant transactions, the lowest transaction costs of any stablecoin, easy exchange between fiat, obsessive customer service and easy access to earning opportunities.
Armanino LLP (www.armaninollp.com) is one of the 25 largest independent accounting and business consulting firms in the nation. Armanino provides an integrated set of audit, tax, business management, consulting and technology solutions to companies in the U.S. and globally. The firm helps clients adapt and change in every stage of business, from startup through rapid growth to the sale of a company.
Armanino emphasizes smart technology, leading a cloud revolution of financial, operational, sales and compliance tools that are transforming the way companies do business. The firm extends its global services to more than 100 countries through its membership in Moore Global, one of the world’s major accounting and consulting membership organizations. In addition to its core consulting and accounting practices, Armanino operates its division, AMF Media Group (www.amfmediagroup.com), a media and communications services agency. Its affiliate, Intersect Capital (www.intersectcapitalllc.com) is an independent financial planning, wealth and lifestyle management firm.
Chainlink is the most widely used and secure way to power universal smart contracts. With Chainlink, developers can connect any blockchain with high-quality data sources from other blockchains as well as real-world data. Managed by a global, decentralized community of hundreds of thousands of people, Chainlink is introducing a fairer model for contracts. Its network currently secures billions of dollars in value for smart contracts across the decentralized finance (DeFi), insurance and gaming ecosystems, among others.