Proposal: Improving Support for TrueCurrencies

Hello - I’m Rafael, CEO of TrustToken, and our team would like to propose improving the support for TrueCurrencies on AAVE.

Specifically, we’d like to propose the following changes:

1. Add support for TrueAUD, TrueCAD, TrueGBP, and TrueHKD
2. Change TrueUSD LTV from 1% to 75% (same as DAI and USDC)

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Why AAVE benefits from increasing support for TrueCurrencies

Popularity: TUSD has been listed on AAVE since 2019, currently ranks 3rd in market size among stablecoins on AAVE, and makes up 13.6% of AAVE’s total market size.

Largest AAVE markets at time of writing, sorted by Total Borrowed:

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With increased LTV for TrueUSD, as well as the additional assets, we believe TrueCurrencies could grow AAVE’s total market size by an additional $150mm from where it is today.

New use cases: TrueCurrencies such as TCAD, TAUD, TGBP, and THKD, can add value to AAVE by allowing users to on-ramp via their native currencies or speculate on Forex with leverage.

Transparency: TUSD is the only stablecoin with live attestations to corroborate TUSD out in the market with dollars held in escrow. These attestations are facilitated by top accounting firm Armanino, LLP.

Reliability: Based on DeFi Score, TUSD on AAVE has the highest trust rating of any fiat-backed stablecoin currently listed on the platform.

Liquidity: TUSD is at over $280M in market cap at the time of writing, ranking as the 4th largest stablecoin after USDT, USDC, and DAI. It enjoys deep liquidity on both centralized and decentralized exchanges.

DeFi Adoption: The MakerDAO community accepted our TUSD collateral application and is in the process of green-lighting TAUD, TGBP, and TCAD.

Status:

  • TUSD Proposal Poll: (99.99% voted “Yes”)
  • TGBP Greenlight Poll: (100% voted “Yes”)
  • TAUD Greenlight Poll: (100% voted “Yes”)
  • TCAD Greenlight Poll: (100% voted “Yes”)

Access: TUSD is widely available through both 1st party and 3rd party fiat-to-crypto on-ramps, creating a new entry point for both individual and institutional AAVE users. You can mint and redeem it right here.

Weaknesses

TAUD, TCAD, TGBP, and THKD have lower liquidity when compared to TUSD. However, for each of our stablecoins AAVE is open to onboarding, TrustToken can commit to providing $350k of liquidity at the time of listing to seed the market.

Feedback

We think there is a strong partnership here and would love to work with the AAVE community to address any questions or concerns.

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I agree that adding support for tokenised international currencies is a good move for the reasons you mentioned, with ability to interact with native currencies my favourite. In my own experience, TrustToken and their services are impressively professional. Adding support for these currencies like a good idea which would benefit users. :+1:

It would be interesting to hear if the community has any reservations towards such a partnership?

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While these other TrueCurrencies don’t have as much liquidity as TUSD, I do think it’s important to support other nation’s currencies in the long run - especially as controversy around the USD’s valuation continues to heat up I think it could be a good move.

Looking forward to hearing about the development of this proposal.

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Very interesting, but why don’t you add TEUR, and TCHF?

@toad @defidude- thanks for your support. Our team is looking forward to working together on this!

L0GYKAL- our team has decided to pause supporting additional currencies until we’re able to get more DeFi support for our existing non-USD currencies. It’s difficult to justify the investment otherwise. We’re green-lit on 3 of them with Maker, and if we can get them supported on AAVE as well we’ll have a stronger case for ramping up investment in new currencies.

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TrustToken has been very collaborative with MakerDAO so far, I’m truly impressed: https://forum.makerdao.com/t/tusd-update-trusttoken-response-to-implementation-concerns/3407

I think the new tokens contemplated in this post could be a great addition, positioning Aave as the decentralized forex market of choice.

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Thanks @monet-supply, it’s been great to work with you and the Maker community as well.

I do think decentralized forex markets are a large opportunity - AAVE has generally been ahead of others and could potentially claim this position. We’d love to partner and support with liquidity, marketing, and down the road, hearing from the community what real-world currencies or assets they’d like to see tokenized for listing on AAVE, such as the ones you’ve mentioned @L0GYKAL.

For selfish reasons I would love to see the team speak to Xfers out of Singapore re: their XSGD & XIDR (Indonesia) initiatives

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@ecent I think a TrueSGD would be quite feasible down the road if AAVE would be interested in having it, TrueIDR may be more difficult for regulatory reasons, will need to look more into it.

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I think this is a great idea. We are all distinctly aware of the global community we have and the support for a variety of currencies will encourage user adoption and engagement. There will be peaks and troughs in all market cycles and a lot of people may want to sit in their native currency to protect against any global or personal volatility. I for example would love to take profit in gbp but not necessarily withdraw off chain, TGBP would enable that.

What would TrustToken want in return for the liquidity provision? Is the provision for a fixed period of time?

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The Aave Fam is among the top adopters of TrueCurrencies with TUSD available on Aave since the first January 2020 release.

Early June TrueCurrencies upgraded the TUSD smart contract with beta code with no warning for integrators. To protect Aave’s AUM exposure to TUSD debt was reduced by lowering the LTV to just 1% as a temporary risk management measure until an audit is shared.

With regards to adding other TrueCurrencies to Aave. My understanding is that the smart contract is the same as TUSD so it is tested. However I cannot find the assets on CoinGecko or CCM so the main concern would be around having a sufficient liquidity.

I can see a lot of value in new stable assets for Europeans such as myself. As these assets grow they will reach the necessary volume and market depth for smooth liquidations on Aave. A first step could be to have a True market to segregate the risks where you could borrow TrueCurrencies against preferred collaterals.

The current data driven asset selection and parameter calibration process is detailed in Aave’s risk docs https://docs.aave.com/risk/asset-risk/methodology

A qualitative analysis completes the risk algorithm, which includes a smart contract review and due diligence. The DeFi space changes fast with risks constantly evolving.

Until now the founding team has been handling the asset selection and calibration of parameters based on community sentiment and Aave Risk Framework analysis. Now all decisions are in the hand of $LEND holders that will vote on all the parameters through governance.

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@DrAdz786- we’re happy to provide the liquidity if AAVE is able to list the tokens! We’re aiming to provide initial liquidity to help get the markets started and will hopefully allow natural liquidity to take over after a certain amount of time. We do have limited capital and have many places we need to use it to help grow the ecosystem. In addition to seeding liquidity, we’ll be marketing AAVE’s new markets in our communities to drive more natural supply and demand.

@Alex_BertoG- we apologize for not warning integrators and have learned from that mistake. Going forward, we’re giving integrators plenty of notice. Note that while we dropped the ball on the communication there, the code we shipped was, as always, fully audited, and it had no breaking changes.

While the liquidity on the other TrueCurrencies is smaller than TUSD, it’s markets like AAVE that help to grow that liquidity. We’re also working on increasing TrueCurrency liquidity on Uniswap and will have more updates on that soon.

While this is one possible path, I don’t think it’s the best one. TrueCurrencies are, by many measures, the most trustworthy stablecoins in the world.

  1. TrueCurrencies are the only stablecoins with live attestations to corroborate TUSD out in the market with dollars held in escrow. These attestations are facilitated by top accounting firm Armanino, LLP.
  2. We’re now working with oracles to become the only stablecoins to live report collateralization on-chain.
  3. Based on DeFi Score, TUSD on AAVE has the highest trust rating of any fiat-backed stablecoin currently listed on the platform, higher than DAI, USDC, and USDT.
  4. Unlike some other stablecoins, purchasing and redeeming TrueCurrencies is easy. Just go here.

If you told me you were considering listing a stablecoin with a lower DeFi trust rating, without live attestations, and, like some, more difficult to mint and redeem, I’d also be concerned!

@Alex_BertoG what would you want to see from TrueCurrencies to fully support listing them? Your feedback is how we get better- we’re here to work with the AAVE community and create products that the community feels fully confident in.

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Awesome idea. Lets get it done.

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@Alhambren let’s do it.

Just wanted to share this update here:

Hal from our team shared the proposed TUSD upgrade with your team, we’re just waiting to get the green-light from your team and Maker and then we should be clear to do the upgrade.

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Security update:

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Hey Aave fam! I’m Clayton Lowery from Armanino (a major US accounting and consulting firm) and a PM on our TrustExplorer application which issues real-time audit reports over each of the stablecoins in this proposal. I wanted to provide some input on how great and professional the TrustToken team is. They have continuously pushed the envelope in this industry for trust and transparency by being the first to receive audits over the dollars backing the token, then doing a dashboard for holders to see these balances live, and then merging the two together to partner with us to launch the first audit application ever that is in real-time 24/7/365. Our next innovation is working with Chainlink to provide this collateral data on-chain. We think this level of transparency sets TrustToken apart from any asset-backed tokens and they will continue to raise the bar higher in this area.

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We know liquidity for the other TrueCurrencies is important for usage and for liquidations. Wanted to share an update on the liquidity front:

We think this further strengthens the case for listing the other TrueCurrencies, beyond the reasons mentioned above. If there are particular markets the community thinks are still not liquid enough, please let us know.

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As of 7:03PM PT tonight, the planned TUSD upgrade is now complete. :tada:

New implementation contract: 0x7a9701453249e84fd0d5afe5951e9cbe9ed2e90f

Gnosis Safe TX that performed the upgrade: 0xbe0ee01abff79c4f4106c1924b1541d279501ada8a2a35db4d8ba885b246279a

This code has of course been fully audited and already reviewed by the AAVE team. Please let us know if you have any questions or concerns.

2 Likes