TUSD VS FDUSD, who will be Binance’s new “royal” stablecoin?

23-12-09 12:23

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In recent years, the stablecoin market has undergone significant changes. With the maturity and expansion of the cryptocurrency field, stablecoins, as a key bridge connecting the traditional financial and digital currency worlds, have seen continuous growth in market share and application scenarios.

We all know that BUSD, which is a collaboration between Paxos and Binance, has been the third largest stablecoin after USDT and USDC for a long time. However, due to regulatory pressure from the SEC, Paxos chose to terminate its partnership with Binance on BUSD and stop issuing new BUSD. Subsequently, Binance also announced the delisting of BUSD.

Since November 2022, the trading volume of BUSD on Binance has plummeted, and it will gradually exit the historical stage by the end of December this year. This change provides opportunities for other stablecoins in the market, especially for emerging stablecoins that hope to expand their market share.

Data source: Dune

Against this backdrop, who will be Binance's new "official" stablecoin? The community is currently focused on the stablecoins commonly used in Binance Launchpad trading pairs, such as the recently added FDUSD and the more established TUSD.

Binance's newly launched FDUSD, what is its background?

First Digital USD (FDUSD) is issued by FD121 Limited (branded as First Digital Labs). Its parent company, First Digital Trust, is a qualified custodian and trust company headquartered in Hong Kong. On June 1st of this year, it officially announced the launch of FDUSD, a stablecoin pegged to the US dollar, which is regulated in Asia.

According to data, First Digital completed its first round of financing in 2020 and has completed a total of three rounds of financing, raising a total of 25.15 million US dollars. Investors include Nogle and Kenetic Capital.

Data source: Qichacha

First Digital stated when launching FDUSD that as a company registered under the Hong Kong Trustee Ordinance, they must store all FDUSD reserves in an independent account held by a regulated financial institution in Asia. This will prevent the FDUSD reserves from being mixed with other assets of First Digital Trust Limited.

Public information shows that the CEO of First Digital is Vincent Chok. According to information on LinkedIn, in addition to serving as CEO of First Digital, Vincent Chok has also been CEO of First Digital's parent company, Legacy Trust Company Limited, since 2015. Gunnar Jaerv, the current COO of First Digital, previously held positions as head of proprietary trust and head of digital assets at Legacy Trust Company Limited, where he worked for 7 years.

Historically older TUSD

Without exaggeration, TUSD is one of the earliest stablecoins in the market. According to its official website, TUSD was launched in April 2018 and was the first USD stablecoin operated by a regulated operator.

Although TUSD (TrueUSD) had a weaker presence during DeFi Summer, its issuance date was actually earlier than USDC (USD Coin), USDP (Pax Dollar), and BUSD. As early as the year of its launch, TUSD's issuance exceeded $200 million and it occupied a place in the cryptocurrency market with its stability and reliability, becoming one of the main stablecoins at that time.

At the end of 2020, an investment company registered in the British Virgin Islands (BVI) called Techteryx Ltd. led the acquisition of TUSD. Currently, Techteryx is responsible for managing TUSD. It is reported that Techteryx has a global business presence and has offices in Asian countries and regions such as Singapore and Hong Kong. In addition, Techteryx has established long-term partnerships with industry-leading companies to enhance user trust in TUSD and promote its popularity and development.

Application scenarios determine the upper limit of stablecoins

From the background of the two, TUSD, as an earlier stablecoin, has a longer history and a more mature market and user base. FDUSD, on the other hand, is issued by First Digital Labs, a subsidiary of First Digital Trust. It started fundraising in 2020 and only officially launched FDUSD in 2023, making it a newcomer in the industry.

We all know that the application scenario is very important for stablecoins. In September 2018, after Paxos obtained the license to issue stablecoins from the New York State Department of Financial Services (NYDFS), it launched the USDP stablecoin. At the beginning of its issuance, USDP once occupied nearly 30% of the stablecoin market on Ethereum, but due to limited application scenarios, its market share continued to decline.

Compared to each other, TUSD and FDUSD have some similar use cases: both are widely used as trading pairs on cryptocurrency exchanges, helping investors mitigate the impact of market volatility; both are suitable for international cross-border payments and remittances due to their stability and low transaction costs. TUSD and FDUSD can also be used on DeFi platforms, such as lending and liquidity pools, providing stable asset options.

However, the two also have different application scenarios. In terms of smart contracts and programming finance, FDUSD emphasizes its programmability and is a programmable stablecoin that allows users to conduct complex financial transactions, custody services, and insurance arrangements through smart contracts without intermediaries. Although TUSD can also be used in smart contracts, its application in terms of programmability is not as prominent as FDUSD.

From the perspective of asset-backed financing, commercial enterprise payment solutions, and daily consumer digital wallets, TUSD is more common in encrypted asset collateral and financing, especially as a stable collateral in DeFi platforms, due to its early market presence and widespread acceptance. TUSD not only plays an important role in traditional cryptocurrency trading and DeFi platforms, but also demonstrates wide applicability in numerous payment scenarios worldwide, successfully integrated into platforms in various industries and fields.

Specifically, TUSD is also used as a payment tool in the travel industry through Travala.com, allowing users to book travel and vacations using stablecoins. This not only provides users with more payment options, but also promotes the application of cryptocurrencies in traditional industries. As a cutting-edge Web3 shopping platform, UQUID provides convenience for users to purchase gift cards, clothing, and more than 120 million products by supporting TUSD payments, deepening TUSD's penetration in the e-commerce field.

As the largest Web3 freelance marketplace, HYVE accepts TUSD as a payment method, enhancing TUSD's competitiveness and application scenarios in the job market. In addition, NOWPayments, a cryptocurrency payment platform, also supports physical merchants to accept TUSD as a payment method.

Although FDUSD can theoretically be used in these scenarios, due to its later launch, it may not be as widely adopted in these application areas as TUSD.

Overall, both TUSD and FDUSD provide the core functionality of stablecoins, serving as a stable store of value and medium of exchange in cryptocurrency trading and cross-border payments. FDUSD stands out for its features in smart contracts and programmable finance, while TUSD has successfully integrated into multiple platforms across different industries and sectors, such as Travala.com, UQUID, HYVE, and NOWPayments, making it more mature and diverse in everyday consumption, online shopping, and other payment needs.

Deployment Platforms, Chains, and Market Performance

As the birthplace of TUSD, Ethereum has become its native blockchain network. TUSD initially existed in the form of an ERC-20 token, making full use of Ethereum's smart contract technology for efficient management.