TrueUSD's Borrowing Rates Jumped to 100% as TUSD Soared to $1.20: Kaiko

Traders shorted TUSD to capture a 20% upside for the token’s intended $1 peg.

AccessTimeIconMay 3, 2023 at 12:12 p.m. UTC
Updated May 3, 2023 at 3:17 p.m. UTC

Traders quickly jumped in to take advantage of trueUSD’s (TUSD) depegging event Tuesday to capture a potential 20% gain – paying an outrageously large amount in fees to be able to do so.

Crypto analytics firm Kaiko said in a Wednesday newsletter that on-chain traders utilized Aave and Compound, two popular lending protocols, to borrow large amounts of TUSD and then quickly swapp these holdings for USD coin (USDC), another dollar-pegged token.

Such a move was to effectively short, or bet against, TUSD from its elevated price. However, neither Aave nor Compound had a large supply of TUSD, which caused borrowing rates to hit over 100% annualized on both protocols.

Kaiko said these token conversions appeared to be organic instead of driven by automated bots. The firm added TUSD’s depegging likely occurred due to the lack of liquidity backing its intended $1 peg.

“Binance has recently been promoting TUSD, making BTC-TUSD the only zero-fee pair on the exchange,” Kaiko wrote. “This quickly made Binance BTC-TUSD one of the highest-volume pairs in all of crypto despite TUSD being relatively unknown amongst stablecoins.”

“Additionally, TUSD liquidity has not kept pace with its volumes, making a depegging like this more likely,” it added.

Binance has shied away from Binance USD (BUSD), which it offered in association with crypto firm Paxos, since regulatory troubles earlier this year. Paxos said at the time it would stop minting new BUSD tokens at the direction of the New York Department of Financial Services (NYDFS).

Traders have quickly adopted TUSD on Binance. Bitcoin trading volumes paired with the token clocked over $1 billion over the past 24 hours, second only to tether-denominated trading at $1.5 billion.

Edited by Parikshit Mishra.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Shaurya Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.