Our Stablecoin: taoUSD

taoUSD is the first over-collateralized stablecoin backed by wTAO, engineered for low volatility and soft-pegged to the US dollar. The protocol maintains a tight price band (typically between $0.995 and $1.005) through a set of economic mechanisms designed to promote price stability and user incentives.

Stability Mechanisms

• Debt Issuance and Repayment If taoUSD falls below peg (by more than the 0.5% issuance fee), users are incentivized to purchase taoUSD on the market to repay their interest-free debt, reducing supply. If the price exceeds the peg by more than the fee, users are incentivized to borrow more taoUSD to sell at a premium, increasing supply and bringing the price down.

• Liquidity Incentives TrustedStake partners with external protocols to incentivize taoUSD/USDC liquidity on platforms like Uniswap, increasing depth and reducing slippage.

• Redemptions Redemptions are restricted to protocol-owned, whitelisted addresses, preventing unrestricted capital outflows. Profits from redemptions are recycled into taoUSD liquidity.

• Liquidations If a vault becomes undercollateralized, the protocol initiates a Dutch auction where bidders can acquire the vault’s wTAO collateral at a discount using taoUSD. If no bids are placed, the protocol proceeds with automated liquidation to preserve system solvency.