⚖️Peg Stability

Asset Backing for tgUSD

tgUSD is a stablecoin backed exclusively by blue-chip stablecoins. At present, only USDT is accepted as collateral for minting. However, the protocol will continue to monitor developments of USDe on TON, as well as future native USDC support, to potentially expand the accepted collateral set.

Each circulating tgUSD is minted at a strict 1:1 ratio with USDT. The collateral is deployed into principal-protected protocols, such as Morpho, Fluid, and Aries Market, to generate yield while preserving capital security and full backing.

As part of the yield deployment process, collateral is transferred across chains. Any slippage, bridge fees, or losses incurred during this process are fully absorbed by the protocol. This ensures that users can always redeem tgUSD at full value, regardless of cross-chain execution costs.

tgUSD Peg Arbitrage Mechanism

Because both redeeming tgUSD for USDT and unstaking stgUSD for tgUSD require cooldown periods, users seeking instant liquidity often turn to DEX swaps. This frequently causes short-term price deviations from the $1 peg—creating arbitrage opportunities:

• tgUSD → USDT When many users swap tgUSD to acquire USDT, the pool’s USDT liquidity is drained. As USDT becomes scarce, its price rises in the pool—eventually making 1 USDT > 1 tgUSD, triggering a profitable arbitrage condition.

• stgUSD → tgUSD Similarly, when users frequently swap stgUSD to tgUSD (to bypass the cooldown), tgUSD appreciates in the pool. Arbitrageurs can compare the swap price with the on-chain conversion rate to identify profitable discrepancies.

These scenarios are frequent and expected. Arbitrage plays a natural role in rebalancing prices across pools and maintaining tgUSD’s peg stability in a decentralized, market-driven way.

Arbitrage Examples

Scenario 1: tgUSD trades below $1.00 on Torch Stable Swap

• Market price: $0.993

• Arbitrage steps:

  1. Buy 1 tgUSD on Torch for $0.993 USDT

  2. Redeem it from the protocol for $1.00 USDT

  3. Arbitrage profit: $0.007 per tgUSD

Scenario 2: tgUSD trades above $1.00 on Torch Stable Swap

• Market price: $1.007

• Arbitrage steps:

  1. Mint 1 tgUSD via the protocol at $1.00 using USDT

  2. Sell it on Torch for $1.007 USDT

  3. Arbitrage profit: $0.007 per tgUSD

Price gaps between the protocol and DEXs like Torch Stable Swap and DeDust already create natural arbitrage opportunities, helping to stabilize tgUSD through user-driven mechanisms.