Tether Launches Alloy (aUSDT): The First Gold-Backed ‘Tethered’ Stablecoin

Leading stablecoin issuer Tether has unveiled Alloy (aUSDT), a gold-backed stablecoin pegged to the US dollar.

The launch of Alloy, the first instance of a tethered asset, comes in conjunction with the new Alloy by Tether platform. This enables the minting of the new stablecoin.

Alloy is designed to be overcollateralized by Tether Gold (XAUt), a token representing physical gold ownership, while maintaining a peg to the U.S. dollar.

In essence, Alloy acts as a synthetic dollar, mimicking the value and functionality of the US dollar without direct backing.

Tether describes tethered assets as “digital assets that aim to track the reference price of another asset through different stabilization mechanisms.”

2/ Tethered Assets are digital assets that aim to track the reference price of another asset through different stabilisation mechanisms.

— Alloy by Tether (@Alloy_tether) June 17, 2024

Tether’s Alloy Offers Exposure To Gold

Furthermore, Alloy by Tether offers long-term holders the opportunity to retain exposure to gold while simultaneously utilizing a dollar-referenced Tethered Asset for day-to-day transactions.

The platform also hints at the potential creation of other tethered assets in the future, including yield-bearing products.

Users can mint the synthetic dollar by depositing XUSDT through a smart contract and price oracles, allowing them to engage in transactions using aUSDT while retaining their gold-backed Tether asset.

Developed by Tether subsidiaries Moon Gold and Moon Gold El Salvador, aUSDT will become part of a real-world asset tokenization platform set to launch later this year, according to Tether CEO Paolo Ardoino.

“Alloy by Tether is an open platform that allows to create collateralised synthetic digital assets and will soon be part of the new Tether digital assets tokenisation platform, launching later this year,” Ardoino said in a post on X.

aUSDT, the first Tethered asset, just launched!
aUSDT is a synthetic dollar over-collateralised by XAUt (Tether Gold).

Alloy by Tether is an open platform that allows to create collateralised synthetic digital assets and will soon be part of the new @Tether_to digital assets… https://t.co/J8JyWt9duh

— Paolo Ardoino 🤖🍐 (@paoloardoino) June 17, 2024

aUSDT is not the first synthetic dollar in existence. With Galoy introducing the Bitcoin-based Stablesats on the Lightning Network in August 2022, it represents a significant development within the stablecoin landscape.

Earlier this year, Ethena Labs introduced USDe, a dollar-pegged stablecoin backed by Ether. Meanwhile Asymmetry presented an algorithmically balanced synthetic dollar called aUSDT in June.

Analysts have compared aUSDT favorably to other stablecoins, citing Tether’s high liquidity, smarter decision-making, and reduced principal-agent risk due to its centralized control.

Tether has also incentivized users by offering a bonus to USDT holders at a 2:1 ratio and setting aside 10 million aUSDT for this purpose.

Tether Surpasses $100 Billion Market Cap

In early March, Tether’s USDT surpassed a market capitalization of $100 billion, with an impressive growth of 9% year-to-date. Comparatively, USDT maintains a lead of over $71 billion in market cap when compared to its closest competitor, USD Coin (USDC).

EXPLORE: What is Tether USDT – A Beginner’s Guide

Despite the success, concerns about the quality of assets backing USDT have lingered in the crypto space.

A recent United Nations report highlighted Tether’s popularity among cyber fraud and money laundering activities in Southeast Asia. Tether has refuted these claims, emphasizing its collaboration with law enforcement and the traceability of its token.

Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.

Disclaimer

Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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