Tether unveils Alloy stablecoin backed by gold and pegged to the US dollar
Tether, the company responsible for the $112 billion USDT market cap, has recently unveiled a novel gold-backed stablecoin tied to the U.S. dollar. This fresh addition, known as Alloy (aUSDT), signifies Tether’s initial venture into linked assets and can be generated on the newly launched Alloy by Tether platform.
As per Tether, Alloy is crafted as an open avenue for constructing collateralized synthetic digital assets. The primary asset on the platform is aUSDT, a token with a fixed value relative to the U.S. dollar.
Alloy by Tether affords long-term holders the chance to uphold gold exposure while simultaneously acquiring a dollar-referenced Tethered Asset for transactions and everyday financial activities.
Investors have the option to mint aUSDT by depositing Tether’s XAUt as collateral. XAUt, boasting a market cap of $570 million, is purportedly supported by physical gold reserves housed in Switzerland.
The aUSDT token caters to individuals keen on utilizing cryptocurrency for payments and transfers without the need to liquidate their gold-backed tokens. To ensure security, positions are required to be overcollateralized, enabling users to mint new tokens up to 75% of the collateral value.
The issuance of these assets will be overseen by Moon Gold NA, S.A. de C.V., and Moon Gold El Salvador, S.A. de C.V., which are under the regulation of El Salvador’s National Commission of Digital Assets (CNAD).
This recent offering aligns with Tether’s strategy to broaden its services beyond USDT, the leading stablecoin by market value and a fundamental component of the digital asset sector. Tether’s expansion into Bitcoin (BTC) mining and artificial intelligence (AI) last year through a joint venture with BTC miner and data cloud provider Northern Data Group (NB2) further reinforces this strategy.
The Alloy platform is geared towards facilitating the digital replication of diverse assets and may potentially introduce yield-bearing products, catering to investors seeking dependable and innovative financial opportunities.
In contrast to Tether’s USDT, which is backed by a substantial reserve of cash and short-term U.S. T-bills, aUSDT relies on overcollateralization with Tether Gold (XAUt). This approach creates a synthetic dollar aimed at mirroring the value and utility of the US dollar without direct dollar support. The overcollateralization acts as a safeguard against gold price fluctuations, ensuring the token maintains its fixed value.
By utilizing gold-backed assets to produce synthetic digital dollars, Tether is enriching its appeal to investors and broadening its offerings within the digital asset realm.
