Tether Introduces Alloy: A Gold-Backed, Dollar-Pegged Stablecoin

• Tether has launched a new gold-backed stablecoin, aUSDT, on its Alloy platform, allowing users to mint the synthetic dollar through over-collateralization.
• Tether’s aUSDT facilitates transactions without selling gold-backed assets and is part of a broader trend of synthetic dollars, following similar launches by Galoy and Ethena Labs.

In a massive move, the world’s largest stablecoin issuer Tether unveiled its gold-backed stablecoin pegged to the synthetic dollar. This new synthetic dollar has been created on Tether’s new platform Alloy and it will trade as aUSDT through smart contracts running on the Ethereum blockchain network. As a result, users will be able to mint it through over-collateralization while depositing the Tether token that tracks the value of Gold.

Tether’s over-collateralized token Tether Gold (XAUt) will provide the ownership of physical gold but pegged to the U.S. Dollar. The new offering underscores Tether’s ambitions to diversify beyond its USDT stablecoin, which has a market capitalization of $112.5 billion and is pegged to the US dollar, backed by reserves of US Treasury bills, along with other securities and investments, per the Crypto News Flash report.

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

Tether subsidiaries Moon Gold and Moon Gold El Salvador are behind building the aUSDT gold-backed stablecoin. Interestingly, the Tether Alloy platform is an open platform that allows the creation of other tethered assets, also including yield-bearing products. In its official press release, the company noted:

Alloy by Tether introduces a novel category of digital assets known as tethered assets, designed to track the price of reference assets through stabilization strategies like over-collateralization with liquid assets and secondary market liquidity pools.

Tether’s aUSDT Stablecoin Facilitates Transactions Without Seeling Gold-Backed Assets

Tether Gold, with a market capitalization of approximately $573 million, is backed by physical gold stored in Switzerland, according to the company. Tether’s latest offering, the aUSDT currency, also targets users seeking to conduct transactions, payments, and remittances with a currency akin to the US dollar, without the need to sell their gold-backed digital assets, stated Tether’s press release.

Moreover, Tether’s aUSDT is not the first synthetic dollar on the market. In August 2022, Galoy introduced Stablesats, a Bitcoin-based synthetic dollar on the Lightning Network.

The synthetic dollar gained popularity when startup Ethena Labs launched its Ether-backed, dollar-pegged USDe in February, despite initial skepticism. Asymmetry followed in June with an algorithmically balanced synthetic dollar.

An analyst has favorably compared aUSDT to USDe and other stablecoins, citing Tether’s high liquidity and centralized control, which provides “smarter decision-making and less principal-agent risk.”