Tether introduces Alloy a stablecoin backed by gold and pegged to the US dollar
Tether, the company known for its $112 billion market cap stablecoin USDT, has recently unveiled a new stablecoin backed by gold and pegged to the U.S. dollar. This new digital asset, named Alloy (aUSDT), represents Tether’s initial venture into tethered assets and can be generated on the newly launched Alloy by Tether platform.
Alloy is designed by Tether as an open platform for generating collateralized synthetic digital assets, with aUSDT being its primary asset pegged to the U.S. dollar.
Alloy by Tether allows long-term investors to retain exposure to gold while simultaneously acquiring a dollar-referenced Tethered Asset for transactions and everyday use.
Investors have the option to create aUSDT by using Tether’s XAUt as collateral. XAUt, which has a market cap of $570 million, is reportedly supported by physical gold reserves stored in Switzerland.
The aUSDT token caters to users interested in utilizing cryptocurrency for payments and transfers without needing to convert their gold-backed tokens. To ensure security, positions must be overcollateralized, enabling users to generate 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 regulated under El Salvador’s National Commission of Digital Assets (CNAD).
Tether’s recent expansion initiative includes offering diverse services beyond USDT, the leading stablecoin in terms of market value and a fundamental element of the digital asset sector.
In the previous year, Tether expanded into Bitcoin (BTC) mining and artificial intelligence (AI) through a subsidiary jointly owned by BTC miner and data cloud provider Northern Data Group (NB2).
The Alloy platform is geared towards easing the creation of digital versions of various assets and may potentially introduce yield-bearing products, broadening its appeal to investors seeking dependable and innovative financial options.
Contrasting the collateralization approaches, Tether’s USDT token is backed by a substantial reserve of cash and short-term U.S. T-bills, earning profits from the interest paid on the bills. Additionally, USDT is overcollateralized with $3.7 billion in gold and $5.4 billion in Bitcoin, as per the firm’s Q1 data.
In contrast, aUSDT is overcollateralized by Tether Gold (XAUt), functioning as a synthetic dollar crafted to mirror the value and functionality of the U.S. dollar without direct dollar support. This overcollateralization acts as a safeguard against gold price declines, ensuring the token maintains its peg to the dollar.
By utilizing gold-backed assets to produce synthetic digital dollars, Tether is enhancing its usefulness for investors and expanding its offerings in the digital asset market.