finbold.com
Tether, the company behind the $112 billion market cap USDT, has introduced a new gold-backed stablecoin pegged to the U.S. dollar. The new stablecoin, called Alloy (aUSDT), marks Tether’s first foray into tethered assets and can be minted on the recently launched Alloy by Tether platform.
According to Tether, Alloy is designed as an open platform for creating collateralized synthetic digital assets. The platform’s first asset is aUSDT, a token whose price is pegged to the U.S. dollar.
5/ Alloy by Tether provides long-term holders the opportunity to maintain exposure to gold, while in parallel obtaining a dollar-referenced Tethered Asset for payments and day-to-day economy.https://t.co/tuQikMJbJU
— Alloy by Tether (@Alloy_tether) June 17, 2024
Investors can mint aUSDT by depositing Tether’s XAUt as collateral. XAUt, with a market capitalization of $570 million, is allegedly backed by physical gold stored in Switzerland.
The aUSDT token targets users interested in using cryptocurrency for payments and remittances without having to liquidate their gold-backed tokens. To ensure security, positions must be overcollateralized, allowing users to mint new tokens up to 75% of the collateral value.
The issuance of these assets will be managed 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 strategic expansion
This new offering follows Tether’s broader strategy to diversify its services beyond USDT, the largest stablecoin by market value and a cornerstone of the digital asset market.
Last 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 aims to facilitate the creation of digital versions of a range of assets and may also introduce yield-bearing products, broadening its appeal to investors seeking reliable and innovative financial options.
Comparing collateralization strategies
Tether’s USDT token uses a large reserve of cash and short-term U.S. T-bills to back the token, generating profits from the interest paid on the bills. USDT is also overcollateralized with an additional $3.7 billion in gold and $5.4 billion in Bitcoin, according to the firm’s Q1 figures.
In contrast, aUSDT is overcollateralized by Tether Gold (XAUt), making it a synthetic dollar designed to replicate the value and functionality of the US dollar without direct dollar backing. Overcollateralization provides a buffer against price drawdowns of gold, ensuring the token maintains its dollar peg.
By leveraging gold-backed assets to create synthetic digital dollars, Tether is enhancing its utility for investors and diversifying its offerings in the digital asset market.