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- On June 17, Tether CEO Paolo Ardoino disclosed the launch of aUSDT, a novel synthetic dollar that is over-collateralized by XAUt, Tether’s gold-backed digital asset.
- The next day, renowned industry analyst and creator of the stock-to-flow model Willy Woo lauded Tether’s innovation, calling it “a genius business idea.”
- Woo explained that this new stablecoin could bring Tether higher profits by capitalizing on gold gains, which historically outstrip the yields from U.S. Treasury Bills.
Discover the groundbreaking introduction of Tether’s aUSDT—a gold-collateralized stablecoin offering a promising alternative to traditional T-Bill yields. Learn how this could reshape the market.
Innovative Over-Collateralization with Gold
Willy Woo expanded on the revolutionary potential of Tether’s over-collateralized stablecoin, suggesting that the company could eventually issue a Bitcoin-backed stablecoin, bUSDT, as their BTC treasury grows. Despite the current bear market conditions making such a move impractical, Woo believes it could be feasible in future, more stable market cycles.
Comparisons to Terra and Luna
Woo made comparisons to Terraform Labs’ Terra and Luna, which were backed by volatile assets. Unlike Terra and Luna, Woo highlighted Tether’s considerable $5.5 billion annual revenue, suggesting a stronger and more sustainable foundation. Ardoino’s announcement also introduced Alloy by Tether, an open platform for creating collateralized synthetic digital assets. This platform will soon be integrated into Tether’s new digital asset tokenization system, set to launch later this year. The tokenization platform aims to delve deeper into real-world asset (RWA) tokenization. The stability of aUSDT is preserved through supply and demand dynamics in secondary markets and liquidity pools.
Prospects for Tether’s Stablecoin Portfolio
Tether Gold (XAUt), which mirrors the price movements of gold, has a current market capitalization of $572 million. As of the latest data, XAUt trades at $2,318, having peaked at $2,426 per ounce on May 20. Tether leads the market for dollar-pegged stablecoins, boasting a record-high circulation of $112.5 billion in USDT and commanding a 70% market share. Circle’s USDC follows, with a circulation of $32.6 billion and a 20% market share. Together, these stablecoins contribute to a total market capitalization of $162 billion, about 6.5% of the entire crypto market.
Conclusion
In summary, Tether’s introduction of aUSDT marks a significant evolution in stablecoin technology, offering potentially higher profitability through gold collateralization compared to traditional T-Bill yields. This innovation not only provides a new avenue for investors but also showcases Tether’s ambition to expand its foothold in the realm of asset-backed digital currencies. The blockchain and financial communities will undoubtedly be watching closely as these developments unfold.