Tether introduces gold-backed synthetic dollar, aUSDT

Tether Holdings Ltd. — the issuer of the world’s top stablecoin — Tether (USDT) announced the launch of a new synthetic dollar backed by gold.

The aUSDT token announced in a June 17 tweet by Tether chief technology officer Paolo Ardoino was created on the company’s new Alloy by Tether platform and will be available on the Ethereum (ETH) blockchain. Users can mint aUSDT through over-collateralization by depositing Tether’s gold-backed token, XAUt.

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’s expansion

This new offering highlights Tether’s ambition to expand beyond its flagship USDT stablecoin, which currently has a market capitalization of $112.5 billion and is backed by reserves of US Treasury bills and other securities and investments. The launch of aUSDT  introduces a new category of tokens offered by the company known as “tethered assets.”  The firm explained:

aUSD₮ is over-collateralised on-chain by Tether Gold XAU₮, merging the dollar utility with the millennial store of value gold. […] Tethered Assets are digital assets that aim to track the reference price of another asset through different stabilisation mechanisms. […]

In the case of Alloy […] aUSD₮ is over-collateralised by XAU₮ and its price stability is maintained through supply/demand dynamics on secondary markets (including liquidity pools).

Alloy by Tether is designed to be an open platform that allows for the creation of other tethered assets, potentially including yield-bearing products. The platform aims to track the price of reference assets through stabilization strategies like over-collateralization with liquid assets and secondary market liquidity pools.

Tether Gold (XAUt), which backs the new aUSDT currency, has a market capitalization of about $573 million and is backed by physical gold stored in Switzerland. The aUSDT is targeted at users who want to make transactions, payments, and remittances with a currency similar to the US dollar without having to sell their gold-backed digital assets.

Tether has been profitable amid the current high interest-rate environment, reporting a profit of $4.5 billion in the first quarter of 2024. However, the company has faced scrutiny over the quality of assets backing its stablecoins, with regulators expressing concerns about the liquidity of its reserves and their ability to withstand mass redemption requests under market pressure.

Despite this, Tether’s USDT has maintained its one-to-one peg with the US dollar without any major depegging incidents in recent years. The news follows Tether’s — and other major crypto companies’ — email service provider being breached, leading to a large-scale phishing attack.

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