Tether, issuer of the largest stablecoin in the cryptocurrency market, USDT, announced on Monday the creation of a new synthetic dollar backed by gold. The token, aUSDT, was developed on the company’s Alloy by Tether platform.
By leveraging smart contracts on the Ethereum Mainnet blockchain, users can mint aUSDT, collateralizing it with another Tether token that represents the value of gold.
Tether launches league
According to announcementAlloy by Tether, developed by Moon Gold NA SA de CV and Moon Gold El Salvador SA, both members of the Tether Group, serves as the basis for the newly launched token.
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In the words from Tether CEO Paolo Ardoino, Alloy is an open platform for creating collateralized synthetic digital assets and will soon be part of the company’s new digital asset tokenization platform launching later this year.
Additionally, Alloy allows for the creation of multiple “linked assets,” potentially including yield-bearing products. Platform stabilization strategies, such as over-collateralization with liquid assets and secondary market liquidity pools, will supposedly guarantee the price stability of these assets. Ardoino further stated on the matter:
We are pleased to announce the launch of Alloy by Tether, introducing a class of digital assets backed by gold and pegged to a reference fiat currency. Although the stabilization mechanism is different compared to traditional options like USD₮, this innovative solution represents an exciting milestone and we eagerly anticipate how it will interact with the rest of the market. Furthermore, we plan to make this innovative technology also available on our future digital asset tokenization platform.
Transactions and payments
Tether Gold (XAUt), the underlying asset of aUSDT, has a market capitalization of approximately US$573 million. The physical gold backing Tether Gold is reportedly safely stored in Switzerland.
The issuer of the stablecoin claims that this gold-backed digital asset allows users to carry out transactions, payments and remittances using a currency similar to the US dollar while maintaining ownership of gold-backed digital assets.
Tether has enjoyed substantial financial success with its USDT stablecoin, generating a profit of $4.5 billion in the first quarter alone, according to reported on your certificate. However, the quality of assets backing stablecoins like USDT has faced increasing scrutiny from regulators.
Incorporated in the British Virgin Islands, Tether reached a settlement with the New York Attorney General and the Commodity Futures Trading Commission (CFTC) in 2021, resolving allegations related to reservation disclosure and transparency.
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Overall, Tether’s introduction of a gold-backed synthetic dollar, USDT, represents another milestone in the company’s expansion of stablecoin offerings. By leveraging the Alloy by Tether platform, users can now access a digital asset that combines the stability of the US dollar with the intrinsic value of physical gold.
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