Tether Introduces Synthetic Dollar Stablecoin Backed by Gold

Tether Introduces Gold-Backed ‘Synthetic’ Dollar Stablecoin


By Shalini Nagarajan
Updated on:
June 18, 2024 00:36 EDT
|
Reading Time: 1 min


On Monday, Tether unveiled Alloy, a stablecoin backed by gold and tied to the US dollar. This debut marks the introduction of tethered assets by the issuer, with Alloy (aUSDT) being minted through the newly launched platform.
Tethered assets are created to mirror the value of a specific reference asset, such as the US Dollar, the company explained. They achieve this through stabilization methods like over-collateralization, which involves holding collateral valued higher than the assets being issued, along with liquidity in the secondary market.
Backing Alloy is Tether Gold (XAUt), a token representing physical gold ownership that will maintain its value relative to the US dollar. Essentially, Alloy is considered a “synthetic” dollar, aiming to mimic the value and functionality of the US dollar without direct backing, meaning there is no direct one-to-one backing with the dollar.
Tether Collaborates with Regulatory Experts in El Salvador for aUSDT Launch
Alloy, the first asset available on the platform, ensures a stable value linked to the US dollar. Investors can mint the token by depositing Tether Gold as collateral. With physical gold stored in Switzerland, Tether Gold boasts a market capitalization of $570m.
Alloy targets users looking to use cryptocurrencies for transactions and remittances while maintaining their holdings of gold-backed tokens without selling them off. Users are required to overcollateralize their positions, enabling them to mint new tokens up to 75% of the collateral value.
Additionally, Moon Gold NA and Moon Gold El Salvador will supervise the issuance of the asset, operating under El Salvador’s National Commission of Digital Assets (CNAD).
Interestingly, this development follows a public disagreement in May, where Tether’s CEO Paolo Ardoino addressed concerns raised by Ripple’s CEO regarding potential government actions against Tether. Ripple, on the other hand, hinted at launching its own competing stablecoin in June.
Follow Us on Google News