Tether is set to launch a gold-backed stablecoin tied to the U.S. dollar, marking it as the initial tethered asset, as announced by the issuer. This fresh cryptocurrency is known as Alloy (aUSDT) and can be generated on the newly established Alloy by Tether platform.
Alloy will be backed by Tether Gold (XAUt), an overcollateralized token providing ownership of physical gold, while being pegged to the U.S. dollar. This means Alloy is a synthetic dollar, created to replicate the value and utility of the U.S. dollar without direct backing.
In a recent communication, Tether explained that tethered assets are digital assets designed to follow the reference price of another asset via various stabilization mechanisms. They also mentioned that additional tethered assets, including yield-bearing products, could be developed on the platform.
To mint the synthetic dollar, users can deposit XUSDT through a smart contract and price oracles. This allows users to conduct transactions using aUSDT while still holding their gold-backed Tether asset.
Tether subsidiaries Moon Gold and Moon Gold El Salvador were responsible for developing AUSDT. Tether CEO Paolo Ardoino revealed that Alloy by Tether would be integrated into a platform for tokenizing real-world assets, slated to launch later this year.
Although Tether’s aUSDT is not the pioneer synthetic dollar, it has been favorably compared to USDe and other stablecoins due to Tether’s robust liquidity and centralized control, resulting in smarter decision-making and reduced principal-agent risk.
Tether has incentivized USDT holders by offering a 2:1 bonus and allocating 10 million aUSDT for this purpose. As the cryptocurrency market continues to evolve, the introduction of Alloy represents a significant development in the realm of stablecoins.