Tether is introducing a gold-backed stablecoin pegged to the U.S. dollar. It is the first tethered asset, the issuer declared. The new coin is called Alloy (aUSDT) and is mintable on the new Alloy by Tether platform.

According to the company, Alloy will be overcollateralized by Tether Gold (XAUt) — a token that provides ownership of physical gold — but pegged to the U.S. dollar. By definition, the new token is a synthetic dollar, which is designed to mimic the value and functionality of the U.S. dollar without being directly backed by it.

Alloy explained in an X post that tethered assets are “digital assets that aim to track the reference price of another asset through different stabilisation mechanisms.” Further, it said:

“Alloy by Tether provides long-term holders the opportunity to maintain exposure to gold, while in parallel obtaining a dollar-referenced Tethered Asset for payments and day-to-day economy.”

Stability and flexibility through aUSDT

In the same thread, the organization said other tethered assets, including yield-bearing products, could be created on the platform. 

The synthetic dollar can be minted by depositing XUSDT through a smart contract and price oracles. Thus, users can make transactions with aUSDT while retaining their gold-backed Tether asset.

AUSDT was developed by Tether subsidiaries Moon Gold and Moon Gold El Salvador. Alloy by Tether will become part of a real-world asset tokenization platform launching later this year, said Tether CEO Paolo Ardoino.

The first tethered asset is not the first synthetic dollar

Tether’s aUSDT is not the first synthetic dollar. In August 2022, Galoy introduced a Bitcoin-based synthetic dollar called Stablesats on the Lightning Network.

However, the synthetic dollar as a popular asset form came to prominence when startup Ethena Labs introduced its Ether-backed, dollar-pegged USDe in February. The launch was met with some skepticism. Asymmetry provided a variation on the concept with an algorithmically balanced synthetic dollar in June.

One analyst has compared aUSDT favorably to USDe and other stablecoins due to Tether’s high liquidity and “smarter decisionmaking and less principal-agent risk” thanks to its centralized control.

Tether has sweetened the deal on the new asset by offering USDT holders a bonus at a 2:1 ratio and has set aside 10 million aUSDT for the purpose.

Source