Tether Launches Alloy, a Gold-Backed Stablecoin on New Platform, Enhancing Digital Asset Security and Functionality

In a recent report by Cointelegraph, Tether is introducing a stablecoin supported by gold and linked to the U.S. dollar. The issuer declared it the first tethered asset.

Stablecoin issuer Tether has announced the launch of Alloy, a gold-backed stablecoin pegged to the U.S. dollar. This marks the first phase in Tether's real-world asset tokenization platform, which will reportedly enable users to maintain exposure to gold while simultaneously obtaining a dollar-referenced tethered asset for payments and everyday economic activities.

Tether Introduces Alloy, a Gold-Backed Stablecoin on New Platform, Enhancing Digital Asset Security and Functionality

According to a recent report by Cointelegraph, Tether is introducing a stablecoin backed by gold and pegged to the U.S. dollar, which the issuer claims is the first tethered asset. The new coin, named Alloy (aUSDT), is mintable on Tether's new Alloy platform.

The company has stated that Alloy will be overcollateralized by Tether Gold (XAUt), a token that is pegged to the U.S. currency and provides ownership of physical gold. The new token is a synthetic dollar, as it is intended to replicate the value and functionality of the U.S. dollar without being directly backed by it, as defined by the platform.

Tethered assets are "digital assets that aim to track the reference price of another asset through different stabilization mechanisms," explained Alloy in an X post, adding:

“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.”

In the same thread, the organization also mentioned that the platform could create other tethered assets, such as yield-bearing products, down the line.

The synthetic dollar can be minted by depositing XUSDT, which is enabled by a smart contract and price oracles. As a result, users can maintain their gold-backed Tether assets while conducting transactions with USD.

AUSDT was created by Moon Gold and Moon Gold El Salvador, subsidiaries of Tether, and Paolo Ardoino, Tether's CTO, has stated that Alloy by Tether will be integrated into a real-world asset tokenization platform launching later this year.

Tether's Alloy Enters a Competitive Synthetic Currency Market, Praised for High Liquidity and Strategic Control

Tether's aUSDT is not the first synthetic currency to hit the market. In August 2022, Galoy introduced Stablesats, a synthetic dollar on the Lightning Network backed by Bitcoin.

However, the synthetic dollar gained more traction as a distinct asset class when Ethena Labs, a startup, launched its Ether-backed, dollar-pegged USDe in February, a move that was met with some skepticism. In June, a variant on the concept was introduced with an algorithmically balanced synthetic dollar called Asymmetry.

One analyst has viewed aUSDT favorably in comparison to USDe and other stablecoins, citing Tether's high liquidity and "smarter decision-making and less principal-agent risk" as benefits of its centralized control.

Tether has also allocated 10 million aUSDT to enhance the transaction on the new asset and has provided USDT holders with a bonus at a 2:1 ratio.

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