Tether Launches Alloy by Tether a Gold-Backed Digital Dollar
Tether, a prominant player in the cryptocurrency industry, has announced the launch of Alloy by Tether, a novel digital asset backed by Tether Gold (XAU₮). This innovative offering aims to combine the stability of traditional fiat currencies with the reliability and security of gold, providing a new avenue for digital transactions and asset management.
Alloy by Tether represents a new category of digital assets known as tethered assets. These assets are designed to track the price of reference assets through sophisticated stabilization strategies, including over-collateralization with liquid assets and secondary market liquidity pools. This approach ensures consistent value and stability, making Alloy by Tether a reliable digital currency option.
The first token introduced under Alloy by Tether is aUSD₮. This digital currency is designed to maintain the value of one U.S. dollar, over-collateralized by Tether Gold (XAU₮). XAU₮ tokens represent ownership of physical gold stored securely in Switzerland. This unique setup allows users to engage in digital transactions, payments, and remittances using aUSD₮ without the need to sell their gold-backed assets.
Users can create aUSD₮ tokens by using Tether Gold (XAU₮) as collateral. The minting process is managed through Ethereum-compatible smart contracts, ensuring transparency and security. These smart contracts track all collateral and minted tokens, with Price Oracles constantly evaluating the Mint to Value (MTV) ratio to maintain the stability and integrity of the system.
The over-collateralization mechanism means that the amount of new tokens users can mint is maximized at 75% of the collateral value, providing an additional layer of security and stability.
Alloy by Tether is not just a single product but an open platform that allows for the creation of various tethered assets. This includes potentially yield-bearing products, offering a modern approach to asset management. Such versatility makes it appealing for institutional investors looking to integrate secure, gold-backed digital assets into their portfolios.
The management and issuance of Alloy by Tether are handled by Moon Gold NA, S.A. de C.V., and Moon Gold El Salvador, S.A. de C.V. These entities, part of the Tether Group, are authorized by the National Commission of Digital Assets (CNAD) in El Salvador, ensuring regulatory compliance and catering to diverse customer segments.
The launch of Alloy by Tether marks a significant step in Tether’s broader strategy to expand its digital asset offerings. CEO Paolo Ardoino highlighted that this new platform will be part of Tether’s upcoming tokenization venture, expected to launch later this year. This initiative aims to provide a comprehensive tokenization platform that includes collateralized synthetic digital assets, enhancing Tether’s position in the digital asset market.
While Alloy by Tether’s aUSD₮ is a new entrant in the market of synthetic dollars, it stands out due to its high liquidity and centralized control, which reduces principal-agent risk. Other synthetic dollars, like those introduced by Galoy and Ethena Labs, have faced skepticism, but Tether’s strong market presence and established trust provide a robust foundation for aUSD₮.
