Tether Introduces Alloy, Merging Digital Currency with Gold Stability

Tether Introduces Alloy, Merging Digital Currency with Gold Stability

Tether has launched Alloy, a new asset combining digital currency with the stability of gold. Users can mint aUSDT using Tether Gold (XAUT) as collateral, facilitating digital payments. This represents a significant step in real-world asset tokenization, focusing on gold-backed assets.

Tether Launches Alloy by Tether

Tether, a leading stablecoin issuer, has announced the official launch of Alloy by Tether. This tethered asset is backed by Tether Gold (XAUT). Therefore, Alloy aims to provide stability in the digital economy by merging the reliability of gold with a stable unit of account.

CEO Paolo Ardoino on Tethered Assets

Alloy by Tether introduces a new category of digital assets, known as tethered assets. These assets track the price of reference assets through stabilization strategies like over-collateralization with liquid assets and secondary market liquidity pools. Moreover, Paolo Ardoino, Tether’s CEO, highlighted Alloy’s innovative approach, marking a milestone in real-world asset (RWA) tokenization.

“Alloy by Tether is an open platform that allows the creation of collateralized synthetic digital assets,” Ardoino said. “It will soon be part of the new Tether digital assets tokenization platform, launching later this year.”

Advanced Features of Alloy

Alloy by Tether enables the creation of various tethered assets with broader backing mechanics, potentially including yield-bearing products. This technology provides institutions with a modern approach to asset management, offering a secure, gold-backed digital asset for portfolios. Additionally, Moon Gold NA, S.A. de C.V., and Moon Gold El Salvador, S.A. de C.V. will manage the issuance and operations for this. They will cater to different customer segments and regulatory requirements.

RWA Tokenization Momentum

The first token in the Alloy by Tether lineup is aUSDT, designed to track the value of one US dollar. aUSDT is over-collateralized by XAUT, backed by physical gold stored in Switzerland. Thus, offering the stability of the US dollar combined with the value of gold.

Users can mint aUSDT tokens using XAUT as collateral, allowing for digital transactions without selling their XAUT. Currently, the smart contracts operate on the Ethereum Mainnet. Users mint aUSDT by depositing XAUT through Ethereum-compatible smart contracts. The smart contract tracks all collateral and minted tokens, using price oracles to maintain the mint-to-value (MTV) ratio.

Future Growth in RWA Tokenization

This development aligns with the growing trend of real-world asset tokenization. Commodity-backed tokens have reached $1.1 billion in market capitalization, with gold being the most popular commodity. Tokenized precious metals like XAUT and PAX Gold (PAXG) make up 83% of the market cap of commodity-backed tokens, providing a reliable store of value. With the introduction of Alloy and aUSDT, Tether is well-positioned for the expansion of the RWA tokenization market.