July 24, 2024
Tether stablecoin Alloy
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Tether introduces US dollar-backed stablecoin Alloy, backed by gold

Tether’s Launch

Tether is launching a stablecoin backed by gold and linked to the US dollar. The issuer claimed that it is the first tied asset. On the brand-new Alloy by Tether platform, the new coin, known as Alloy (aUSDT), is mintable. The company claims that Tether’s gold-pegged XAUT token, which grants ownership of actual gold but is based on the US dollar, will overcollateralize Alloy. The new currency is, by definition, a synthetic dollar, created to resemble the US dollar’s functionality and value without really being backed by it. Tethered assets are “digital assets that aim to track the reference price of another asset through different stabilization mechanisms,” according to Alloy’s explanation in an X post.

Company Remarks

Moreover, it stated: Long-term holders of Alloy by Tether can keep their exposure to gold while simultaneously acquiring a dollar-referenced Tethered Asset for payments and daily economic activities.
Flexibility and stability with aUSDT

The company stated in the same thread that yield-bearing products and other tethered assets might be developed on the platform. A smart contract and price oracles can be used to deposit XUSDT in order to create the synthetic dollar. Users can therefore continue to use their gold-backed Tether asset while transacting with aUSDT. Tether subsidiaries Moon Gold and Moon Gold El Salvador created aUSDT. According to Tether CEO Paolo Ardoino, Alloy will be integrated into a real-world asset tokenization platform that launches later this year.

Not the first synthetic dollar is the first connected asset.
The aUSDT from Tether is not the original synthetic dollar. In August 2022, Galoy released Stablesats, a synthetic dollar based on Bitcoin, via the Lightning Network.

Benefits

Nonetheless, the introduction of the Ethereum-backed, USD-pegged USDe by startup Ethena Labs in February brought the synthetic dollar to the forefront as a popular asset type. There was some skepticism regarding the launch. In June, Asymmetry offered a version of the idea using a synthetic dollar that was algorithmically balanced.

Because of Tether’s centralized control, which allows for “smarter decisionmaking and less principal-agent risk,” an analyst has compared it favorably to USDe and other stablecoins. By providing Tether holders with a bonus at a 2:1 ratio, Tether has improved the terms of the new asset. For that reason, 10 million aUSDT have been put aside.

Image by mamewmy on Freepik

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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