(Kitco News) – Tether, the company responsible for issuing USDT, the top stablecoin by market cap, continues to expand beyond fait-backed stablecoins with the launch of Alloy by Tether, a new asset-backed token that uses Tether Gold (XAU₮) as collateral.
“Developed by Moon Gold NA, S.A. de C.V. and Moon Gold El Salvador, S.A. de C.V., both of whom are members of the Tether Group, Alloy by Tether aims to redefine stability in the digital economy by combining the strengths of a stable unit of account with the security and reliability of gold,” the company said in a press release.
“We are thrilled to announce the launch of Alloy by Tether, introducing a class of digital assets backed by gold and tethered to a reference fiat currency,” said Paolo Ardoino, CEO of Tether. “While the stabilization mechanism is different compared to traditional options like USD₮, this innovative solution marks an exciting milestone, and we eagerly anticipate how it will interact with the rest of the market. Moreover, we plan to make this innovative technology available in our upcoming digital asset tokenization platform as well.”
The new Alloy token is similar to other tethered assets in that it is designed to track the price of reference assets – in this case, XAU₮ – “through stabilization strategies like over-collateralization with liquid assets and secondary market liquidity pools,” Tether said. “This innovative approach provides consistent value and stability between the reference asset and its tethered counterpart.”
The company said Alloy by Tether will eventually contain multiple tokens, the first of which will be aUSD₮, a digital currency designed to track the value of one US dollar.
“What makes aUSD₮ unique is that it is over-collateralized by Tether Gold (XAU₮), which means it is supported by real physical gold stored in Switzerland,” Tether said. “Users can create aUSD₮ tokens using Tether Gold as collateral.”
The token’s design aims to give users who want to engage in digital transactions, payments, and remittances with a currency that feels as familiar as the U.S. dollar the ability to do so without having to sell their XAU₮.
“Currently, Alloy by Tether smart contracts are deployed on the Ethereum Mainnet,” Tether said. “Users can mint aUSD₮ by depositing Tether Gold as collateral through a process managed by Ethereum-compatible smart contracts. The aUSD₮ smart contract ensures transparency by keeping track of all collateral and minted tokens, using Price Oracles to constantly evaluate the Mint to Value (MTV) ratio.”
The new aUSD₮ token is the first in a planned series of tokens to be released via Alloy by Tether, “an open platform that allows the creation of different tethered assets with broader backing mechanics, potentially including yield-bearing products,” they said. “This technology provides a modern approach to asset management for institutions as well by offering a secure, gold-backed digital asset that can be integrated into portfolios.”
Moon Gold NA, S.A. de C.V., and Moon Gold El Salvador, S.A. de C.V., which are both authorized by the CNAD in El Salvador, will oversee the issuance and management of aUSD₮ and will be able to cater to different customer segments and regulatory requirements, Tether said.
