Tether is launching a new stablecoin backed by gold and pegged to the U.S. dollar, marking its first asset of this kind, the company announced. The newly introduced coin, named Alloy (aUSDT), can be minted on the innovative Alloy by Tether platform.
The company revealed that Alloy will be supported by Tether Gold (XAUt), a token representing physical gold ownership, while maintaining its peg to the U.S. dollar. Essentially, Alloy is a synthetic dollar, designed to mirror the value and functionality of the U.S. dollar without direct backing.
Describing tethered assets as digital assets that aim to mirror the reference price of another asset through various stabilization methods, Alloy emphasized stability and flexibility through aUSDT. Additionally, the organization hinted at the possibility of creating other tethered assets, including yield-bearing products, on the platform.
Users can mint the synthetic dollar by depositing XUSDT through a smart contract and price oracles, enabling transactions with aUSDT while still holding their gold-backed Tether asset.
Developed by Tether subsidiaries Moon Gold and Moon Gold El Salvador, aUSDT is part of a broader tokenization platform that will be launched by Tether later this year, as confirmed by CEO Paolo Ardoino.
While Tether’s aUSDT is not the first synthetic dollar, having been preceded by Galoy’s Stablesats on the Lightning Network in August 2022, it stands out due to Tether’s extensive liquidity and centralized control, which reduces principal-agent risk. Analysts have praised aUSDT for these reasons and compared it favorably to other stablecoins like USDe.
To incentivize adoption, Tether is offering a bonus to USDT holders at a 2:1 ratio and has allocated 10 million aUSDT for this purpose. Despite initial skepticism surrounding synthetic dollars like USDe, the growing popularity of such assets suggests a promising future for these innovative digital currencies.