Tether Introduces Alloy: A Gold-Backed US Dollar Stablecoin

Tether announced that the launch of their new synthetic dollar, Alloy (aUSDT), marks the first step in their real-world asset tokenization platform rollout. This gold-backed stablecoin, pegged to the U.S. dollar, is the issuer's first tethered asset and can be minted on the new Alloy by Tether platform.

Alloy will be overcollateralized by Tether Gold (XAUt), a token that provides ownership of physical gold, but it is pegged to the U.S. dollar. As a synthetic dollar, Alloy is designed to mimic the value and functionality of the U.S. dollar without direct backing.

In an X post, Alloy explained that tethered assets are “digital assets designed to track the reference price of another asset using various stabilization mechanisms.” Alloy by Tether offers long-term holders the chance to maintain exposure to gold while obtaining a dollar-referenced tethered asset for payments and everyday transactions.

Achieving Stability and Flexibility with aUSDT

In the same thread, the organization mentioned that other tethered assets, including yield-bearing products, could also be created on the platform.

The synthetic dollar, aUSDT, can be minted by depositing XUSDT through a smart contract and price oracles. This allows users to make transactions with aUSDT while retaining their gold-backed Tether asset.

Developed by Tether subsidiaries Moon Gold and Moon Gold El Salvador, Alloy by Tether will be part of a real-world asset tokenization platform set to launch later this year, according to Tether CEO Paolo Ardoino.

The First Tethered Asset Isn't the First Synthetic Dollar

aUSDT from Tether isn't the inaugural synthetic dollar. In August 2022, Galoy introduced Stablesats, a Bitcoin-based synthetic dollar on the Lightning Network.

The synthetic dollar gained popularity when startup Ethena Labs launched its Ether-backed, dollar-pegged USDe in February, despite some initial skepticism. In June, Asymmetry introduced an algorithmically balanced synthetic dollar.

One analyst has compared aUSDT favorably to USDe and other stablecoins due to Tether’s high liquidity and centralized control, which reduces principal-agent risk.

To promote the new asset, Tether is offering USDT holders a bonus at a 2:1 ratio and has set aside 10 million aUSDT for this purpose.