Tether Launches New Digital Asset Backed by Tether Gold

Tether has launched a new digital asset called Alloy by Tether, which is backed by Tether Gold.

This asset 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 Monday (June 17) press release.

Alloy by Tether introduces a new category of digital assets known as “tethered assets,” which are designed to track the price of reference assets through stabilization strategies such as over-collateralization with liquid assets and secondary market liquidity pools, according to the release.

“This innovative approach provides consistent value and stability between the reference asset and its tethered counterpart,” Tether said in the release.

The first token in the Alloy by Tether lineup is aUSD₮, a digital currency that is designed to track the value of one U.S. dollar, per the release. What sets aUSD₮ apart is that it is over-collateralized by Tether Gold (XAU₮), meaning it is supported by real physical gold stored in Switzerland. This combination allows users to engage in digital transactions, payments and remittances with a currency that feels as familiar as the U.S. dollar, without having to sell their XAU₮.

To create aUSD₮ tokens, users can use Tether Gold (XAU₮) as collateral. The process is managed by Ethereum-compatible smart contracts, with the aUSD₮ smart contract ensuring transparency by keeping track of all collateral and minted tokens, according to the release. Price Oracles are used to constantly evaluate the Mint to Value (MTV) ratio, further enhancing transparency and stability.

Alloy by Tether is an open platform that allows the creation of different tethered assets with broader backing mechanics, potentially including yield-bearing products, the release said. This technology provides a modern approach to asset management for institutions as well, 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., both authorized by the digital asset regulatory body CNAD in El Salvador, will handle the issuance and management of Alloy by Tether, catering to different customer segments and regulatory requirements, per the release.

Paolo Ardoino, CEO of Tether, said in the release that the launch of Alloy by Tether introduces a class of digital assets backed by gold and tethered to a reference fiat currency. He also said that Tether plans to make this technology available in their upcoming digital asset tokenization platform. 

It was reported in March that another Tether resource, its stablecoin backed with dollar-denominated reserves, surpassed $100 billion in circulation. Those tokens facilitate easy fund transfers across crypto trading platforms without using the traditional banking system.