Stablecoin issuer Tether has unveiled a new asset class backed by Tether Gold in an effort to improve value consistency and stability.
Tether is adding a new asset class to its stablecoin lineup to improve stability in the digital economy by fusing the qualities of a stable unit of account with the security of gold.
On June 17, Tether announced in a blog post that the new token, called “Alloy,” is supported by Tether Gold (XAU₮), a token that confers ownership of actual, physical gold.
The so-called “tethered asset,” created by Moon Gold El Salvador, S.A. de C.V. and Moon Gold NA, S.A. de C.V., Tether’s affiliates, is purportedly intended to use “stabilization strategies like over-collateralization with liquid assets and secondary market liquidity pools” to track the price of reference assets. Tether CEO Paolo Ardoino stated:
“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.”
Tether Gold, which is backed by “real physical gold stored in Switzerland,” is the primary collateral for the first token in the Alloy lineup, aUSD₮, which is intended to track the value of one U.S. dollar.
Data from Tether indicates that as of publication, five addresses were holding aUSD₮. The stablecoin issuer notes that users do not need to sell their Tether Gold holdings in order to create aUSD₨ tokens by using Tether Gold as collateral.
This allows for digital transactions, payments, and remittances with a currency miming the U.S. dollar. Ethereum-compatible smart contracts oversee the process.
The newest asset in Tether’s lineup of tokenized assets is aUSD₮. With the launch of the XAU₮ stablecoin in early 2020, Tether gave investors access to digital gold. The stablecoin is backed by real gold. In a Swiss vault, one troy ounce of gold is represented by each XAU₴ token.
