Tether Introduces Gold-Backed Digital Asset in Alloy Series

Tether, the issuer of USDT, has introduced the aUSDT token, backed by Tether Gold (XAUT), as part of its Alloy series of “pegged assets.”

According to the press release, aUSDT aims to redefine stability in the digital economy by combining the benefits of a stable unit of account with the security and reliability of gold.

Alloy represents a new category of “pegged” digital tokens. These are designed to track the price of benchmark assets using stabilization strategies such as over-collateralization with liquid assets and secondary market liquidity pools.

This approach supports a constant value and a resilient link between the benchmark asset and its pegged counterpart, the company noted.

aUSDT is intended to track the value of $1. The token is backed by Tether Gold (XAUT) — actual physical metal stored in vaults in Switzerland.

Users can issue aUSDT using XAUT as collateral.

“This is a very useful and innovative combination for users who want to engage in digital transactions, payments, and remittances with a currency that feels as familiar as the US dollar, without needing to sell their XAUT,” the company explained.

The Alloy by Tether smart contracts are deployed on the Ethereum mainnet. They ensure transparency by tracking all collateral and issued tokens, using price oracles for continuous assessment of the Mint to Value (MTV) ratio.

According to CoinGecko, XAUT’s market capitalization stands at $571.6 million, surpassing its competitor PAX Gold (PAXG) from Paxos, which is valued at $428.4 million.

The open Alloy platform allows for the creation of various pegged assets with broader collateral mechanisms, including yield-generating products.

The technology represents a modern approach to capital management. It may appeal to institutions by offering a secure digital token backed by gold, with the potential for portfolio inclusion.

Management and issuance are handled by Moon Gold NA and Moon Gold El Salvador, part of the Tether Group and authorized by El Salvador’s CNAD.

“We plan to use this innovative technology [Alloy] on our new digital asset tokenization platform,” stated the company’s CEO, Paolo Ardoino.

In June, Tether’s head announced that the USDT issuer would allocate over $1 billion to distribute among startups from “hundreds of venture proposals.” 

At that time, Ardoino reiterated plans to launch a platform by the end of the year, where companies could issue bonds and stocks in the form of digital tokens, and central banks could offer CBDCs.

In April, Tether announced a restructuring into four divisions to expand beyond stablecoins.