Tether unveils gold-backed asset class to ‘redefine stability’ in digital economy

Stablecoin issuer Tether has announced the launch of a new asset class backed by Tether Gold in a bid to enhance value consistency and stability.

Tether is expanding its list of stablecoins with a new asset class aimed at enhancing stability in the digital economy by combining the attributes of a stable unit of account with the security of gold. In a blog announcement on Jun 17, Tether said the new token called “Alloy” is backed by Tether Gold (XAU₮), a token that provides ownership of real physical gold.

The so-called “tethered asset,” developed by Tether’s affiliates Moon Gold NA, S.A. de C.V., and Moon Gold El Salvador, S.A. de C.V., is reportedly designed to track the price of reference assets using “stabilization strategies like over-collateralization with liquid assets and secondary market liquidity pools.”

“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 CEO Paolo Ardoino

The first token in the Alloy lineup, aUSD₮, is designed to track the value of one U.S. dollar and is over-collateralized by Tether Gold, which is backed by “real physical gold stored in Switzerland,” Tether says. As of press time, there are five addresses holding aUSD₮ already, according to data from Tether.

Users can create aUSD₮ tokens by using Tether Gold as collateral, enabling digital transactions, payments, and remittances with a currency that mirrors the U.S. dollar without needing to sell their Tether Gold holdings, the stablecoin issuer explains, adding that the process is managed by Ethereum-compatible smart contracts.

For Tether, aUSD₮ is the latest offering in its line of tokenized assets. In early 2020, Tether unveiled the XAU₮ stablecoin backed by physical gold, offering investors a way to hold gold in digital form. Each XAU₮ token represents ownership of one troy ounce of gold held in a Swiss vault.