By Adedapo Adesanya
Tether, the largest company in the cryptocurrency industry, has launched Alloy by Tether, a ground-breaking tethered asset backed by Tether Gold which 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.
Developed by Moon Gold NA, S.A. de C.V. and Moon Gold El Salvador, S.A. de C.V., both of whom are members of the Tether Group, Alloy by Tether, the product introduces a novel category of digital assets known as tethered assets, designed to track the price of reference assets through stabilization strategies like over-collateralization with liquid assets and secondary market liquidity pools.
This innovative approach provides consistent value and stability between the reference asset and its tethered counterpart.
The first token in the Alloy by Tether lineup is aUSD₮, a digital currency is designed to track the value of one US Dollar.
According to a statement, USD₮ uniqueness is based on it being over-collateralized by Tether Gold (XAU₮), which means it is supported by real physical gold stored in Switzerland.
Users can create aUSD₮ tokens using Tether Gold (XAU₮) 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 having to sell their XAU₮,” the statement added.
Currently, Alloy by Tether smart contracts are deployed on the Ethereum Mainnet. Users can mint aUSD₮ by depositing Tether Gold (XAU₮) as collateral through a process managed by Ethereum-compatible smart contracts. The aUSD₮ smart contract ensures transparency by keeping track of all collateral and minted tokens, using Price Oracles to constantly evaluate the mint-to-value (MTV) ratio.
Alloy by Tether is an open platform that allows the creation of different tethered assets with broader backing mechanics, potentially including yield-bearing products. This technology provides a modern approach to asset management for institutions as well by 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 CNAD in El Salvador, will handle the issuance and management of Alloy by Tether, catering to different customer segments and regulatory requirements.
“We are thrilled to announce the launch of Alloy by Tether, introducing a class of digital assets backed by gold and tethered to a reference fiat currency,” said Mr Paolo Ardoino, CEO of Tether.
“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. Moreover, we plan to make this innovative technology available in our upcoming digital asset tokenization platform as well.”
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