On June 17th, Tether, the world’s largest stablecoin issuer, announced the launch of their open platform “Alloy by Tether,” which permits the creation of various tethered assets backed by Tether Gold. According to their official site, Alloy by Tether aims to blend the stability of the US dollar with the security of gold, offering users a reliable and versatile digital currency for everyday use and asset management. This platform is developed and managed by Moon Gold NA, SA de CV, and Moon Gold El Salvador, SA de CV, entities authorized by El Salvador’s CNAD (National Digital Assets Commission) and members of the Tether Group, catering to diverse customer groups and regulatory requirements.
Alloy by Tether introduces a novel category of digital assets known as “Tethered Assets,” capable of supporting single or multiple collateral types. It aims to maintain price stability of reference assets through strategies such as over-collateralization of liquid assets and a secondary market liquidity pool, ensuring consistent value and stability between reference assets and their anchored counterparts.
Central to Alloy by Tether are Vaults, used for storing user collateral, unissued aUSD₮ (Alloy’s USD-backed stablecoin), and Collateralized Minting Positions (CMP) information. Vaults set specific liquidation thresholds at clearing points or maximum MTV (Minting Value Token) setups, with a liquidation point set at 75%. In other words, a CMP qualifies for liquidation if the value of aUSD₮ minted in CMP exceeds 75% of the value of XAU₮ (Tether Gold backed by physical gold) used as collateral. User interaction with Vaults requires KYC verification.
Additionally, Alloy by Tether is compatible with Ethereum Virtual Machine (EVM), supporting Ethereum mainnet, Polygon, Optimism, Arbitrum, BNB Chain, and others. It utilizes Solidity as the smart contract programming language, ensuring flexible operation across different blockchains while maintaining high security standards.
The first token in the Alloy by Tether series is aUSD₮, designed to track the value of 1 USD and offering advantages of USD in terms of payments, transactions, settlements, and savings, combined with the inherent advantages of gold such as scarcity, low volatility, and purchasing power preservation. As of June 18th, over 8 million aUSD₮ tokens have been minted according to the official website.
What distinguishes aUSD₮ is its over-collateralization with Tether Gold (XAU₮), backed by physical gold stored in Switzerland, allowing users to mint aUSD₮ using XAU₮ as collateral via Ethereum smart contracts. XAU₮, issued by Tether, represents one ounce of pure gold on a London Good Delivery gold bar, offering advantages like no custody fees. Ethereum blockchain data shows that as of June 18th, over 246,000 XAU₮ tokens are in circulation, with a market value of approximately $570 million.
Of course, the aUSD₮ smart contract ensures transparency by monitoring collateral and token minting, continually evaluating the Minting Value Token (MTV) ratio. Beyond aUSD₮, Alloy by Tether plans to support the creation of Tether assets with different support mechanisms in the future, including income-generating products.
