TETHER Holdings, the issuer of the largest stablecoin in the cryptocurrency market, announced on Monday (June 17) the introduction of a new synthetic dollar backed by gold.
This new token, created on the company’s Alloy by Tether platform, will be traded as aUSDT via smart contracts on the Ethereum Mainnet blockchain. Users can mint it through over-collateralization by depositing another Tether token that tracks the value of gold.
This new initiative underscores Tether’s ambition to diversify beyond its USDT stablecoin, which has a market capitalization of $112.5 billion, is pegged to the US dollar, and is backed by reserves of US Treasury bills and other securities.
Stable Currency Value
Steady Economic Growth: The gold standard provided a stable currency value, as currencies were directly pegged to gold, reducing inflation and encouraging steady economic growth.
Controlled Money Supply
Preventing Inflation: By limiting the amount of money that could be minted to a conservative ratio of the amount of gold held, the gold standard naturally controlled the money supply, preventing hyperinflation and promoting economic stability.
Facilitated Trade
Enhanced Global Commerce: The gold standard simplified international trade with fixed exchange rates, reducing the risks associated with foreign exchange and encouraging a smoother flow of goods and investments globally.
Alloy by Tether was developed by Moon Gold NA SA de CV and Moon Gold El Salvador SA de CV, both members of the Tether Group. According to the company, this open platform is designed to facilitate the creation of other tethered assets, potentially including yield-bearing products.
“Alloy by Tether introduces a novel category of digital assets known as tethered assets, designed to track the price of reference assets through stabilisation strategies such as over-collateralisation with liquid assets and secondary market liquidity pools,” the company said.
According to the company, Tether Gold has a market capitalization of about US$573 million and is backed by physical gold stored in Switzerland.
