A quick look at Tether's new platform Alloy: a new synthetic dollar platform powered by XAU₮

On June 17, Tether, the world’s largest stablecoin issuer, announced the launch of the open platform “Alloy by Tether”, which allows the creation of different bonded assets supported by Tether Gold.

According to the official website, Alloy by Tether aims to combine the stability of the US dollar with the security of gold to provide users with a reliable and versatile digital currency for daily use and asset management. The platform is developed and managed by Moon Gold NA, SA de CV and Moon Gold El Salvador, SA de CV, authorized by El Salvador’s CNAD (National Commission for Digital Assets), both members of the Tether Group, to cater to different customer segments and regulatory requirements.

The platform introduces a new type of digital asset class called "Tethered Assets", which can support single or multiple types of collateral and aims to pass Stabilization strategies such as over-collateralization of liquid assets and secondary market liquidity pools to track the price of the reference asset provide consistent value and stability between the reference asset and its anchored counterpart.

Vaults are the core of Alloy by Tether and can be used to store user collateral, unissued aUSD₮, and user Collateral Mining Position (CMP) information. Vault will set a specific liquidation threshold based on the liquidation point or maximum MTV. The liquidation point is 75%. In other words, if the value of aUSD₮ minted in a CMP exceeds 75% of the value of the XAU₮ (Tether Gold backed by real physical gold) used as collateral, the CMP is eligible for liquidation. It should be noted that users interacting with Vaults need to pass KYC verification.

In addition, Alloy by Tether is also compatible with Ethereum EVM, including supporting Ethereum mainnet, Polygon, Optimism, Arbitrum, BNB Chain and other chains. And Alloy by Tether chooses Solidity as the smart contract programming language, which can achieve flexible operation of different blockchains while maintaining extremely high security.

aUSD₮ is the first token in the Alloy by Tether series and is designed to track the value of 1 USD, offering the functional benefits of using the U.S. dollar, such as its widespread use for payments, trading, settlement and savings, while combining gold’s inherent advantages such as scarcity, low volatility and preservation of purchasing power. According to the official website, as of June 18, the minting volume of aUSD₮ exceeded 8 million.

aUSD₮ is unique in that it is over-collateralized by Tether Gold (XAU₮) backed by real physical gold stored in Switzerland, that is, users can use XAU₮ as collateral through the Ethereum smart contract. Mint aUSD₮. It is reported that XAU₮ is a gold stablecoin issued by Tether. Each token has one ounce of pure gold on a London good delivery gold bar and has the advantage of no custody fees. Ethereum browser data shows that as of June 18, the circulation of XAU₮ exceeded 246,000, with a market value of approximately US$570 million.

Of course, the aUSD₮ smart contract also maintains transparency by monitoring collateral and minted tokens, and utilizes price oracles to continuously evaluate the minted value (MTV) ratio. In addition to aUSD₮, Alloy by Tether will also support the creation of Tether assets with different support mechanisms in the future, including yield-generating products.

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