What is Tether Gold? Complete explanation of gold token XAUt trading, principles, advantages and risks

Tether, the leading stablecoin issuer of USDT, officially launched its "AlloybyTether" platform on June 17, 2024. The first product allows users to use Tether's gold token TetherGold (XAUt) as collateral. , minting a new synthetic U.S. dollar stablecoin aUSDT, reached a market size of $8.02 million in less than a day, attracting market attention. This article comprehensively summarizes the issuance and redemption methods, advantages and risks of TetherGold (XAUt) used as collateral in this process to help readers understand this unique asset.

What is TetherGold(XAUt)?

XAUt is a stablecoin backed by gold. Unlike other stablecoins that anchor the value of various countries’ legal currencies, the asset behind the value of XAUt is gold, which has long been regarded as a safe haven asset. XAUt is a collaboration between Tether and British precious metal trader TGCommoditiesLimited. It was first launched in January 2020. Holders can exchange it for 1:1 with physical gold. As well as offering the same benefits of physical gold, such as preserved purchasing power and potential risk hedging. Since XAUt is based on ERC-20 tokens issued by Ethereum (TRC-20 tokens are also issued on the TRON chain), it allows gold to be easily traded or transferred on the chain in the form of tokens. Currently, XAUt can be bought and sold on major cryptocurrency exchanges and can be converted into physical gold at Tether's request, although Tether charges a small fee for the redemption process.

How does TetherGold (XAUt) work?

Issue XAUt

XAUt operates similarly to most fiat-backed stablecoins. When an investor seeks to purchase XAUt, Tether will purchase or allocate corresponding physical gold for each XAUt token at a 1:1 ratio, which will be stored and kept in a secure gold vault on behalf of the customer, which will then be A corresponding number of tokens are issued to buyers.

Redeem XAUt

Holders can redeem their XAUt for physical gold, or they can be sold by TGCommoditiesLimited on their behalf for cash delivery, but each process will incur transaction fees.

What are the advantages of TetherGold(XAUt)?

1. Stability Unlike traditional cryptocurrencies that are prone to volatility, XAUt is backed by physical gold held in Tether reserves, making it less prone to violent price fluctuations.

2. Hold real gold

XAUt allows investors to own the value of gold without worrying about how the gold is stored. At the same time, XAUt holders can identify details through unique serial numbers.

3. Liquidity

XAUt can be easily traded on cryptocurrency exchanges, providing investors with liquid asset options. When a major risk occurs, such as a war, the holder can also easily save and take it out of the country. Provide investors with a convenient way to invest in assets. 4. Security

XAUt’s gold reserves are safely stored in trustworthy Swiss

gold

vaults, ensuring investors the safety of their investments. 5. Transparency

Tether regularly provides proof of ownership and fully audited reports to prove the legitimacy and transparency of its gold reserves.

Potential Risks of TetherGold (XAUt)

1. Regulatory Issues

The regulatory environment for cryptocurrencies and digital assets still needs to develop, and XAUt may face regulatory pressure from certain jurisdictions.

2. Market competition

Not only is XAUt a gold token on the market, but other digital gold products such as PAXGold (PAXG) and DigixDAO (DGD) also bring competitive pressure to XAUt.

3. Gold price fluctuations

Although gold is considered the best

safe haven

asset, its price may still fluctuate, which may affect the value of XAUt and cause losses to investors. Where to buy TetherGold (XAUt)

Currently, XAUt can be traded on exchanges such as OKX, Gate.io, Bitfinex, etc.

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