Tether unveiled a new stablecoin which is pegged to U.S. Dollar. But has a peculiar difference from the existing - and extremely popular - USDT. The new token is called Alloy (aUSDT) and it is backed by overcollateralized gold reserves rather than government debt.
Tether released a very pompous statement on the subject.
“aUSDT unifies the most popular currency in the world with the store of value used by humanity for the last 5,000 years,” the company wrote on X.
Tether claims that gold-backed currencies were "historically strong". They always helped to reduce inflation and sustain steady economic growth.
As for Alloy (aUSDT), Tether claims it is going to be a super reliable token. Firstly, because it is overcollateralized, which means it is backed by value that exceeds the number of tokens in circulation. it creates a kind of a buffer zone for price bumps. For instance, if gold suddenly starts falling down in price, the stablecoin might lose its dollar peg. But, hopefully, that is not possible if all the investors know that aUSDT is overcollateralized, and Tether always has enough resources to back it.
What's more interesting, aUSDT is not backed by gold. Tether decided to use another of its assets, Tether Gold (XAUT), as a backup.
XAUT is a popular token pegged to and backed by one troy ounce of gold. So it's the excessive holdings of XAUT that are backing aUSDT, not real gold.
XAUT has a good standing on the market. Its market cap is over $574 million now, which makes it the largest gold-pegged stablecoin at the moment. Paxos's PAXG is following closely with $428 million.