Crypto news: Tether has published a particularly important news regarding the launch of a new gold-collateralized stablecoin.
It is called Alloy by Tether and has the symbol aUSDT.
As the symbol itself says, it is always a stablecoin pegged to the US dollar, but unlike USDT it is not collateralized in dollars.
Crypto news: the collateralization in gold of Tether
Tether already years ago had launched a stablecoin collateralized by gold, Tether Gold (XAUT), but in that case it was a simple stablecoin whose value remained pegged to that of gold.
In fact, the price of XAUT is always very similar to that of an ounce of gold, so much so that for example at this moment the price of this token is about $2,320, and that of an ounce of gold (XAU) is always about $2,320.
To achieve parity with gold very simply Tether has in reserve an ounce of gold for every XAUT token issued, and the latter can always be returned to the sender in exchange for an equal amount of gold (1 XAUT = 1 XAU).
In other words, Tether Gold is not only collateralized in gold, but it is also exchangeable at par with gold, and this ensures that its price remains pegged to that of gold.
For the new stablecoin aUSDT, things are different.
The new algorithmic stablecoin: aUSDT
aUSDT is technically over-collateralized in gold. In other words, the total market value of all the gold reserves held by Tether as collateral for aUSDT exceeds the market value of all the aUSDT tokens issued.
aUSDT, however, is not anchored to the price of gold, but to that of the US dollar, like USDT.
Only that, while the traditional USDT maintains parity with the dollar because Tether has an equal number of USD or equivalents in reserve for all the USDT tokens issued on the market, and because each USDT token is redeemable by the sender in exchange for an equal amount of USD, for aUSDT things are different.
In fact, as stated in the official Tether announcement:
“its price stability is maintained through the dynamics of demand/supply in the secondary markets (including liquidity pools)”.
3/ In the case of Alloy by Tether, aUSD₮ is over-collateralised by XAU₮ and its price stability is maintained through supply/demand dynamics on secondary markets (including liquidity pools). pic.twitter.com/RSiXbGZ2UB
— Alloy by Tether (@Alloy_tether) June 17, 2024
This is therefore an algorithmic stablecoin whose price stability around 1 USD is maintained thanks to algorithms that act on demand and supply, and not by being over-collateralized in gold.
Moreover, technically it is not directly collateralized in physical gold, but in XAUT tokens, which are in turn collateralized in physical gold. Therefore, aUSDT is an algorithmic stablecoin pegged to the US dollar and collateralized in tokenized gold (XAUT).
The tokens with similar names
aUSDT, or Alloy Tether, is not yet present on the crypto markets, where however other tokens with similar names are already present but are a completely different thing.
In particular, there is Aave USDT, which is the token on Aave that replicates USDT.
It should be noted that although this last token is also pegged to the value of the US dollar, it is different from Alloy Tether, so it is necessary to clearly distinguish between the two tokens with the same ticker because they have different risk profiles.
In turn, aUSDT should not be confused with USDT, because the classic USDT being collateralized directly in USD and being especially redeemable at par in USD has a higher degree of security, with really minimal price fluctuations on the market.
Instead, aUSDT, being an algorithmic stablecoin, could have price fluctuations potentially higher than the traditional USDT, even if it should still always maintain a value close to 1 USD in the medium/long term.
Crypto news: The details on Tether’s new gold-collateralized stablecoin
Tether has also published a subsection of its official website, accessible at the address alloy.tether.to, with all the details.
It is still necessary to be very careful because fake aUSDT websites have already appeared that only serve to scam the naive.
On the official Tether website, aUSDT is defined as a “pegged asset,” designed to track the price of a specific reference asset, such as the US dollar in this case.
To maintain this price constraint, they use stabilization strategies such as excessive collateral (i.e., over-collateralization), which involves holding more value as collateral than the value of the issued assets, supported by secondary market liquidity pools.
Therefore, users who want to create new aUSDT tokens will have to provide as collateral a number of XAUT tokens of greater value than the aUSDT tokens obtained. The additional collateral acts as a safety net, absorbing potential fluctuations in the value of the collateral.
All technical details can be found at https://docs.alloy.tether.to.
The role of MiCA
According to several observers, it is possible that the launch of this algorithmic stablecoin collateralized in XAUT could be Tether’s response to the entry into force of the new European crypto regulation on stablecoins, the MiCA, expected on June 30.
In fact, fiat-collateralized stablecoins must be somehow approved in order to continue to exist on centralized platforms in the European Union. There are doubts about whether USDT can manage to obtain this kind of approval, with the risk of having to be considered an unauthorized stablecoin in the EU.
Instead, aUSDT does not fall into the category of so-called e-money token, because it is not convertible into USD. From this point of view, it is more similar to XAUT, that is a so-called asset-referenced token, since it is in fact convertible into Tether Gold.