Tether Launches Alloy: Tokenizing Gold on Ethereum for Digital Asset Expansion

Tether, the company known for its $110 billion stablecoin USDT, has introduced a novel token minting platform called Alloy on the Ethereum network. This platform allows users to generate tokens that are collateralized by Tether’s tokenized gold, XAUT. Paolo Ardoino, Tether’s CEO, described Alloy as an open platform for creating collateralized synthetic digital assets. It will soon integrate with Tether’s broader digital asset tokenization platform set to launch later this year.

The initial asset available on Alloy is aUSDT, a stablecoin pegged to the U.S. dollar. Investors can create aUSDT tokens by depositing Tether’s XAUT as collateral. XAUT, which is backed by physical gold stored in Switzerland, has a market capitalization of $570 million. This initiative is aimed at users who wish to utilize cryptocurrencies for payments and remittances without needing to sell their gold-backed tokens.

Alloy requires overcollateralization, meaning users can mint new tokens up to 75% of the value of their collateral. Asset issuance on the platform will be managed by Moon Gold NA, S.A. de C.V., and Moon Gold El Salvador, S.A. de C.V., regulated under El Salvador’s National Commission of Digital Assets (CNAD).

Tether’s expansion into tokenized assets follows its strategy to diversify beyond USDT, the largest stablecoin globally and a fundamental component of the digital asset market. Recently, the company has ventured into Bitcoin mining, payment processing, and artificial intelligence through cloud computing. Ardoino also outlined plans to launch a broader tokenization platform facilitating digital versions of various assets such as bonds, stocks, funds, and loyalty reward points, aiming to broaden Tether’s role in digital finance.

In summary, Tether’s Alloy platform represents a significant step towards expanding the utility of its assets beyond stablecoins, offering users new opportunities to leverage digital tokens backed by physical assets like gold on a decentralized platform.

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