Alloy by Tether sets a new golden standard in the crypto world, offering a stablecoin backed by real gold.
On July 17th 2024, Tether, a leading player in the stablecoin market, has introduced a game-changing innovation with the launch of Alloy, a gold-backed platform, and a new stablecoin, aUSD₮ This development is a significant paradigm shift, as it departs from the conventional practice of backing stablecoins with the U.S. dollar. In contrast, aUSD₮is underpinned by tangible gold, specifically Tether Gold (XAU₮. The Alloy platform, which issues aUSD₮ stabilizes its value through over-collateralization with XAU₮ tokens, each representing ownership of physical gold. The value of these tokens is pegged to the U.S. dollar, providing a unique fusion of the stability of traditional fiat and the advantages of digital currencies.
A synthetic dollar, like aUSD₮, is a type of digital token whose value is pegged to the value of the US dollar. However, instead of being backed by actual dollars, it’s supported by another asset — in this case, gold. The need for synthetic dollars arises from the desire for stability in the highly volatile cryptocurrency market. While cryptocurrencies offer numerous advantages, their value can fluctuate wildly. This volatility can deter potential users who are seeking a stable store of value or medium of exchange. Synthetic dollars provide the stability of the US dollar while also offering the benefits of cryptocurrency, such as fast transactions, low fees, and the potential for smart contracts. This makes them an attractive option for many users, particularly in the financial sector.
The gold supporting the currency is securely stored in Switzerland and fully managed by Tether. Tether already owns the XAU₮ asset, backed by gold at a 1:1 ratio with an ounce of gold. On the innovative Alloy platform, XAU₮tokens can be frozen, leading to the issuance of aUSD₮ This means that gold worth $2,000 can be locked up, and, in return, a stablecoin of equal value, backed by this precious metal, can be generated. With its gold backing, this type of token offers a level of reliability that surpasses the standard USDT.
Alloy is a cutting-edge platform where tokens akin to aUSD₮ will be issued. This is only the initial step in a series of projects that Tether has planned based on this concept. Alloy stands out as the first platform where top stablecoins backed by Real World Assets (RWA) tokens can gather. The launch of Alloy primarily signals that the RWA segment is poised for substantial growth. Tether is leading the integration of RWA and stablecoins, a trend other crypto companies are likely to emulate. Given their reliable gold backing, gold-backed stablecoins are set to attract large capital holders.
To put it simply, the first token in the Alloy by Tether lineup is aUSD₮, a digital currency designed to track the value of one US dollar. What sets aUSD₮ apart is that it’s over-collateralized by Tether Gold (XAU₮), meaning it’s supported by real physical gold stored in Switzerland. Users can create aUSD₮ tokens using Tether Gold (XAU₮) as collateral, providing a robust and innovative solution for users wanting to engage in digital transactions, payments, and remittances with a currency that feels as familiar as the US dollar, without having to sell their XAU₮.
In addition to the features mentioned above, Alloy by Tether offers a significant level of compatibility with Ethereum’s EVM. This compatibility extends to a multitude of platforms, such as Ethereum mainnet, Polygon, Optimism, and Arbitrum, as well as BNB Chain. This broad spectrum of compatibility allows Alloy to interact seamlessly with a variety of blockchain technologies, further enhancing its versatility as a gold-backed stablecoin platform.
Furthermore, Alloy by Tether has made a strategic decision to use Solidity as the smart contract programming language. Solidity is recognized for its efficiency and security in the development of blockchain applications, especially within the Ethereum ecosystem. By opting for Solidity, Alloy can carry out operations across different blockchains while maintaining high levels of security. This ensures that transactions carried out on the Alloy platform are not only versatile but also secure, reinforcing Tether’s commitment to providing a robust and innovative solution for users wanting to engage in digital transactions.
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