Alloy by Tether (aUSDT) is a Tethered Asset intended to track a reference asset’s price using Tether Gold as collateral, to provide stability and value. It was launched on June 17, 2024. ^[1][2][3][4]

Overview

Users mint Alloy by Tether tokens using Tether Gold (XAU₮) as collateral, creating a digital currency connected to gold's strength. ^[1][2]

"Introducing Alloy by Tether, the first Tethered Asset. aUSD₮ is over-collateralised on-chain by Tether Gold XAU₮, merging the dollar utility with the millennial store of value gold. aUSD₮ is over-collateralised by XAU₮ and its price stability is maintained through supply/demand dynamics on secondary markets (including liquidity pools)." - the company tweeted.^[5]

"Alloy by Tether provides long-term holders the opportunity to maintain exposure to gold, while in parallel obtaining a dollar-referenced Tethered Asset for payments and day-to-day economy" - they added.

According to the company, Alloy by Tether is an open platform that allows the creation of different Tethered Assets with broader backing mechanics, potentially including yield-bearing products. ^[5]

Alloy by Tether is an open platform that allows to create collateralised synthetic digital assets and will soon be part of the new @Tether_to digital assets tokenisation platform, launching later this year. - founder Paolo Ardoino tweeted.^[9]

aUSD₮

aUSD₮ is a non-algorithmic, gold-backed, on-chain, and Tethered asset minted through the Vaults. ^[8]

Similar to the other Tether tokens like USDT, aUSD₮ tokens are "authorized but not issued" when they are created and deposited into the Vaults, ready to be minted by users. They are only considered "authorised and issued" when they are minted by the user. ^[8]

The synthetic dollar can be minted by depositing XAUT through a smart contract and price oracles. Thus, users can make transactions with aUSDT while retaining their gold-backed Tether asset. ^[3]

aUSDT was developed by Tether subsidiaries Moon Gold and Moon Gold El Salvador. ^[3][10]

Tethered Asset

Tethered Assets are digital assets that aim to track the reference price of another asset through stabilization strategies like over-collateralization with liquid assets and secondary market liquidity pools, which seek to provide consistent value and stability between the reference asset and its tethered counterpart. ^[1]

Technology

Alloy by Tether aims to stabilize the volatile financial landscape by backing each unit with Tether Gold, representing ownership of physical gold stored in Switzerland. This approach leverages Switzerland's economic stability to enhance the reliability of Tether Gold. ^[6]

By using gold as collateral, Alloy by Tether seeks to be a digital asset with low volatility. The platform utilizes smart contracts compatible with various Ethereum Virtual Machine (EVM) chains, including Ethereum Mainnet, Polygon, Optimism, Arbitrum, and BNB Chain. ^[6]

Solidity is a leading language for developing Ethereum smart contracts, valued for its robustness and security features. By utilizing Solidity, Alloy by Tether ensures compatibility with various blockchains while upholding high standards of security and functionality. ^[6]

Alloy by Tether Vaults

Alloy by Tether's core smart contracts are called Vaults. Each Vault serves multiple purposes

• Storing User's Collateral.
• Storing Unissued aUSD₮.
• Storing User's Collateralised Minted Position (CMP) information.

Vaults store inside them the address' metrics, such as:

• Minted aUSD₮
• Provided XAU₮
• Position's Mint to Value (MTV)

Vault uses this information to compute the solvency of the position. If the position approaches liquidation, whitelisted liquidators are able to liquidate it, withdrawing the user's XAU₮ while transferring back aUSD₮ up to the amount of minted aUSD₮. ^[7]