Tether’s ‘Brilliant Idea’: Launching aUSDT, a Gold-Backed Stablecoin with Higher Profit Potential

On June 17, Tether CEO Paolo Ardoino announced aUSDT, a new synthetic dollar collateralized by XAUt, Tether’s gold-backed digital asset.

In a post on X on June 18, industry analyst and stock-to-flow creator Willy Woo called it “A cool Tether business idea.”

Tether’s USDT is currently earning on US Treasury bills, but now the company can issue a stablecoin that earns on gold earnings, he explained.

This has higher profit potential as over the long term gold returns 8% compared to bonds at 0% to 5%.

A stable currency over backed by gold.

A great Tether business idea.

Instead of issuing USDT and earning the bond yield from the T-Bill, the company can issue USDT earning the gold.

Over the long term, gold returns 8%, compared to 0-5% for bonds. https://t.co/ZBCjnK05Ja

— Willy Woo (@woonomic) June 18, 2024

Overcollateralized by gold

Woo went on to say that he wouldn’t be surprised if Tether issued a Bitcoin-backed bUSDT stablecoin, given that the company is building a significant BTC treasury. However, “it doesn’t make sense right now given the bear market dips,” he said before adding, “but in a future cycle where BTC is bigger and less volatile, it could happen.”

He compared the asset to Terraform Labs’ Terra and Luna, which was a stable coin backed by a volatile asset.

“As with every new product, adoption will take time, Tether has plenty of time to accumulate more gold. Earth/Moon never had $5.5 billion in real revenue per year like Tether.

As part of the announcement, Ardoino also introduced Alloy by Tether, an open platform that allows users to create synthetic collateral digital assets. He added that it will soon be part of the new digital asset tokenization platform Tether, which will launch later this year as the company moves deeper into tokenizing real-world assets (RWA).

Linked assets are crypto assets that aim to track the benchmark price of another through different stabilization mechanisms, in this case, the company’s gold-backed XAUt token.

Additionally, USDT price stability is maintained through supply and demand dynamics in secondary markets, including liquidity pools.

Stablecoin Outlook

Tether Gold, or XAUt, which tracks the price of the commodity, currently has a market cap of $572 million. It was trading at $2,318 at the time of writing. Gold prices hit an all-time high of $2,426 an ounce on May 20, but have retreated slightly since then.

Tether is the market leader in dollar-pegged stablecoins, with a record circulation of $112.5 billion USDT and a global market share of around 70%. Its closest competitor is Circle’s USDC, which has a circulation of $32.6 billion and a market share of 20%.

The total market capitalization of stablecoins is $162 billion, which represents about 6.5% of the total crypto market.

SPECIAL OFFER (Sponsored) Binance Free $600 (Exclusive to CryptoPotato): Use this link to register a new account and receive an exclusive welcome offer of $600 to Binance (full details).

2024 LIMITED OFFER on BYDFi Exchange – Up to $2888 Welcome Reward, Use this link to register and open a 100 USDT-M position for free!