Tether's new stablecoin attempt aUSDT: a gold-backed digital asset

Tether, the world’s largest stablecoin issuing company, recently launched a new stablecoin, aUSD₮, designed to meet growing market demand and inject new vitality into the DeFi ecosystem. aUSD₮ is a unique digital asset that is over-collateralized by Tether Gold (XAUT), meaning aUSD₮ is backed by real physical gold stored in Switzerland.

What are Alloy by Tether, Tethered Assets and aUSD₮?

Recently, Tether announced the launch of a new platform, Alloy by Tether, and introduced a new type of digital asset, Tethered Assets. This class of assets is designed to track the price of a reference asset through stabilization strategies such as over-collateralization of liquid assets and secondary market liquidity pools. Tethered Assets can accept single or multiple types of collateral and can track the price of most known assets, such as fiat currencies, commodities, and other similar products.

Alloy by Tether is an open platform that allows the creation of different Tethered Assets with a wider range of support mechanisms, possibly including yield products. The technology also provides institutions with a modern approach to asset management by providing a secure, gold-backed digital asset that can be integrated into investment portfolios. Moon Gold NA, S.A. de C.V. and Moon Gold El Salvador, S.A. de C.V. are both authorized by El Salvador’s CNAD and will be responsible for the issuance and management of Alloy by Tether to meet different customer groups and regulatory requirements​.

Alloy by Tether tokens use Tether Gold (XAU₮) as collateral and are a Tethered Asset. aUSD₮ is the first Alloy by Tether token designed to track the value of $1. Tether Gold represents physical gold stored in Switzerland, with each XAU₮ token pegged to one ounce of physical gold and meeting the London Bullion Market Association’s (LBMA) Good Delivery Standards. This combination is designed to provide the stability and reliability of gold with the trading functionality and convenience of the U.S. dollar. aUSD₮ is created on the Ethereum network, and the entire process is managed by Ethereum-compatible smart contracts, ensuring transparency and security. This method not only bridges physical gold and digital transactions, but also uses price oracles to monitor the relationship between tokens and their underlying values ​​in real time, further enhancing stability.

As of June 30, more than 19.04 million aUSD₮ have been minted, and the collateral gold has exceeded 417.23 kilograms.

aUSD₮ Minting Mechanism: Over-collateralization and Vaults Smart Contract

aUSD₮ The minting mechanism includes the following aspects:

• Over-collateralization: Over-collateralization is the core feature of aUSD₮. Each aUSD₮ token is backed by Tether Gold (XAU₮) worth more than its face value. The excess XAU₮ acts as a buffer, protecting aUSD₮ from gold price fluctuations. When users mint aUSD₮, they need to deposit more gold than the value of aUSD₮ they wish to mint as collateral to ensure the stability and security of the token.
• Minting process: Users mint the corresponding amount of aUSD₮ by locking the specified amount of Tether Gold in the smart contract. The maximum amount of aUSD₮ that can be minted is determined by the Mint Value Ratio (MTV), with a maximum MTV of 75%. The entire minting and management process is conducted through Ethereum-compatible smart contracts (Vaults), ensuring transparency and security. Minting is possible as long as the user passes KYC and the MTV of their CMP does not exceed the clearing point.

MTV calculation formula:

MTV = (minted aUSD₮ value / staked XAU₮ value) * 100

For example, if a user staked $10,000 worth of Tether Gold and minted $7,500 worth of aUSD₮, then MTV is 75%. If the ratio exceeds 75%, the location faces liquidation.

• Vaults Mechanism: Vaults is a smart contract system for storing user collateral and unissued aUSD₮, allowing independent, permissionless verification of the XAU₮ collateral backing each issued aUSD₮. Vaults also store users’ CMP information as well as address metrics such as aUSD₮ minted and XAU₮ offered, as well as MTV of positions. Only addresses that have completed KYC verification can interact with Vault and mint aUSD₮. Vaults obtains price data in real time through oracles, monitors and calculates the MTV of each user's mortgage position.
• Oracle mechanism: The oracle mechanism ensures that the value of aUSD₮ is always pegged to the US dollar at 1:1. The oracle obtains real-time price data for XAU₮ and USD from multiple trusted sources and is used to calculate the current MTV for each user’s staking position to ensure system stability and transparency. This mechanism not only maintains the value of aUSD₮, but also leverages gold’s intrinsic value to provide additional stability and security.
• Liquidation mechanism: Liquidation occurs when the value of the collateral falls below a predetermined threshold (usually set at 75% of the collateral value). If the user's mortgage position is close to the liquidation point, the authorized liquidator can step in to recover the user's XAU₮ and return the corresponding amount of aUSD₮. This mechanism ensures the integrity of the system and prevents undercollateralization.
• Fee Structure: The minting, redemption and liquidation process of aUSD₮ will incur certain fees. Currently, minting and redemption fees are both 25 basis points (bps), and liquidation fees are 75 bps. These fees help cover the operating costs of the system and maintain its stability.

Through this mechanism, aUSD₮ provides a digital asset that combines the stability of the US dollar and the value of gold, suitable for a variety of trading and investment needs.

Detailed minting process:

• Staking deposit: Users first visit the Alloy by Tether website and choose to start minting. On the left side of the screen, users select the amount of Tether Gold (XAU₮) to offer and decide how much aUSD₮ to mint. (XAU₮ can be purchased through the Tether Gold platform or the secondary market)
• Set parameters: The system will display information such as collateral, minted aUSD₮ quantity and minting fee, liquidation point, MTV, health bar, XAU₮ price and liquidation price. .
• Transaction Overview: Displays a detailed transaction summary including wallet balance changes, CMP impact and associated fees.
• Confirm minting: The user clicks the "Add Collateral and Mint aUSD₮" button to confirm the transaction and transfer XAU₮ from the wallet to Vault as collateral, and the minted aUSD₮ will appear in the wallet.
• Monitor CMP: Users can monitor CMP and current status on the right screen.

aUSD₮ Core advantages: Gold’s stability and full-chain transparency

aUSD₮ Core advantages mainly include the following points:

• Gold-backed stability and direct exposure to gold value: aUSD₮ powered by Tether Gold (XAU₮) This gold is stored in Switzerland as collateral, ensuring the stability of its value. Through an over-collateralization mechanism, the face value of each aUSD₮ token is backed by higher value Tether Gold, providing a buffer that protects aUSD₮ from fluctuations in the price of gold. Additionally, aUSD₮ offers similar everyday usage conveniences to fiat currencies while providing users with direct exposure to the value of physical gold as it is backed by Tether Gold. Users can enjoy the security of gold while utilizing aUSD₮ for efficient transactions and value storage.
• Transparency and Security: aUSD₮ is minted and managed via Ethereum-compatible core smart contracts that enable independent and permissionless verification of XAU₮ collateral, ensuring the transparency of the system. All interactions are subject to KYC verification, ensuring that only verified addresses can interact with smart contracts. The price oracle continuously monitors the relationship between the token and its underlying value, further enhancing the stability of the system.
• Liquidity and Efficiency: aUSD₮ provides a simplified way to trade gold, which can be used for daily transactions or as a stable asset management tool for investors. By being compatible with the Ethereum ecosystem, aUSD₮ can also seamlessly integrate with various DeFi platforms, promoting revenue generation and asset diversification.
• Versatility and wide application: In addition to stability and transparency, aUSD₮ also provides a new way of asset management, suitable for different financial institutions and individual investors. Its design is not only suitable for traditional financial transactions, but also enables automated casting, redemption and liquidation through smart contracts, providing a modern asset management solution.
• Continuous Transparency and Auditability: aUSD₮ operates independently of the banking system and provides a high degree of transparency and security as a resilient, fully on-chain solution.

Through these advantages, aUSD₮ provides users with a stable and efficient digital asset management tool that combines the security of gold with the transparency and efficiency of blockchain technology to provide investors with a reliable value Storage and trading tools.

Summary

Tether’s new stablecoin aUSD₮ provides users with an innovative digital asset management tool by combining the stability of Tether Gold with the transparency of blockchain technology. aUSD₮ uses an over-collateralization mechanism and smart contracts to ensure the stability of its value and the transparency of the system. Not only does it leverage gold’s intrinsic value to provide additional stability, it also enables automated management via Ethereum-compatible smart contracts, making it suitable for a variety of trading and investment needs. With its transparent operations and strong security, aUSD₮ provides investors with a reliable store of value and trading tool, and provides the DeFi ecosystem with more choices and possibilities.

ref:

https://crypto-economy.com/breaking-tether-launches-new-innovative-gold-backed-cryptocurrency-ausd%E2%82%AE/

https://www. pymnts.com/cryptocurrency/2024/tether-launches-new-digital-asset-backed-by-tether-gold/

https://www.kitco.com/news/article/2024-06-18/gold- meets-digital-dollars-tether-launches-ausdt-stablecoin-gold-backing

https://cointelegraph.com/explained/what-is-tethers-gold-backed-stablecoin-alloy-ausd

https:// cryptoslate.com/tether-launches-synthetic-dollar-ausdt-backed-by-physical-gold/

https://thenextbitcoin.net/understanding-tethers-gold-backed-stablecoin-alloy-ausd%E2%82% AE/

https://docs.alloy.tether.to/get-started/introduction-to-alloy-by-tether

https://tether.io/news/tether-announces-launch-of-alloy -by-tether-a-new-digital-asset-backed-by-tether-gold/

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