Here’s Why Tether’s Gold-Backed Stablecoin Is A Genius Business Idea, Explains Analyst
Highlights
- Tehter gold-backed aUSDT offers average gains of 8%, compared to the 0-5% yields of USDT from T-Bills.
- Woo also speculated that Tether might launch a Bitcoin-backed stablecoin, bUSDT, in the future.
- Tether's Alloy platform allows users to create tokens collateralized by Tether's tokenized gold.
On Monday, June 17, stablecoin issuer Tether launched its gold-backed stablecoin Alloy (aUSDT) as a synthetic dollar overcollateralized by Tether Gold (XAUt). This launch comes as part of Tether’s attempt to expand its footprint in the rapidly expanding stablecoin market. Popular analyst Willy Woo noted that this is a genius business idea from Tether.
Willy Woo Unlocks Tether’s New Stablecoin Strategy
As said, Willy Woo has praised Tether’s innovative move to launch a gold-collateralized stablecoin. Calling this strategy “genius,” Woo highlighted that unlike USDT, which earns yields from T-Bills, the new gold-backed stablecoin aUSDT would generate the returns from Gold, which gives 8% gains on average compared to the 0-5% yields derived from Treasury bills.
Woo also speculated that since Tether is currently working on building a sizeable Bitcoin Treasury, it might consider launching a Bitcoin-backed stablecoin bUSDT later in the future. However, Woo acknowledged that such a move won’t make sense in the current bear market considering Bitcoin’s price volatility. However, he believes that such a move would be more viable in the future when BTC becomes a widely adopted asset class by institutions, and thus becomes relatively more stable.
While addressing concerns regarding potential pitfalls, Woo contrasted Tether’s approach with Terra/LUNA model, which failed due to backing a stablecoin with a volatile asset. The analyst stated that Tether’s substantial annual income of $5.5 billion and its time to accumulate more gold would prevent a similar downfall.
More About the Alloy Platform
For its new Gold-backed stablecoin, Tether has introduced a new token minting platform Alloy built atop the Ethereum blockchain network. The Alloy platform will allow users to create tokens collateralized further by Tether’s tokenized gold. Thus, this platform will integrate into Tether’s digital assets tokenization system, set to launch later this year.
This initiative will redefine stability in the digital economy by combining the security, reliability, and the stable value of Gold. Alloy by Tether introduces “Tethered assets,” a new category of cryptocurrencies designed to track the price of reference assets through various stabilization strategies.
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