Stablecoin giant Tether has announced a service that allows users to deposit surplus of their existing gold-backed token, XAUT, to “mint” a new type of $1 stablecoin called USDT. Did you understand? If not, you can watch the 40-second video the company posted on X. The video shows the A-for-Alloy symbol spinning around a gold bar, marble numbers on a laptop, and a greasy voice with the final pitch, “Let’s let’s.” Let’s redefine stability together. ”
I think one way of saying this is to “redefine stability together.” Another says, “Join Tether as we add a new layer of synthetic assets to the black box of our operations and hope for the best.” I don’t know about you, but this makes me nervous.
For those who don’t know, Tether’s flagship currency, the USDT stablecoin, has a market capitalization ($112 billion at last count) that is larger than most banks and the GDP of most countries. The company has not yet conducted a proper audit. Instead, the crypto world has long believed that all these stablecoins are properly backed by safe assets. And to be fair, this has worked so far. Tether continues to maintain its peg despite multiple crypto crises, including the FTX meltdown that wiped out half of the industry.
However, this new gold stablecoin feels like the next level for Tether as well. What the company is trying to do is turn its Alloy platform on Ethereum into an “open platform that will enable the creation of a variety of tethered assets with a broader range of backing mechanisms, including potentially higher-yielding products.” It’s about having customers treat you as such. Therefore, a Tether tokenized gold-backed stablecoin is likely just the beginning.
In an interesting claims to be looking to expand into other assets and DeFi. The market too. In other words, Tether wants to diversify in case USDT’s golden goose is threatened.
In this sense, Alloy’s gamble makes good business sense for Tether and its ambitious CEO. And I should point out that Tether requires those who want to create a gold-backed stablecoin to post additional collateral. This practice has worked well for a decade for the pioneering decentralized stablecoin DAI. At the same time, the idea of Tether spinning up a set of new crypto assets beyond USDT and having those assets serve as collateral for other Tether assets feels like it could be problematic. Am I overreacting? Let us know what you think.
jeff john roberts
jeff.roberts@fortune.com
@jeffjohnroberts
decentralized news
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meme-o-the-moment
…Alternatively, you could buy a gold ETF.
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