Author: HAMSTER
Tether, the world’s largest stablecoin issuer, 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 overcollateralized by Tether Gold (XAUT), which means that 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 type of asset is designed to track the price of reference assets through stabilization strategies such as excess collateral of liquid assets and secondary market liquidity pools. Tethered Assets can accept single or multiple types of collateral and can track the prices 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, potentially including yield products. The technology also offers institutions a modern approach to asset management by providing a secure, gold-backed digital asset that can be integrated into a portfolio. Moon Gold NA, S.A. de C.V. and Moon Gold El Salvador, S.A. de C.V., both authorized by the El Salvador CNAD, will be responsible for the issuance and management of Alloy by Tether to meet different customer segments and regulatory requirements.
The Alloy by Tether token is a Tethered Asset that uses Tether Gold (XAU₮) as collateral. aUSD₮ is the first Alloy by Tether token designed to track the value of $1. Tether Gold represents physical gold stored in Switzerland, and each XAU₮ token is pegged to one ounce of physical gold in compliance with the London Bullion Market Association (LBMA) good delivery standards. This combination is designed to provide the stability and reliability of gold with the transactional 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 to ensure transparency and security. This approach not only bridges physical gold and digital transactions, but also uses price oracles to monitor the relationship between the token and its underlying value in real time, further enhancing stability.
As of June 30, more than 19.04 million aUSD₮ have been minted, and the collateralized gold has exceeded 417.23 kilograms.
aUSD₮ Minting Mechanism: Overcollateralization and Vaults Smart Contract
The aUSD₮ minting mechanism includes the following aspects:
Overcollateralization: Overcollateralization is a 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 to protect aUSD₮ from gold price fluctuations. When users mint aUSD₮, they need to deposit more gold as collateral than the value of aUSD₮ they wish to mint, ensuring the stability and security of the token.
Minting process: Users mint aUSD₮ by locking a specified amount of Tether Gold in a smart contract. The maximum amount of aUSD₮ that can be minted is determined by the Minting Value Ratio (MTV), with a maximum MTV of 75%. The entire minting and management process is carried out through Ethereum-compatible smart contracts (Vaults), ensuring transparency and security. Minting can be carried out as long as the user passes KYC and the MTV of their CMP does not exceed the liquidation point.
The calculation formula of MTV is:
MTV = (value of minted aUSD₮ / value of collateralized XAU₮ ) * 100
For example, if a user has collateralized $10,000 worth of Tether Gold and minted $7,500 worth of aUSD₮, the MTV is 75%. If the ratio exceeds 75%, the position will face liquidation.
Vaults Mechanism: Vaults is a smart contract system for storing user collateral and unissued aUSD₮, allowing independent, permissionless verification of the XAU₮ collateral that supports each issued aUSD₮. Vaults also store users' CMP information as well as address metrics such as minted aUSD₮ and provided XAU₮ and the MTV of the position. Only addresses that have completed KYC verification can interact with Vault and mint aUSD₮. Vaults obtain price data in real time through oracles, monitor and calculate the MTV of each user's collateral position.
Oracle Mechanism: The oracle mechanism ensures that the value of aUSD₮ always maintains a 1:1 peg to the US dollar. The oracle obtains real-time price data of XAU₮ and the US dollar from multiple trusted sources and is used to calculate the current MTV of each user's collateral position to ensure the stability and transparency of the system. This mechanism not only maintains the value of aUSD₮, but also uses the intrinsic value of gold to provide additional stability and security.
Liquidation mechanism: Liquidation occurs when the collateral value falls below a predetermined threshold (usually set at 75% of the collateral value). If a user’s collateral position is close to the liquidation point, an authorized liquidator can step in, reclaim 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 of aUSD₮ incur certain fees. Currently, the minting and redemption fees are both 25 basis points (bps), and the liquidation fee is 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 U.S. dollar and the value of gold, suitable for a variety of trading and investment needs.
Detailed casting process:
Collateral 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 provide and decide how much aUSD₮ to mint. (XAU₮ can be purchased through the Tether Gold platform or the secondary market)
Setting parameters: The system will display information such as collateral, amount of aUSD₮ minted 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, confirms the transaction and transfers XAU₮ from the wallet to the Vault as collateral, and the minted aUSD₮ will appear in the wallet.
Monitor CMP: User can monitor CMP and current status on the right screen.
aUSD₮ Core Advantages: Gold Stability and Full Chain Transparency
The core advantages of aUSD₮ mainly include the following:
Gold-backed stability and direct exposure to gold value: aUSD₮ is collateralized by Tether Gold (XAU₮), which is stored in Switzerland, ensuring the stability of its value. Through the over-collateralization mechanism, the face value of each aUSD₮ token is backed by Tether Gold of higher value, providing a buffer that protects aUSD₮ from gold price fluctuations. In addition, aUSD₮ provides the convenience of daily use similar to fiat currency, while providing users with the opportunity to directly expose the value of physical gold because it is backed by Tether Gold. Users can enjoy the security of gold while using aUSD₮ for efficient transactions and value storage.
Transparency and Security: aUSD₮ is minted and managed through Ethereum-compatible core smart contracts that are able to independently and permissionlessly verify XAU₮ collateral, ensuring the transparency of the system. All interactions require KYC verification, ensuring that only verified addresses can interact with smart contracts. Price oracles continuously monitor the relationship between tokens and their 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 and as a stable asset management tool for investors. By being compatible with the Ethereum ecosystem, aUSD₮ can also be seamlessly integrated with various DeFi platforms to promote yield 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. It is designed not only for traditional financial transactions, but also can realize automated minting, redemption and liquidation through smart contracts, providing a modern asset management solution.
Continuous transparency and auditability: aUSD₮ operates independently of the banking system, providing 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, combining the security of gold with the transparency and efficiency of blockchain technology, providing investors with a reliable value storage and trading tool.
Summarize
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. It not only provides additional stability by leveraging the intrinsic value of gold, but also enables automated management through Ethereum-compatible smart contracts, suitable for a variety of trading and investment needs. With its transparent operation and strong security, aUSD₮ provides investors with a reliable value storage and trading tool, and provides more options and possibilities for the DeFi ecosystem.
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/