Tether Kills Failing Gold Stablecoin Experiment

Tether is shutting down its gold-backed lending platform, Alloy, on September 17. The move affects just five customers who borrowed approximately $399,088 in Tether's dollar-tracking token (aUSDT) against 194 units of the gold-backed token XAUT, worth around $850,000 at current prices.

Alloy launched on June 17, 2024, with CEO Paolo Ardoino pitching it as a new breed of gold-backed digital money. However, the platform failed to gain traction and has been valued at just $1.9 million in its last attestation, making up only a fraction of Tether's massive stablecoin market.

For every $10,000 invested in XAUT, about 99.97% remains untouched in users' wallets, while the remaining 0.03% is used as collateral for the borrowed aUSDT. Regular holders of XAUT can breathe easy, the token itself is not being shut down and has a market cap of over $2.7 billion.

The shutdown poses no significant risk to investors in XAUT, but there are two key considerations: exiting the platform comes with a 0.25% fee, and Tether has yet to provide any clarity on what happens if borrowers fail to repay their debts by September 17.