Tether Gradually Shutters Alloy And AUSD₮ Project Due To Low Market Traction

• Tether announced the gradual shutdown of its Alloy platform and related AUSD₮ token.
• The world’s largest stablecoin issuer by market cap cited low user activity and market demand as reasons for its wind-down.

Tether, the world’s largest stablecoin issuer, announced winding down Alloy by Tether (AbT) just two years after launch. It includes shuttering its related stablecoin, aUSD₮.

Tether Pulls the Plug on Alloy and aUSD₮

According to Tether, the decision stemmed from a comprehensive assessment of the project. The company found that it hadn’t been gaining significant user activity or market demand.

The findings led Tether to halt support for the project to focus on its core products. The company stated that it will shift to other priorities, particularly those with stronger user demand, deeper liquidity, and broader long-term market opportunities.

ADVERTISEMENTHowever, Tether ensured the remaining users of the platform and its assets that it will execute the wind-down in phases “to support an orderly transition.” Starting on Wednesday, it will update the Alloy by Tether interface to prevent users from opening new positions or minting aUSD₮.

Additionally, Tether highlighted that users can return their aUSD₮ and remove their collateralized XAU₮ (Tether Gold) for the next three months. But then again, it warned that users who fail to do so before September 17 will waive their right to recover their XAU₮ tokens on the platform.

What is Alloy and aUSD₮?

Alloy by Tether marks its second anniversary after launch on June 17, 2024. Its issuer described it as a “tethered asset” because it tracks the reference price of another through various stabilization mechanisms.

ADVERTISEMENTThe aUSD₮ stablecoin has a 1:1 peg to the US dollar and is underpinned by the Ethereum (ETH) chain. The asset stabilizes its value through supply-and-demand dynamics in secondary markets. It also maintains its peg through over-collateralization using XAU₮.

“Alloy by Tether provides long-term holders the opportunity to maintain exposure to gold, while in parallel obtaining a dollar-referenced Tethered Asset for payments and day-to-day economy,” said Tether during its launch.

On-chain data shows that aUSD₮ has a market cap of approximately $49.91 million based on its circulating supply of 50 million tokens.

Focus on Tether Gold

Besides the USD₮ stablecoin with a market cap of over $186.3 billion, Tether’s gold-backed stablecoin XAU₮ has been showing massive success. It has become a digital alternative to investing in physical gold this year as macro uncertainty and global tensions propelled the precious metal to $5,597.23 per ounce in late January.

Gold’s spot price, which is also reflected in XAU₮, trades at around $4,266 per ounce on Thursday as the conflict between the US and Iran simmered.

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