# Why Tether launches a stablecoin backed by gold

Source: https://x.com/0xfoobar/status/1802691495016747264
Kiwi News: https://news.kiwistand.com/stories/Why-Tether-launches-a-stablecoin-backed-by-gold?index=0x66703843dbae0788b4a3fb8e5d2650f57cf535090bf3ad276037d5c031886a17659a166d
Submitted by macbudkowski.eth on 2024-06-17 UTC, 2 upvotes, 0 comments

## Summary

Tether has announced a new stablecoin backed by gold, expected to be its second-biggest product ever. Its prospects rest on its distribution and integrations, which matter most for stablecoin liquidity, and on its track record of custodying over a hundred billion dollars of existing real-world asset collateral. Centralized control is described as superior to DAO-based governance, offering smarter decisionmaking and less principal-agent risk. The launch could also reduce Tether's alignment with the US government and expand crypto's onchain collateral base, as part of a broader tokenization platform.

## Article

Tether just announced what will likely be their second-biggest product ever: a new stablecoin backed by gold.

Tether is running the Maker horizontal expansion playbook in the opposite direction, starting with 1:1 treasuries then expanding into more exotic hybrid and eventually onchain collateral

They're well-positioned to do this for several reasons:

(1) Stablecoins live and die by their distribution and integrations. Liquidity matters most, that's why people hold USDC and USDT over DAI. That's why ethena is so laserfocused on BD
(2) Track record of (mostly) safely custodying over a hundred billion dollars of existing RWA collateral is precisely what's needed to bootstrap other RWAs like gold, others like ondo are completely hapless here
(3) Centralized control is actually superior to subDAO nonsense bc smarter decisionmaking and less principal-agent risk, less likely to burn funds at below market rates lending to botswanian bike repair shops

Some potential outcomes:

(1) Tether is no longer fully aligned with US govt. Previously stablecoins were perfect tool for eurodollar 2.0 and extending dollar hegemony in the face of rising national debt financing costs. Gold-backed currencies return to pre-Bretton Woods era, didn't end well for Gaddafi. Yet Tether govt relationships seem to be improving recently, so possible there's more to the story
(2) General crypto stimulus effect. Stablecoins are the bottleneck in marketcap expansion, too high of a marketcap-to-stables ratio and volatility spikes. Stables are sticky money, a low marketcap-to-stables ratio is dry powder that's quick to buy dips. Expanding crypto's onchain collateral base is key while ETF money is slow to come onchain
(3) aUSDT is just the flagship product of Tether's general "tokenization platform". While tokenization is mostly a buzzword that means "treasuries" in 90% of cases to date, Blackrock is pushing it hard and Tether's one of the few with the track record and size to actually match them. Pay attention to what other asset launches follow on Alloy