Tether is winding down Alloy, a lending product built around its gold-backed cryptocurrency, after the platform failed to develop meaningful scale.
Summary:
Tether will terminate Alloy on September 17, ending a two-year experiment with gold-backed borrowing
Only five positions remain, with 194.41 XAUT locked as collateral
The shutdown affects Alloy, not Tether Gold, whose market capitalization remains around $2.7 billion
The service launched in June 2024 with a relatively unusual model: users could lock Tether Gold (XAUT) and receive aUSDT, a digital asset designed to track the U.S. dollar. The concept allowed holders of tokenized gold to borrow against their positions without selling the underlying asset.
Two years later, Tether decided to end the experiment. New aUSDT issuance has already stopped, while September 17 has been set as the final date for borrowers to repay outstanding debt and reclaim their collateral.
The remaining exposure is now extremely small. Alloy's latest figures show only five active positions, backed by 194.41 XAUT. At a gold-token price of about $4,372, that collateral is worth roughly $850,000.
The platform had already become a minor part of Tether's ecosystem. Its June attestation valued total collateral at approximately $1.9 million, a negligible amount compared with the company's roughly $183 billion USDT business.
Importantly, Alloy's closure does not mean Tether Gold is being discontinued. XAUT continues to operate independently, with more than 707,000 tokens in circulation and a market capitalization of about $2.7 billion. The gold tied to the remaining Alloy positions represents only around 0.03% of its supply.
Borrowers still have until the September deadline to settle their positions and withdraw collateral. A 0.25% fee applies when exiting the platform. Tether has not detailed what recovery options will be available for users who fail to close their positions before Alloy shuts down.
Related: Earlier, we reported that FTX had begun another round of creditor repayments, highlighting how crypto platforms can remain locked in lengthy financial wind-down processes even after their core operations have ended.