Tether is Killing Its Gold Stablecoin Experiment in 37 Days. Should Investors Worry?

Tether will shut down Alloy, its gold-backed lending platform, on September 17. Five customers still owe 399,088.74 aUSDT against 194.41 Tether Gold (XAUT) in collateral, and the clock now reads 37 days.

But there’s a bigger concern. For every $10,000 in Tether Gold, about $3 sits in Alloy. The other 99.97% of the token is untouched.

What’s Happening to Tether’s Alloy Platform

Alloy launched on June 17, 2024, and CEO Paolo Ardoino pitched it as a new breed of gold-backed digital money. Users deposited XAUT, a token backed by one troy ounce of Swiss-vaulted gold. Against that, they borrowed aUSDT, a dollar-tracking token.

The product never grew. Its June 30 attestation valued all collateral at just $1.9 million. Tether runs USDT, a $183 billion stablecoin, so Alloy amounted to a rounding error.

Two years to the day after launch, Tether announced the wind-down. New minting stopped immediately. September 17 is the last day to repay aUSDT and pull collateral out.

Since then, borrowers have repaid more than half. Alloy’s own data listed just five open positions on August 10. Their gold is worth about $850,000 at XAUT’s current price of $4,372.

What the Shutdown Means for Tether Gold Investors

Regular holders can relax. XAUT is not closing, and it remains a $2.7 billion token. The 194 locked ounces equal 0.03% of its 707,747-token supply.

Two cautions still apply. Exiting costs a 0.25% fee, and Tether has published no recovery path for anyone who misses the date. Buying aUSDT on the open market also grants no claim on anyone’s locked gold.

Meanwhile, demand for the token itself looks healthy, and Tether Gold whale flows have picked up in recent weeks. The real question is smaller than the headline. Will five borrowers settle up in the next 37 days?