XAUT or Tether Gold is a digital asset with the price linked to gold, developed by the Tether company, the same one that has among its products the largest stablecoin in the crypto ecosystem: USDT.
XAUT seeks to become an option for any person or entity that wishes to invest in gold, but without having to go through traditional institutions that make the process more expensive and take longer than necessary.
XAUT wants to become a gateway to tokenized gold, with the advantages that this entails. Firstly, XAUT offers direct exposure to this precious metal, linking the value of the token to that of gold, establishing physical support margins for said commodity and, at the same time, offering easy access to this commodity. XAUT is a perfect example of all the potential of tokenization, applied to the raw materials that we can see in traditional markets.
To maintain trust and handle a known standard in binding this token, Tether has decided that each XAUT has a direct equivalence to a troy ounce of gold. Likewise, the issue is backed by physical bars of the London Good Delivery (LGD) standard, which requires that a bar contain between 350 and 430 troy ounces of gold. In addition, to guarantee the good protection of these physical assets, Tether makes sure to provide proper custody of them, a situation that provides confidence to those who wish to have exposure to this asset.
On the other hand, making use of the blockchain capabilities, Tether allows each XAUT token to be represented in smaller parts (up to six decimal places), that is, up to 0,000001 troy ounces of fine gold.
What does this mean? That a person does not need to buy 1 full XAUT token, but can instead buy parts as small as 0,000001 XAUT. Something similar to what you do with Bitcoin, you don't have to buy a complete one, you can buy satoshi (which are its smallest parts).
In this way, XAUT holders get the combined benefits of physical and digital assets. XAUT token holders will be able to enjoy gold ownership while avoiding the drawbacks associated with physical gold, such as high storage costs and limited accessibility.
How does Tether's XAUT work?
The operation of XAUT is quite simple.
First of all, it is a token developed on the ERC-20 standard deployed on the Ethereum network. In fact, it has been available since December 8, 2022 on said network. Being an ERC-20 token, it can be easily integrated into other Ethereum-compatible networks.
In addition, in order to maintain stability in the linkage system between the XAUT token and its value with respect to a troy ounce of gold, Tether Gold manages the purchase of London Good Delivery gold. This includes ensuring its correct custody, in order to maintain a physical mass of the precious metal that supports the issuance of your token. With this, it seeks to avoid price fluctuations, mistrust in the token or events that may alter its tokenomics.
XAUT follows the same issuance system as USDT, but with greater guarantees. The token issuance process is replicated in the purchase of physical gold and its custody, following international financial standards.
For the rest, we are dealing with an ERC-20 token, with the same capabilities that we are used to seeing within the crypto ecosystem.
Advantages of the XAUT token
XAUT has advantages for everyone who wants to invest in gold:
- XAUT is an ERC-20 token which means it can easily move on the Ethereum blockchain and be transferred easily and cheaply.
- It has a physical reserve of gold to support its issuance, which provides greater security to the token.
- XAUT buyers can Verify your ownership rights to the physical gold bars. For example, they can know the details of the bar such as its serial number and other data, this allows them to identify it through a verification process. In fact, if you own 1 XAUT token, you will be able to withdraw physical gold as long as you are on Swiss territory.
- Another advantage is that it offers access to a completely sovereign monetary unit. Gold is a raw material accepted in international markets, which allows value to be transferred between different countries without major complications.
- The gold market is extremely liquid, and it has a global capitalization of more than 11 trillion dollars, which makes it one of the most valuable commodities on the planet.
- For institutions, XAUT is an excellent asset. Firstly, because it gives you direct exposure to it, as well as verifiable ownership of the bullion.
- There are no custody fees, just a one-time fee of 25 basis points when buying or trading a XAUT from TG Commodities Limited, which is the Tether affiliate in charge of all these operations.
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