The Rapid Rise of the Gold Stablecoin XAUt

XAUt, launched by Tether as a gold stablecoin, has performed brilliantly since its launch at the end of January this year. In just over 4 months, its market value has risen to around $86 million, with a daily trading volume exceeding $110,000, and it is currently listed on 5 exchanges.

The rapid growth of XAUt is attributed to the safe-haven demand brought about by the global economic crisis. Each XAUt is anchored to 1 ounce of physical gold, providing investors with a convenient way to access gold exposure. The aggressive monetary easing policies of central banks like the Federal Reserve and the economic recession triggered by the COVID-19 pandemic have all driven investors to hedge risks through XAUt.

Compared to traditional gold ETFs, XAUt does not require custody fees, can be redeemed for physical gold, and supports 24-hour trading and small denominations. These advantages attract various users, including retail investors, professional traders, and institutional investors.

Currently, XAUt trading is mainly concentrated on three platforms: Delta Ex, FTX, and Bitfinex, focusing on derivatives. Each platform has launched XAUt perpetual contracts, futures, and other products, and plans to introduce infrastructure such as the Lightning Network.

However, XAUt still faces challenges in growing into the next USDt. The competition among gold-backed stablecoins is fierce, and XAUt needs to compete with rivals like PAX Gold. At the same time, gold is more volatile than the US dollar, making the issuance and reserve management of XAUt more complex.

Nonetheless, industry insiders generally believe that XAUt is expected to reach a market value of hundreds of billions of dollars in the future. Apart from "central bank digital currency" and "peer-to-peer electronic cash", it remains to be seen whether Tether can regain the reputation of "digital gold" through XAUt.