The rapid rise of the gold stablecoin XAUt, Tether targets the "digital gold" new track

Recently, cryptocurrency market analysis reports indicate that USDt's growth momentum is strong, and surpassing Ethereum seems to be just a matter of time. Indeed, USDt's market capitalization is rapidly expanding, which is mainly due to the increased demand for margin trading from cryptocurrency traders, the development of certain gray industries, and the rising demand for the US dollar in some countries or regions. However, while USDt is in the spotlight, other asset-backed stablecoins issued by Tether are less mentioned.

According to official data from Tether, in addition to USDt, the company has also issued stablecoins pegged to the Euro, Renminbi, and Gold, namely EURt, CNHt, and XAUt.

Although EURt was launched as early as 2014, its current market value is only about 45 million euros. CNHt was issued in September 2019, and its current market value is about 23 million yuan. The market value, trading volume, and number of listed exchanges for these two stablecoins are relatively limited.

In contrast, XAUt, which was launched at the end of January this year, has performed remarkably well. According to data, just over four months after its launch, XAUt's market capitalization has reached approximately $86 million, with a 24-hour trading volume exceeding $110,000. It is currently listed on five trading platforms.

The rapid growth of XAUt is closely related to the current economic situation. The economic crisis triggered by the global spread of the COVID-19 pandemic has provided favorable conditions for its market value to grow rapidly.

A senior executive of a trading platform stated that each XAUt is backed by one ounce of physical gold. This means that the growth in XAUt's market value actually reflects investors' demand for physical gold.

Industry insiders believe that users interested in XAUt are mainly traders who want to conveniently gain exposure to gold and have investment interests in both cryptocurrencies and gold. XAUt provides retail and professional investors with a convenient way to invest in gold, especially against the backdrop of aggressive monetary policies implemented by central banks worldwide and increasing risks of economic recession, the demand for investors to hedge risks through XAUt has significantly increased.

Compared to traditional gold investment tools, XAUt has some unique advantages. Investors do not need to pay custody fees and can redeem physical gold with XAUt, which is not available with traditional gold ETFs or futures products. Additionally, XAUt can be divided up to six decimal places and supports 24-hour trading, all of which have contributed to its rapid market capitalization growth.

Currently, multiple trading platforms have begun to build a rich variety of trading products around XAUt. According to data, certain trading platforms account for approximately 85% of the trading volume of XAUt. These platforms mainly offer derivative trading of XAUt, including perpetual contracts, leverage trading, and margin trading.

Despite the rapid development of XAUt, there are differing opinions in the industry regarding whether it can become the next USDt. Some believe that XAUt's volatility is much higher than that of USDt, and that issuing stablecoins anchored to gold is more complex than those anchored to fiat currency, making it difficult for XAUt to reach USDt's market capitalization scale. Others believe that stablecoins anchored to gold may reach a market capitalization of hundreds of billions of dollars in the future.

XAUt still faces some challenges during its development, such as the shortage of gold supply. In addition, the market for stablecoins anchored to gold is highly competitive, with multiple projects having failed, and a large number of similar projects still existing.

With the evolution of the cryptocurrency market, whether Tether can achieve success in the "digital gold" space through XAUt remains to be seen.