Stablecoin Protocol USDT0 Aims to Bring Tokenized Gold Closer to DeFi

Stablecoin protocol USDT0 is giving tokenized gold a crypto native spin, aiming to make the world’s oldest stores of value compatible with decentralized finance (DeFi) applications.

The platform is introducing the XAUT0 token, which builds on Tether Gold (XAUT) but integrates an omnichain architecture to expand its utility for trading and as collateral on lending protocols. The token uses LayerZero’s Omnichain Fungible Token (OFT) standard to move seamlessly across blockchains without relying on bridges or wrappers.

Tether’s XAUT corresponds to one troy ounce of gold stored in a Swiss vault, linked to a specific bar meeting London Bullion Market Association standards. It’s also redeemable for physical gold.

The new offering follows the protocol’s first offering USDT0, a unified liquidity layer for Tether’s USDT stablecoin that’s available on ten blockchains including Arbitrum, Optimism and Kraken’s Ink. Since launching earlier this year, the token ballooned to a $1.3 billion circulating supply.

“I am a big bitcoin BTC guy myself,” Lorenzo R., co-founder of USDT0 told CoinDesk in an interview. “But I also like gold and would love to have an easier and more straightforward way to acquire and actually be able to use it in my everyday life.”

“We are still very early when it comes to actual integration of real-world assets and commodities into DeFi protocols,” he added.

The token’s first deployment will occur on The Open Network (TON), the blockchain powering popular messaging app Telegram’s crypto features. Telegram users will be able to buy and use the gold-backed token directly within Wallet in Telegram, potentially introducing the tokenized asset to millions of users. TON was originally developed by Telegram, then continued as an independent operation after settling a lawsuit by the U.S. Securities and Exchange Commission (SEC) in 2020.

A broader promotional rollout of XAUT0 to more blockchains is planned for Q3 this year.

“There are multiple chains that we’re going to be launching on, and some of these chains are going to have more DeFi spin to it,” Lorenzo R. said.