Tether Launches XAUt0 Gold Token Across Multiple Blockchains

As digital assets continue to evolve, there is a growing trend of bringing real-world value onto the blockchain. One notable development in this space is XAUt0, a new iteration of Tether Gold designed to operate across multiple blockchains. Built on LayerZero’s OFT standard, XAUt0 allows users to transfer gold-backed tokens between different networks without relying on risky bridges or wrapped tokens.

In a recent Q&A, Lorenzo R, Co-Founder of USDT0, provided insights into how XAUt0 works and its significance for the future of crypto and commodities. Lorenzo explained the concept of “omnichain” in simple terms, detailed the structure of gold ownership behind the scenes, and discussed the reasons for launching on Telegram’s TON network first. He also highlighted the broader vision of making real, redeemable assets like gold more accessible without the complexities of traditional finance.

XAUt0 represents a significant enhancement over the original XAUt, which has been live on Ethereum since 2020. With USDT0, Tether has expanded to 11 additional chains and continues to do so at scale. USDT0 acts as the connective tissue that enables Tether’s ecosystems to thrive in today’s multi-chain world. XAUt0, on the other hand, is designed to expand the asset across chains, eliminating liquidity fragmentation and the need for legacy mesh solutions. The main enhancement of XAUt0 is its cross-chain nature, making it more accessible for users and serving as the primary expansion and interoperability solution for XAUt.

Each XAUt0 token represents ownership of one fine troy ounce of LBMA-standard gold stored in a Swiss vault. Legally, each XAUt token is an IOU backed by physical gold held by TG Commodities S.A. de C.V. in Switzerland. TG Commodities holds the title to the bars, and token-holders’ right to that gold comes from a contract with Tether Gold under Swiss custodial rules. The redemption process involves verifying the account with TG Commodities and requesting redemption, with Swiss law governing the proof of entitlement and the shipment of the metal.

XAUt0 provides direct ownership of gold, unlike ETFs or synthetic tokens. Holding XAUt0 differs from holding a share of a gold ETF or a crypto-backed token like PAXG in terms of legal rights, audits, and risk of loss. XAUt0 tokens are directly tied to XAUt tokens locked on Ethereum, which are then linked to a specific ounce of LBMA-standard gold in a Swiss vault. The reserves of XAUt0 are tracked on-chain and are auditable by everyone. For every XAUt0 in circulation, one XAUt on Ethereum backs it, and those XAUt tokens are audited by TG Commodities.

XAUt0 is classified as a stablecoin, denominated in ounces of gold rather than in USD. It is seen as a modern, on-chain alternative for storing value amidst global economic uncertainty, combining the scarcity and inflation-hedging power of physical gold with the accessibility provided by USDT0. Regulation-wise, XAUt0 is not a different token but rather the representation of XAUT on different chains compared to Ethereum. The system can be imagined similarly to other omnichain representations of certain assets.

The XAUt0 smart contracts and LayerZero integrations have been audited by security firms, with multiple fail-safes designed to protect against protocol or contract exploits. LayerZero protocol includes Dual DVN Verification and LayerZero Endpoint Validation to ensure solvency. USDT0’s non-custodial design minimizes external dependencies, keeping reserves fully intact and secure on Ethereum. The token’s architecture ensures that no minting or redemption can occur without verified, validated communication. Additionally, every USDT0 or XAUt0 contract has been audited, deployment verified, and USDT0 maintains the fifth-largest bug bounty in the world.

The first deployment of XAUt0 is on TON through Telegram’s Wallet. TON was chosen as the launch platform due to the longstanding relationship between the teams and their shared commitment to permissionless innovation. This rollout reflects a shared vision of making programmable, physically backed assets like gold as accessible and seamless to use as any native digital token. More chains are expected to join the XAUt0 network soon, with some focused on the DeFi aspect.

Looking ahead, USDT0 is evaluating new chain deployments based on user engagement, ecosystem demand, and the potential for growth and long-term value for the Tether ecosystem. The broader vision for tokenized commodities in DeFi involves bringing Tether assets to chains that offer the most potential for growth, including users, volume, and use cases. While there are no specific plans mentioned for issuing other omnichain tokens for commodities like oil and silver, the focus remains on expanding Tether’s presence in the decentralized ecosystem.