Add Collateral XAUt on USDT Market on Ethereum Mainnet

Proposals
1

Introduction

Proposal to list Tether Gold (XAUt) as collateral on the USDT market on Ethereum Mainnet. This initiative aims to enable XAUt holders to leverage their gold-backed tokens, borrowing USDT to engage in DeFi activities within the Ethereum ecosystem. Listing XAUt is expected to enhance liquidity and attract users seeking stable, gold-backed assets for DeFi strategies.

Type

Collateral deployment

Motivation

Tether Gold (XAUt) is a stablecoin launched in January 2020 by TG Commodities Limited, pegged 1:1 to one fine troy ounce of physical gold, compliant with the London Bullion Market Association’s Good Delivery standards. Each XAUt token represents ownership of physical gold stored in secure Swiss vaults, combining the stability of gold with blockchain’s efficiency. Operating as an ERC-20 token on Ethereum, XAUt offers easy transferability, divisibility up to six decimal places, and 24/7 trading, eliminating the high storage costs and accessibility issues of physical gold.

Listing XAUt as collateral on Compound will:

  • Enhance Utility for XAUt Holders: Allow users to borrow USDT against XAUt, enabling participation in yield farming, liquidity provision, and other DeFi opportunities without selling their gold-backed assets.

  • Attract Stable Asset Investors: Provide Compound users access to a low-volatility, gold-backed asset, appealing to those seeking stability in the volatile crypto market.

  • Increase Compound’s Market Diversity: Adding XAUt diversifies Compound’s collateral options, strengthening its position as a leading DeFi lending platform.

  • Boost Liquidity and Adoption: With a market cap of approximately $888M and growing DeFi integrations (e.g., Euler Finance), XAUt’s inclusion is likely to drive borrowing activity and user engagement on Compound.

This proposal aligns with Compound’s mission to offer robust DeFi solutions while providing XAUt holders a secure way to leverage their assets in a trusted protocol.

Important Links

Next Steps

I invite the Compound community to provide feedback and recommendations for listing XAUt as collateral. Discussions will help refine the proposal and ensure alignment with community interests and protocol safety.

3 Likes
DAOplomats Delegate Platform
2

Borrow stables for gold as collateral makes gold very interesting again.

It is also a no-brainer considering its low volatility and its undisputed status as SoV (Store of Value)

I support the proposal.

4 Likes
3

I’ve been accumulating tokenized gold while downsizing my Gold ETF holdings, as I believe it’s the better solution, and can’t see why DeFi is still hesitant to embrace it. Borrowing stables against gold is something that would have been completely unheard of 5 years ago and it’s now more than feasible, but its onchain adoption has been slower than it should lately.

The demand has already been proven, with Aave XAUt market having hit the debt ceiling, which makes a strong case of PMF. I would like to see Compound listing it soon to push its adoption within the industry and absorb a big chunk of this demand.

1 Like