Aave interest bearing USDT

aUSDT

aUSDT is an interest-accruing token that represents a USDT deposit in the Aave lending market.

Risk Rating
Watch Out
$1.00
0.07%
Summary
What we like
aUSDT is an interest-accruing version of USDT. USDT provides easy on-ramp and off-ramp to convert your USD into digital dollars that are backed 1:1 by underlying reserves.
What we like less
aUSDT is exposed to systemic risk of other assets on the Aave lending platform. USDT also has questionable collateral backing given limited Tether audits and reserve reporting.
What it means for you
aUSDT offers you a great way to earn yield on your USD, while maintaining exposure to a highly liquid instrument to hedge your portfolio in volatile market conditions.

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Information
Blockchain
  • Ethereum
Key Metrics
  • Volume (24H): $51.2K
  • ATH: $1.14 (05/19/2021)
  • ATL: $0.95 (05/19/2021)
Risk Assessment
Watch Out
Asset Strength

aUSDT is a large-cap asset with questionable collateral reserves. This asset depends on a centralized entity for custody services. This asset is exposed to the underlying risks of Aave V2, a protocol rated as Average.

aUSDT is a stablecoin that consistently trades within 10bps of its peg to USD, which makes it a great store of value.

Asset Tokenomics

aUSDT has an uncapped supply but has inflation control or burn mechanisms in place. aUSDT is a receipt of a USDT deposit in the Aave lending protocol and accrues interest.

Asset Volatility

aUSDT is a stablecoin that consistently trades within 10bps of its peg to USD, which makes it a great store of value.

Dependencies

Aave V3

Things to know about aUSDT

Who invented USDT?

USDT launched on the Ethereum mainnet in July 2014 by Brock Pierce, Craig Sellars, and Reeve Collins. Tether is one of the earliest stablecoins created that pioneered the fiat-collateralization model that is widely used today. Tether based out of Hong Kong is the sole entity responsible for creating and redeeming tokens as well as maintaining the 1:1 reserve backing.

How does aUSDT work?

aUSDT is a receipt of a USDT deposit in the Aave protocol on Ethereum and accrues interest. USDT is backed 1:1 by USD reserves held with a licensed custodian (Tether). The process of minting USDT tokens requires a KYC registration process with Tether. After receiving approval from Tether's compliance team, the user sends USD to Tether's bank account. Tether then uses the USDT smart contract to mint an equivalent amount of USDT. Lastly, the newly created USDT is sent to the user's on-chain address, while the deposited USD is held in reserve. The process for redeeming USDT back into USD is the same but reversed.

How secure is aUSDT?

aUSDT is exposed to the systemic risks of the Aave lending protocol as a default in one asset market can have a contagion effect across the entire platform. USDT is a centralized stablecoin that relies on a proof-of-reserve system to ensure its reserve assets match its circulating supply. However, the token has faced significant controversy since its inception due to its failure to provide audited reserve attestations by an independent auditor and its reserve reports do not specify the exact underlying assets. The reserve composition of USDT is considered riskier as it consists not only of cash and cash equivalents but also other assets and receivables from loans made by Tether to third parties. Further, USDT can "blacklist" any of its associated addresses at will. When a USDT address is blacklisted, it can no longer receive USDT and all of the USDT controlled by the address can no longer be transferred on-chain.

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