Tokenization platform Theo has secured $100 million to launch thUSD, a novel “gold-powered stablecoin.” Unlike traditional stablecoins backed by cash and Treasuries, thUSD derives its stability from Theo’s existing thGOLD token. The company aims to generate yield for holders through a dual mechanism involving gold-backed lending agreements and strategic futures trading.
Theo has raised $100 million for a stablecoin tied to gold prices. The firm expects its new token, thUSD, to generate yield from its underlying asset and futures positions on platforms like Hyperliquid.
The product represents an attempt to supplant stablecoins backed by cash and U.S. Treasuries. Instead, thUSD will seek parity with the dollar based on reserves of thGOLD, a yield-generating token Theo introduced in January.
That thGOLD token is backed by secured lending agreements with gold retailers like Singapore’s Mustafa Gold. Theo Chief Investment Officer Iggy Ioppe told Decrypt that the arrangement allows retailers to hedge their exposure to gold prices.
“For them, it is hedging,” he said. “They can stick to their business of producing jewelry and selling it, and that makes their business much more predictable.”
When thUSD is minted, the company will simultaneously short gold futures through venues like the CME to mitigate exposure. By holding a long position via thGOLD while shorting futures, Theo aims to capture the spread between spot and futures prices.
Ioppe said the firm plans to short gold on crypto-native venues including Binance and Hyperliquid. He estimated the strategy could deliver 10% annualized yields under favorable conditions.
The firm’s core product, thBIll, debuted last July as a tokenized money-market fund. Ioppe noted the company has focused on “risk-off assets” like T-bills and gold due to current market conditions.
“We’re in a bear market for crypto now,” he stated. “These are things that you invest in when you’re not feeling bullish, so there is enormous demand now on-chain.”
Gold prices have retreated from record highs near $5,300 per ounce this month. According to Yahoo Finance, they have still risen approximately 67% over the past year.
The tokenized gold market is currently dominated by Tether and Paxos. On Monday, Tether Gold and PAX Gold were valued around $2.75 billion and $2.5 billion respectively, according to CoinGecko.
In decentralized finance, thUSD will be compatible with lending protocols like Morpho that support real-world assets. Investors must register and provide personal information for a whitelist to access Theo’s products initially.
“You can access it from 200 countries,” Ioppe said. “Once the token is on-chain, then it’s permissionless in DeFi, which is our whole North Star.”
