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What Is USDXL?

USDXL is the native overcollateralized synthetic dollar backed by HypurrFi lending market deposits.

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Overview

USDXL is a decentralized, overcollateralized synthetic dollar. It can currently only be minted against assets supplied to the HypurrFi Protocol. USDXL targets parity with the U.S. Dollar. As a decentralized synthetic dollar on the HyperEVM Mainnet, USDXL is minted directly by users. Following HypurrFi’s lending protocol standards, users must supply collateral at a specified collateral ratio to mint USDXL. When a user repays their borrow position (or undergoes liquidation), the USDXL is returned to the HypurrFi pool and burned. Interest payments generated from USDXL minting are directed to the HypurrFi treasury and the principal amount is burned.

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Why USDXL?

Synthetic dollars play a crucial role in the DeFi ecosystem, offering a fast, efficient, and borderless way to transfer stable value. With various alternatives in circulation, USDXL brings unique value to the HyperEVM ecosystem.

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HypurrFi’s Strategic Position

HypurrFi already possesses the infrastructure to support synthetic dollar functionality, serving as the primary Facilitator for trustlessly minting and burning USDXL tokens. The protocol’s existing lending market infrastructure, including collateral management and liquidation mechanisms, naturally supports USDXL integration as part of an Aave v3 fork.

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Key Differentiating Factors

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Multi-Collateral Support

Users can mint USDXL against their entire portfolio of supplied collateral assets within HypurrFi, rather than being limited to single-asset vaults. This multi-collateral approach offers:
  • Greater flexibility in managing positions
  • Simplified health factor management
  • Efficient use of diverse collateral types
  • Vast asset selection as native assets transit from Hyperliquid Core DEX to HyperEVM

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Interest-Earning Collateral

Collateral supplied to mint USDXL continues to earn interest from HypurrFi’s lending markets, effectively reducing the net cost of borrowing USDXL.

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Trustless Minting

The minting and burning of USDXL is handled trustlessly through HypurrFi’s smart contracts, ensuring transparency and reliability in the synthetic dollar’s supply mechanics.

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The UST Reserve

Coming soon, the Reserve is the key differentiator for USDXL. Unlike most synthetic dollars that either rely solely on user collateral or direct fiat backing, USDXL continuously allocates protocol profits to build and maintain a large, productive reserve of tokenized U.S. Treasuries. This reserve serves three critical functions:
  • Emergency Backstop: Provides additional security beyond user collateral in case of market stress or black swan events
  • Yield Stabilizer: Treasury yields provide a consistent source of revenue that can be used to stabilize returns
  • Long-term Revenue Generator: Creates sustainable cash flow for the protocol and potentially for USDXL holders

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Treasury Acquisition Process

Protocol revenue from various sources (lending fees, liquidation fees, etc.) follows this path:
  1. Revenue is collected in the protocol’s operational treasury
  2. A governance-determined percentage is allocated to purchase tokenized U.S. Treasuries
  3. These treasuries are added to the UST Reserve, increasing the backing ratio for USDXL
For developers and integrators, more detailed information can be found under the Developers section.