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How USDXL Works

USDXL is a flexible, decentralized overcollateralized stablecoin on the HyperEVM Mainnet. It exists as an ERC20 token designed to maintain a stable value targeting parity with the U.S. dollar, regardless of market conditions. USDXL integrates natively into the HypurrFi Protocol as a new asset, making the interaction process familiar to users of the protocol:

USDXL follows a simple mint and burn mechanism:

  • Minting: USDXL is created when users supply collateral worth more than the USDXL they wish to mint
  • Burning: USDXL is burned when users repay their debt or during liquidations
  • Interest: USDXL accrues interest when borrowed, with rates determined by HypurrFi Governance

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USDXL Implementation

While borrowing USDXL feels similar to borrowing other assets on HypurrFi, its underlying implementation is unique. USDXL’s configuration includes special mechanisms designed to maintain price stability and ensure efficient market operation.

Key implementation features:

  • Direct integration with HypurrFi’s lending markets
  • Overcollateralization requirements
  • Automated liquidation mechanisms
  • Smart contract-based price stability features

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Interest Rate Model

The interest rate mechanism is fundamental to USDXL’s stability. Unlike traditional lending markets where rates fluctuate based on supply and demand, USDXL’s interest rate model is:

  • Directly configurable
  • Designed to maintain price stability
  • Structured to ensure protocol sustainability

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Protocol Integration

USDXL is deeply integrated with HypurrFi’s core protocol features:

  1. Collateral Management

    • Multiple collateral types supported
    • Real-time collateral value tracking
    • Automated risk assessment

  2. Liquidation Mechanism

    • Efficient liquidation processes
    • Health factor monitoring
    • Collateral safety margins

  3. Treasury Integration

    • Interest flows to HypurrFi DAO treasury
    • Sustainable revenue model
    • Community-controlled funds

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Risk Management

HypurrFi implements multiple layers of risk management for USDXL:

  1. Protocol Level

    • Overcollateralization requirements
    • Liquidation thresholds
    • Price oracle security

  2. Market Level

    • Supply caps
    • Borrow limits
    • Interest rate controls

  3. Technical Level

    • Audited smart contracts
    • Emergency pause mechanisms
    • Oracle redundancy

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Smart Contract Architecture

The USDXL system consists of several interconnected smart contracts:

  • USDXL Token Contract: Core ERC20 implementation
  • Lending Pool: Manages borrowing and collateral
  • Price Oracle: Provides real-time price feeds
  • Treasury: Handles interest collection
  • Governance: Controls protocol parameters