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USDXL
Repay and Liquidate
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USDXL
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On this page
Repaying USDXL
How Repayment Works
Example Repayment Scenario
Liquidations
Liquidation Process
Avoiding Liquidation
Protection Strategies
Important Considerations
Technical Details
USDXL
Repay and Liquidate
When users repay their USDXL debt or undergo liquidation, the USDXL tokens are burned by the protocol, effectively removing them from circulation.
Repaying USDXL
The repayment process involves several automated steps:
How Repayment Works
When repaying USDXL, the protocol performs:
Smart contract-based collateralization checks
Token transfer from user to protocol
Burning of repaid USDXL
Interest distribution to treasury
Unlike traditional assets where interest is split between suppliers and the protocol, USDXL’s unique design means:
Principal amount is burned
Interest payments go directly to the HypurrFi DAO treasury
No supplier payments needed
Example Repayment Scenario
Let’s walk through a typical repayment:
Initial State:
User has 1000 USDXL debt tokens
Debt grows to 1010 USDXL (1000 principal + 10 interest)
Repayment Process:
User approves HypurrFi Protocol to use their USDXL
User initiates repayment
1000 USDXL (principal) is burned
10 USDXL (interest) transfers to treasury
Debt tokens are burned
Liquidations
USDXL positions can be liquidated like any other asset in HypurrFi when they become unhealthy.
Liquidation Process
When a position becomes eligible for liquidation:
Liquidators can repay up to 50% of the outstanding borrowed amount
They receive collateral at a discount
The difference (liquidation penalty) serves as their incentive
Avoiding Liquidation
Users should:
Monitor their health factor
Maintain it above 1.0
Add collateral when needed
Repay debt to improve position health
Key factors affecting liquidation risk:
Market price fluctuations
Collateral value changes
Health factor movements
Protection Strategies
Maintain Safe Ratios
Keep health factor well above minimum
Use multiple collateral types
Monitor market conditions
Quick Response Options
Add more collateral
Partially repay debt
Adjust position size
Important Considerations
Always maintain a healthy collateral ratio
Monitor your health factor regularly
Understand how market movements affect your position
Have a liquidation prevention strategy
Keep some emergency collateral available
Technical Details
For developers and integrators:
Smart Contract Documentation
Risk Parameters
Integration Guides
Supply
Flash Minting
Assistant
Responses are generated using AI and may contain mistakes.