The rising demand for a natively-issued dollar-pegged 1:1 dollar-backed asset in decentralized finance (DeFi) led to the creation of USDX, the first native stablecoin launched on Flare Network by HT Digital Assets.
Amid Markets in Crypto-Assets Regulation (MiCA)-induced compliance stress on Tether (USDT), Alessio Quaglini, co-founder and CEO of Hex Trust, explains how USDX aims to be a cornerstone stablecoin for DeFi applications in an interview with Cointelegraph.
USDX is fully backed by cash and cash equivalents, including short-term Treasury bills (T-Bills) and serves a dual purpose as both a stablecoin and gas token in the Flare ecosystem.
According to Quaglini, “USDX is the first native stablecoin on the blockchain for data, Flare, and is brought to life by HT Digital Assets, Hex Trust’s tokenization ecosystem.”
The Hex Trust CEO said that USDX will become a cornerstone stablecoin in DeFi with “aims to integrate further within DeFi applications” to become “a reliable asset for users.”
Related: Can Treasury-linked stablecoins bring stability to DeFi?
How does USDX differ from other stablecoins?
“USDX is a 1:1 USD-referencing stablecoin intended to be fully backed by cash and cash equivalents.
Quaglini said these reserves, primarily consisting of 1-3 month T-Bills, “are securely held within the confines of global, tier-1 financial institutions” to ensure the stablecoin’s value and resilience for holders.
USDX will also be available for use “on Clearpool’s T-pool to generate rewards,” a decentralized liquidity pool (LP) within the Clearpool protocol specifically designed to facilitate yield generation through stablecoin deployment.
Despite the potential Quaglini details for the stablecoin, he also said it could face market competition from established stablecoins, like the regulated Circle USD (USDC), and come up against “regulatory hurdles in different jurisdictions.”
Related: Bitcoin DeFi project Solv to launch native token on Hyperliquid
Yield generation and Flare functionality
Yield generation, often likened to interest on savings in the TradFi space, offers holders a variable or fixed interest rate — or ‘yield’ — via the USDX T-Pool on Clearpool.
The Hex Trust CEO said that holders could earn rewards in both USDX and FLR without lock-up periods, adding that the stablecoin’s integration with “FAssets” will enable users to use non-smart contract tokens like Bitcoin (BTC) in DeFi for yield and crosschain bridging.
According to Quaglini, HT Digital Assets is launching USDX on Flare to become “a building block for DeFi and bridging ecosystems,” functioning as a native stablecoin and gas token.
“From borrowing and lending protocols to perpetual futures exchanges and Flare Labs’ FAsset system, USDX provides a stable foundation for innovation on the network,” he said.
Related: Trump’s DeFi project’s December crypto buying spree nears $45M
FAssets and USDX
Hugo Philion, co-founder of Flare Network and CEO of Flare Labs, told Cointelegraph that the demand for a natively-issued dollar-pegged 1:1 Dollar-backed asset prompted the creation of USDX.
Described as a “foundational asset” for the DeFi ecosystem by Quaglini, USDX plays a key role in the Flare ecosystem and can earn yield from Clearpool “while locked in agent vaults as cUSDX,” according to Philion.
The Flare Labs CEO also added that this yield opportunity “makes the FAsset system far more economically desirable from the agent perspective” but that FAssets cannot be released until the Flare Times Series Oracle has a reliable price for USDX.
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