USDhl Architecture

USDhl is a fiat-backed stablecoin issued on Hyperliquid L1. Every USDhl is backed 1:1 by M, a wholesale dollar collateralized by short‑term U.S. Treasuries.

• Transparency: Reserve holdings are attested daily and streamed on‑chain (see M0 Reserves Dashboard).

• Convertibility: M is always redeemable 1 : 1 for U.S. dollars through M0’s minter. It is also swappable 1:1 for USDC via a continually rebalanced single tick Uniswap pool here.

Issuing USDhl: Lock & Issue

Workflow:

1. Acquire wrapped M: Swap USDC → wM via the deep 1 : 1 pool on Ethereum (Uniswap‑v3).

2. Lock M: Call transferMLikeToken on the Hyperlane Portal contract (Ethereum). The bridge locks the M and emits a Hyperlane message.

3. Issue USDhl: The Hyperliquid Hyperlane Portal verifies the message and mints the same amount of USDhl on HyperEVM.

Redeeming USDhl: Burn & Unlock

1. Burn: call transferMLikeToken on the Hyperlane Portal contract (HyperEVM side). USDhl is burned.

2. Unlock: the bridge verifies the burn and releases the locked wM back on Ethereum.

3. Cash Out: swap wM → USDC 1 : 1 or redeem wM with an AP for dollars.

M as a building block for USDhl

Actor	Action	Checkpoints
Minter	Sends USD to SPV bank account	Bank receipt on‑chain
SPV Operator	Purchases T‑Bills / repo, updates custody ledger	Custodian statement hash
Validator (Auditor)	Verifies collateral market value ≥ outstanding M	Signs message
Protocol	Executes minting fucntion – issues M to minter	On‑chain supply update
Burn flow	Minter returns M → protocol, receives burn request → SPV liquidates collateral and wires USD	Auditor signature + bank receipt

M0 retains market‑makers (MMs) under standing agreements to mint/redeem on demand, ensuring tight arbitrage bands and deep liquidity in primary pools.

Maintaining the USDhl Peg

Similar to other fiat-backed stables, USDhl maintains a $1 market value because there is a constant economic incentive to arbitrage it back to $1. Workflows provided below:

If USDhl < $1:

1. Buy discounted USDhl on HyperCore / AMMs.

2. Burn USDhl via bridge; receive M 1 : 1 on Ethereum.

3. Swap M → USDC at par; pocket risk‑free profit.

If USDhl > $1:

1. Acquire M for USDC 1 : 1 on Ethereum.

2. Lock M → mint USDhl.

3. Sell newly minted USDhl above $1; capture premium.

Because both legs settle within minutes and carry no price risk on M, arbitrage keeps USDhl tightly anchored around $1.