Knowledge Base

• USDX is a yield-bearing digital dollar backed 1:1 by municipal bonds in a bankruptcy-remote setup.

• A share of XFT Municipal Income Fund that is recorded on the blockchain.

• Pay retirees with yield-bearing collateral pushed from pension portfolio. Eliminate risk/return tradeoff in liquidity investing via:

• Stable $1 price
• Internet-native liquidity
• Daily tax exempt income

• Preserve asset bases by eliminating forced liquidations and continue to earn income even after benefits are distributed. Instantly send spendable dollars to retirees 24/7/365 globally via a cryptographically secure, transparent, and immutable payment system.

• Customers may purchase USDX with USD via XFT API or web app.

• USDX is a yield-bearing digital dollar backed 1:1 by municipal bonds. Interest income from underlying bonds is passed on to token holders daily.

How does it work

• XFT uses a process called "rebasing" or changing the total supply of tokens, a reward multiplier, and share-based accounting to distribute bond income to token holders. Under the hood, USDX holders own a fixed amount of shares in a mutual fund.
  

• balanceOf(account) = shares[account] * rewardMultiplier

• When underlying mutual fund assets accrue yield, XFT increases the reward multiplier. This proportionally mints additional USDX tokens to each holder's wallet based on the number of shares they own.

• shares - map of account share of the total supply.
• rewardMultiplier - sum of addRewardMultiplier.

Rebasing Example

• If a user purchased 100 USDX tokens when the reward multiplier was 1.00, that user would receive 100 shares. If the reward multiplier was updated to reflect a 3.8% return, that user would then have 103.8 USDX tokens but still have the same 100 shares.

Consumer

• Step 1 - KYC Verified Customer submits a request to acquire XFT Tokens on the XFT Website and sends Fiat funds.
• Step 2 - Fiat funds deposited are held or invested into the Reserves.
• Step 3 - XFT transfers the equivalent number of XFT Tokens to the KYC Verified Customer. XFT Tokens enter circulation (Amount of Fiat currency deposited by user, less fees = amount of XFT Tokens issued to the user)
• Step 4 - If a KYC Verified Customer wishes to redeem, the user deposits XFT Tokens with XFT through the XFT Website.
• Step 5 - XFT removes the XFT Tokens from circulation and uses a corresponding portion of the Reserves to facilitate the redemption.
• Step 6 - Fiat currency is sent to the KYC Verified Customer's bank account (Amount of Fiat currency paid to a user = amount of XFT Tokens redeemed by the user, less fees).

Institutional Fund Flow

• Purchase Process:
  1. Institutional Client initiates Fedwire for purchase
  2. Custodian receives Fedwire in clearing account
  3. Global Cash Services creates case upon receipt of wire
  4. TA (Transfer Agent) reconciles transaction with wired funds received
  5. Treasury/Fund Accounting initiates wire from clearing to fund account
  6. Custodian receives wire into fund account
• Liquidation Process:
  1. TA creates case for outgoing wire
  2. Global Cash Services initiates wire to the client
  3. Treasury/Fund Accounting initiates wire from fund account to clearing account
  4. Custodian fund account wires to clearing account
  5. Custodian clearing account wires to client
  6. Institutional Client receives wire

• Burn = Withdraw = Offramp = Redeem
• Mint = Deposit = Onramp = Create

• USDX operates in a very similar way as other fiat-backed stablecoins like USDC or USDP. Primary Users (those who have an account with XFT) can mint and redeem USDX at $1. Both Primary and Secondary users can freely transfer their USDX, deposit it into smart contracts, and interact with any protocol that is compatible with the ERC20 standard.

• Goal: Reduce money supply without rate increase

BURN

• - qt bond maturities
• - qt bond interest
• - qt bond interest
• - discount window principal repayment
• - currency swap line repayment
• - emergency facility repayment
• - foreign central bank usd withdrawal
• - interest rate arbitrage (total burn)

LESS CREATION

• - raise IOER
• - reverse repo
• - term deposits
• - raise discount rate
• - raise discount rate
• - duration arbitrage

BALANCE SHEET

• - direct bond sale
• - asset swap

• An in-kind transfer allows investors to move assets like stocks, mutual funds or other securities between accounts without selling them or converting them to cash.

• --

• The fund seeks to provide as high a level of interest income exempt from federal income tax as is consistent with liquidity and stability of principal.

• Normally investing in municipal money market securities.
• Normally investing at least 80% of assets in municipal securities whose interest is exempt from federal income tax.
• Potentially investing up to 20% of assets in securities subject to state and/or federal income tax.
• Potentially investing more than 25% of total assets in municipal securities that finance similar types of projects.
• Investing in compliance with industry-standard regulatory requirements for money market funds for the quality, maturity, liquidity, and diversification of investments.

• The Fund invests exclusively in short-duration U.S. Government Securities. Interest income from these securities is recognized each market day and is reflected in the Fund's NAV.

• Municipal Market Volatility. The municipal market is volatile and can be significantly affected by adverse tax, legislative, or political changes and the financial condition of the issuers of municipal securities.
• Interest Rate Changes. Interest rate increases can cause the price of a money market security to decrease.
• Income Risk. A low or negative interest rate environment can adversely affect the fund's yield.
• Foreign Exposure. Entities providing credit support or a maturity-shortening structure that are located in foreign countries can be affected by adverse political, regulatory, market, or economic developments in those countries.
• Issuer-Specific Changes. A decline in the credit quality of an issuer or a provider of credit support or a maturity-shortening structure for a security can cause the price of a money market security to decrease.

• You could lose money by investing in a money market fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The fund may impose a fee upon the sale of your shares. An investment in the fund is not a bank account and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. XFT and its affiliates, the fund's sponsor, are not required to reimburse the fund for losses, and you should not expect that the sponsor will provide financial support to the fund at any time, including during periods of market stress. The municipal money market can be significantly affected by adverse tax, legislative or political changes and the financial condition of the issuers of municipal securities. Interest rate increases can cause the price of a money market security to decrease. Entities located in foreign countries can be affected by adverse political, regulatory, market, or economic developments in those countries. A decline in the credit quality of an issuer or a provider of credit support or a maturity-shortening structure for a security can cause the price of a money market security to decrease.

• A non-money market fund's SEC yield is based on a formula developed by the SEC. The method calculates a fund's hypothetical annualized income as a percentage of its assets.

• A security's income, for the purposes of this calculation, is based on the current market yield to maturity (for bonds) or projected dividend yield (for stocks) of the fund's holdings over a trailing 30-day period. This hypothetical income will differ (at times, significantly) from the fund's actual experience. As a result, income distributions from the fund may be higher or lower than implied by the SEC yield.

• The SEC yield for a money market fund is calculated by annualizing its daily income distributions for the previous 7 days.

• The Fund is a Delaware Series Trust, registered as a non-diversified, closed-end management company under the 1940 Act. The Board of Trustees may authorize multiple series or classes of shares. The Fund does not intend to hold annual shareholder meetings.

• The Fund is a series of XFT Municipal Trust, which is an open-end investment company under the Investment Company Act of 1940 Act (the “1940”), which confers certain rights to all shareholders, including, among other rights, the right to: (i) vote for the board of trustees; (ii) approve the Fund’s investment management agreement; and (iii) vote on other Fund-specific matters.

• The following example shows how to onramp into USDX via ACH Push.

Request

curl --location --request POST 'https://api.xft.finance/v0/transfers' \
--header 'Content-Type: application/json' \
--header 'Api-Key: <API Key>' \
--header 'Idempotency-Key: <generate a idempotency-key>' \
--data-raw '{
    "amount": "1000.00",
    "developer_fee": "0.0",
    "on_behalf_of": "customer_123",
    "source": {
        "payment_rail": "ach_push",
        "currency": "usd"
    },
    "destination": {
        "payment_rail": "ethereum",
        "currency": "usdx",
        "to_address": "0xdeadbeef"
    }
}'

Response