Knowledge Base

• XFT is a full-stack digital asset management firm. Our flagship product, USDX, is a tax-efficient yield-bearing digital dollar for retirement systems. We also issue bespoke stablecoin products for corporations, endowments, and governments.

• Our hypothesis is that because blockchain enables transfers at NAV, there will be less redemption at NAV, thus less outflows, asset base erosion, run risk. Swaps skip the USD step.

• Blockchain P2P transferability can only reduce redemptions if the entire payment value chain works. This includes commercial bank deposits. For example, if retirees can’t spend shares at Walmart or traders can’t use shares as trading collateral, tokenized mutual fund or stock utility decreases for the pension. Fortunately, XFT's ecosystem offers 13000+ public, private, and alternative onchain assets, including WMTX.

• Our mission is to leverage blockchains to build resilient internet capital markets.

• Learn more: xft.finance/dollars

• 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.

BTCX is a yield-bearing stablecoin backed by bitcoin.

• Corporate treasuries demand bitcoin exposure but sacrifice cash flow risk via holding bitcoin directly. Since BTC price appreciates, realizing income means selling and capital gains tax implications.

• With XFT's BTCX Tokenized Trust, corporates can allocate treasuries to bitcoin without liquidity risk, cash flow risk, or extra capital gains tax implications. BTCX provides:

• • Bitcoin yield-profile
• • Tax-efficiency
• • Daily cash flow
• • Stable $1 unit price
• • Internet-native collateral mobility
• • Passively-managed, compliant investment vehicle

• The health of a business is measured by its cash flow. Invest in bitcoin the right way today.

• The International Deposits Network (IDN) is public infrastructure home to tokenized deposits from 2170 US-chartered and 50+ global commercial banks.

THE PROBLEM

• - Pensions can’t earn yield on cash
• - Teachers can’t buy groceries with stocks

HOW TO DISTRIBUTE BENEFITS + BUY GROCERIES VIA ASSET SWAP

• Instead of:
• Sell stocks → get cash → distribute retirement benefits → buy groceries

• Pensions:
• Tokenize stocks → swap directly for tokenized deposits

• Retirees:
• Receive benefits → swap directly for Walmart’s stablecoin → groceries

• 10 JPMD tokens = 10 AAPL tokens = $10 worth of AAPL shares = $10 USD = 10 MSTR 0.625 03/15/30 tokens
• token singleness or 1 token = fractional asset ownership = 1 USD

• Results
• - No taxable event
• - No slippage
• - No frontrunning
• - Zero txn fees
• - Transfer at NAV, not redemption

HOW DOES IT WORK

• How to swap XFT mutual funds for bank deposits
• https://youtu.be/T7-h9SfUwG4

• How to swap tokenized deposits for groceries
• https://youtu.be/7y6_JplPFZU

• How to swap tokenized deposits for convertible bonds
• https://youtu.be/1LOMNljWnOs

• Swap qualifying onchain assets into bank accounts globally on the IDN today!

WHY UPMC DIGITAL DOLLAR?

• - secure hospital payment systems
• - atomic swaps w/ XFT ecosystem of 13000+ onchain assets
• - instant 24/7/365 bilateral settlement for prefunded txns, less credit risk
• - zero-fee global payments

• Stablecoins run on the blockchain or a cryptographically-secured + decentralized payment system. Change Healthcare's Feb 2024 cyber attack is an example nightmare scenario for hospitals across the United States.

• How the ransomware attack at Change Healthcare went down
• https://techcrunch.com/2025/01/27/how-the-ransomware-attack-at-change-healthcare-went-down-a-timeline/

• Change Healthcare attack expected to exceed USD 1 billion in costs
• https://www.ibm.com/think/news/change-healthcare-cyberattack-exceeds-1-billion-costs

• Full Military Pharmacy Operations Restored After Change Healthcare Cyberattack
• https://health.mil/News/Dvids-Articles/2024/04/25/news469562

• The Cyberattack on Change Healthcare: Lessons for Financial Stability
• https://www.financialresearch.gov/briefs/files/OFRBrief-24-05-change-healthcare-cyberattack.pdf

• The Change Healthcare Cyberattack and Response Considerations for Policymakers
• https://www.congress.gov/crs-product/IN12330

• Change Healthcare Cyberattack Underscores Urgent Need to Strengthen Cyber Preparedness
• https://www.aha.org/change-healthcare-cyberattack-underscores-urgent-need-strengthen-cyber-preparedness-individual-health-care-organizations-and

• What We Learned: Change Healthcare Cyber Attack
• https://energycommerce.house.gov/posts/what-we-learned-change-healthcare-cyber-attack

MUTUAL FUND REDEMPTION FLOW

Traditional

• 1 Investor requests FOBXX redemption
• 2 Fund manager sells underlying bonds
• 3 T+1 settlement wait
• 4 Wire transfer USD to investor

Payment stablecoins

• 1 Investor requests FOBXX redemption
• 2 Investor locks FOBXX tokens in HTLC
• 3 Fund locks USDXT in HTLC with same hash
• 4 Investor reveals secret, claims USDXT
• 5 Fund uses secret, claims FOBXX tokens
• 6 Fund burns FOBXX tokens

OR

• 1 Investor requests FOBXX redemption
• 2 Fund burns FOBXX tokens in investor wallet
• 3 Fund transfers USDXT tokens to investor wallet

WHY PAYMENT STABLECOINS FOR MUTUAL FUND REDEMPTIONS?

• Instant settlement
• 24/7/365 redemptions vs. business hours only
• Global access vs. geographic restrictions
• No counterparty risk vs. trusting multiple counterparties
• Programmable vs. manual processes
• Zero fee vs. wire transfer fees

Payment Stablecoins

• User buys 1 payment stablecoin with $1 USD. XFT uses that $1 to buy a short‑term US government bond. These bonds pay interest. XFT keeps interest payments from these bonds as revenue.

• Net investment income on underlying securities.
• Minting.
• Redemption.

Stock Trading

• Total Fees = Trading Fee + (Order Fee * Cost of Order)

Issuance

Chain	Chain Id	Payment Token	Trading Fee	Order Fee
Ethereum	1	USDX	$0	0 bps
Ethereum	1	USDC, USDT	$50	50 bps
Arbitrum	42161	USDX	$0.00	0 bps
Arbitrum	42161	USDC, USDT	$100	100 bps
XDC Network	50	USDX	$0	0 bps
Canton Network		USDX	$100	100 bps
Base	8453	USDX	$0.20	25 bps
Base	8453	USDC, USDT	$100	100 bps

Redemption

Chain	Chain Id	Payment Token	Trading Fee	Order Fee
Ethereum	1	USDX	$0	0 bps
Ethereum	1	USDC, USDT	$50	50 bps
Arbitrum	42161	USDX	$0.00	0 bps
Arbitrum	42161	USDC, USDT	$100	100 bps
XDC Network	50	USDX	$0	0 bps
Canton Network		USDX	$100	100 bps
Base	8453	USDX	$0.20	25 bps
Base	8453	USDC, USDT	$100	100 bps

Dividends

• XFT charges a 5% service fee of the total dividend payment

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

• 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.

Time	USDX	Shares	rewardMultiplier
1	100	100	1
2	103.8	100	1.038

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.

• Programmable money is a digital form of money used for a predefined purpose, like a voucher, with limitations on where, when or with whom people can use it. It is a dollar capable of loading and executing an application, while guaranteeing the integrity of the execution flow and data.

Why atomic swaps?

• Atomicity ensures that a sequence of operations is either performed in its entirety or not at all – never partially.

• A CBDC is a digital dollar or liability of a central bank.

• "Central bank money" refers to money that is a liability of the central bank. In the United States, there are currently two types of central bank money: physical currency issued by the Federal Reserve and digital balances held by commercial banks at the Federal Reserve.

• While Americans have long held money predominantly in digital form—for example in bank accounts, payment apps or through online transactions—a CBDC would differ from existing digital money available to the general public because a CBDC would be a liability of the Federal Reserve, not of a commercial bank.

• USDXT is a payment stablecoin that is 100% backed by short-term US treasuries and USD.

Why USDXT redemption?

• Mint USDXT for large/unpredictable redemptions or transfer for small/frequent.

Why USDXT atomic subscription?

• Access more investors 24/7/365 via USDXT programmability and instant bilateral settlement.

Why instant redemption?

• Liquidity management.

Why instant subscription?

• Programmable 24/7/365 investing at NAV.

Why standard?

• Permissionless atomic P2P swaps.

• Goal: Reduce money supply without rate increase

BURN

• - qt bond maturities
• - 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
• - duration arbitrage

BALANCE SHEET

• - direct bond sale
• - asset swap

• Each token represents fractional ownership of a debt obligation.

Naming Schema

• Symbol = ISIN = US48251W5004
• Name = Ticker = KKR 6.25 03/01/28

• Name: [issuer] [coupon] [maturity]

• Secured loan: Backed by collateral (asset pledged).
• Example: Mortgage. Bank lends you money, house is collateral. If you default, bank seizes house.

• Unsecured loan: No collateral, based on creditworthiness.
• Example: Credit card. Bank lends you money, no asset pledged. If you default, lender sues, but no asset automatically taken.

• Non-accruals = loans not paying interest/principal, counted as at risk/default

• 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 "singleness of money" refers to the principle that all forms of money within an economy, whether physical or digital, should be valued equally and be interchangeable at par (face value). This means, for example, that a £1 coin should be worth the same as a £1 bank deposit.

• All XFT mutual fund shares maintain singleness by redeeming at identical NAV ($1 par value). Distributing yield while maintaining $1 par value is achieved via rebasing.

• Liquidity risk is risk that a firm is unable to realise investments and other assets in order to settle its financial obligations when they fall due.

• Funding liquidity risk: Inability to obtain the necessary funding at a reasonable cost.
• Asset liquidity risk: Inability to liquidate assets (as necessary) at an acceptable price.

Asset-Based Liquidity Sources

• Cash flows
• Pledging of assets
• Reserve Balances
• Liquidation of Assets
• Securitization of Assets

Liability-Based Liquidity Sources

• Retail Deposits
• Wholesale funding
  • Public or Municipal Deposits
  • Federal Home Loan Bank Borrowings
  • Federal Reserve Discount Window
  • Deposit Listing Services and Internet Deposits
  • Brokered Deposits
  • Reciprocal Deposits
  • Sweep Deposits
• Funding From the Financial Markets

• Liquidity booklet, Comptroller's Handbook
• Liqudity risk management for insurers

MMF Risks

• Liquidity transformation
• Money-like assets
• Threshold effects
• Contagion effects
• Reactive investors

• Fed_New_Activities_Familiar_Risks.pdf

• Closed-end fund, no yield

• Investment company, yield-bearing stablecoin

• ISIN, CUSIP, SEDOL, IBAN

• --

OTC Derivative Stock Tokens

• EU rules make it costly for European investors to buy U.S. stocks directly, so Robinhood buys the shares, parks them in a U.S. SPV, and issues euro‑denominated blockchain tokens that mirror each share. The mechanics are similar for both public and private stocks (to explain the OpenAI token), just with differences in liquidity and pricing frequency. When investors hold tokens, they bear Robinhood counterparty risk rather than direct market exposure (holding token vs stk).

• Counterparties
• Investor EU
• Robinhood
• Prime broker
• Custodian

PUBLIC EQUITIES

Buy

• 1 User sends EUR to Robinhood
• 2 Robinhood swaps EUR to USD
• 3 Robinhood buys shares
• 4 Robinhood mints token to User wallet

Sell

• 1 User sends token to Robinhood
• 2 Robinhood sells AAPL share
• 3 Robinhood swaps USD to EUR
• 4 Robinhood sends EUR to User
• 5 Robinhood burns tokens

SECONDARIES

Buy

• 1 User sends EUR to Robinhood
• 2 Robinhood swaps EUR to USD
• 3 Robinhood finds OpenAI seller in secondary market
• 4 Robinhood buys OpenAI shares via private transaction
• 5 Robinhood mints token to User wallet

Sell

• 1 User sends token to Robinhood
• 2 Robinhood finds OpenAI buyer in secondary market
• 3 Robinhood sells OpenAI shares via private transaction
• 4 Robinhood swaps USD to EUR
• 5 Robinhood sends EUR to User
• 6 Robinhood burns tokens

• Secondary Liquidity Sources
• Total Return Swap (TRS)
• Seller
• Pre‑held inventory

Formulas

• Base_EUR = USD_Price / FX_Rate
• Upper = Base_EUR * 1.005
• Lower = Base_EUR * 0.995
• FX_Fee = Exec_Price * Qty * 0.003
• Net_Cost = (Exec_Price * Qty) + FX_Fee
• Credit = (Exec_Price * Qty) - FX_Fee
• Unrealized_P/L = (Current_Base_EUR - Avg_Cost) * Position

XFT tokenized equities ARE NOT like Robinhood's stock tokens. All XFT secondary shares are denoted with a ".S" in the token symbol.

• 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.

• The distribution rate = Latest distribution annualized / current NAV

• The 30-day SEC yield is a standardized measure of the income earned by a fund, typically a bond fund or ETF, over a 30-day period, annualized to provide an estimated annual return.

• USDX is an Investment Company

• 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.