This proposal seeks funding to expand the reach of USDX, an existing, fully collateralized, USD-pegged stablecoin, onto the Cardano blockchain. USDX already operates successfully on another chain (mention which one). This expansion aims to provide a reliable and transparent digital asset for the Cardano ecosystem, fostering growth in decentralized finance (DeFi), payments, and other applications. We believe bringing USDX to Cardano will address the need for a stable and accessible medium of exchange, unlocking its full potential.

• USDX envisions becoming the leading stablecoin on Cardano, serving as a cornerstone of its DeFi ecosystem. We aim to achieve this by:
• Stability: Maintaining a 1:1 peg to the US dollar through the existing, proven collateralization mechanism already used for USDX on [Original Chain].
• Accessibility: Ensuring ease of use and accessibility including on/off-ramping for all users, regardless of technical expertise.
• Scalability: Designing the Cardano implementation to handle a large transaction volume and support future growth.
• Transparency: Providing full transparency regarding the collateral backing USDX and its management, leveraging the existing transparency mechanisms of USDX on [Original Chain].
• Security: Prioritizing the security of the Cardano implementation and user funds through rigorous audits and best practices.

Despite recent growth in fiat-backed stablecoins on Cardano, the ecosystem still suffers from a critical liquidity and regulatory compliance gap. Existing stablecoins are insufficient in volume to support Cardano’s expanding DeFi, payments, and institutional use cases. Additionally, most current solutions do not comply with CIP-113 (which enables clawback mechanisms), leaving them ill-equipped for regulated financial environments where asset recovery and was compliance are essential.

1. Without a highly liquid, CIP-113-compatible stablecoin like USDX, Cardano faces: Limited Scalability – Inadequate stablecoin supply restricts DeFi growth, lending, and real-world adoption.
2. Regulatory Risks – The absence of clawback functionality makes it difficult to comply with financial regulations, deterring institutional participation.
3. Fragmented Liquidity – Multiple small, non-interoperable stablecoins weaken capital efficiency and user experience.

USDX aims to solve these challenges by providing a scalable, regulatory-friendly stablecoin with CIP-113 support, ensuring Cardano can meet both decentralized and compliant financial demands.

1. Enhanced Liquidity & Ecosystem Growth USDX provides a highly scalable, deep liquidity pool for Cardano’s DeFi, DEXs, and payment solutions, reducing slippage and improving capital efficiency. Enables seamless trading, lending, and borrowing—critical for attracting users and developers.
2. Regulatory Compliance & Institutional Adoption CIP-113 clawback support ensures compliance with financial regulations, making USDX viable for institutional use, asset recovery, and legally compliant transactions. Positions Cardano as a leader in regulated DeFi, appealing to enterprises, banks, and governments.
3. Stability & Trust in Cardano’s Economy A fully backed, transparent stablecoin reduces volatility risks, allowing businesses and users to transact confidently. Mitigates reliance on external stablecoins (like USDT/USDC), keeping value within Cardano’s ecosystem.
4. Future-Proofing for Real-World Use Cases Supports micropayments, remittances, payroll, and merchant settlements with fast, low-cost transactions. Enables tokenized RWAs (Real-World Assets) by providing a stable settlement layer.
5. Interoperability & Developer Advantage Native Cardano integration ensures lower fees, faster transactions, and seamless smart contract interactions compared to bridged alternatives. Encourages more dApp development by offering a reliable stable asset for DeFi, gaming, and enterprise solutions.
6. Big institutional backers of Hex Trust with potential liquidity: Animo Brands - https://www.animocabrands.com/ Hashkey Capital - https://hashkey.capital/ Morgan Creek Capital Management - https://www.morgancreekcap.com/ https://www.hextrust.com/company/about-us (investors shown here)

By deploying USDX, Cardano gains a competitive edge—bridging decentralized finance with regulatory needs while accelerating adoption across retail, institutional, and government use cases.

Phase 1: Infrastructure & Smart Contract Development (Month 1-2)

Goals:

Establish Cardano Infrastructure within Hex Trust

Develop and test smart contracts for minting / burning USDX + ability to freeze / blacklist

Key Tasks:

✅ Infrastructure Setup (Week 1-3)

Cardano Node Deployment: Decide between running a full node or integrating with API providers (Blockfrost, Maestro).

Key Management & Custody: Implement EdDSA (Ed25519) signing and HSM/MPC support for Cardano. Wallet Integration: Ensure internal wallet infrastructure supports Cardano assets.

✅ Smart Contract Development (Week 2-5)

Develop Minting/Burning Smart Contract

Define Policy ID & Asset Metadata (name, symbol, decimals).

Compliance Features: Implement transaction monitoring, freezing of addresses and whitelisting if required; specifically related to CIP-113.

✅ Testing & Audits (Week 6-8)

Deploy contracts to Cardano testnet and conduct internal validation.

Engage third-party auditors (e.g., Tweag, MLabs, Certik) for security review.

📌 Outcome:

USDX smart contracts are deployed and validated on Cardano testnet.

Internal infrastructure is ready for minting and transaction signing.

Phase 2: Mainnet Launch & Initial Liquidity Deployment (Month 3-4)

Goals:

Launch USDX on the Cardano mainnet.

Integrate with initial liquidity pools and DeFi platforms.

Key Tasks:

✅ Mainnet Deployment (Week 9-10)

Deploy USDX minting/burning contract on Cardano mainnet.

Register USDX on-chain with Policy ID & metadata.

Begin minting initial USDX supply under Hex Trust’s custody model.

✅ DEX & Initial Liquidity Integration (Week 10-14)

DEX Listings: Deploy initial USDX liquidity pools on Minswap, SundaeSwap, WingRiders.

Liquidity Incentives: Consider farming/staking rewards for liquidity providers.

Lending Market: Integrate USDX with Lenfi Finance & Liqwid Finance.

📌 Outcome:

USDX is live on Cardano mainnet with active liquidity pools and trading pairs.

Users can mint, trade, and use USDX in DeFi applications.

Phase 3: Wallet & Custody Expansion (Month 5)

Goals:

Expand USDX support across wallets & exchanges.

Implement security, governance, and compliance controls.

Key Tasks:

✅ Wallet Compatibility (Week 15-16)

Ensure USDX is supported by Eternl Wallet & Lace Wallet

Work with Dapp developers for direct integrations.

✅ Exchange Listings (Week 17-18)

Initiate CEX listing discussions (with ADA-supporting exchanges).

Implement on/off-ramping solutions (if needed).

✅ Security & Compliance (Week 19-20)

Activate AML & transaction monitoring for on-chain activity.

Establish governance framework (if decentralized control is required).

📌 Outcome:

USDX is integrated across wallets, exchanges, and custody solutions.

Security and compliance measures are in place.

Phase 4: Scaling & Ecosystem Growth (Month 6)

Goals:

Strengthen USDX adoption across Cardano DeFi and cross-chain ecosystems.

Key Tasks:

✅ Expand Lending & Borrowing Use Cases

Partner with DeFi protocols to enable USDX as collateral.

Explore yield-bearing opportunities with Cardano staking.

✅ Cross-Chain Expansion & Bridges

Midnight - Sidechain

Midguard, zkFold - popular L2s

Wanchain

📌 Final Outcome:

USDX is fully deployed, liquid, and integrated into the Cardano ecosystem.

Ecosystem partners drive organic growth for USDX adoption.

All Figures in ADA

Initial start up cost:

Phase 1 - 30%

Phase 2 - 20%

Phase 1 - Infrastructure & Smart Contract Development (Months 1-2)

Cardano Node Deployment Set up - 7,813

Cardano Node Deployment (Maintenance for 2 months) - 6,250

Third-Party API Access (e.g. blockfrost, maestro) - 1,563

Development Costs (Plutus Smart Contracts) - 46,875

Internal Testing & Simulations - 7,813

Smart Contract Security Audit - 46,875

Regulatory & Compliance Review - 15,625

Legal Fees for Stablecoin Compliance - 78,125

Security Monitoring Tools - 7,813

Phase 2 - Mainnet Launch & Initial Liquidity Deployment (Months 3-4)

Cardano Mainnet Deployment - 7,813

Initial Liquidity on DEXs - 867,187

DeFi Lending/Borrowing Integrations (e.g. Lenfi, Liqwid Finance) - 78,125

Liquidity Incentives (Farming & Staking) - 390,625

Phase 3 - Wallet & Custody Expansion (Month 5)

Wallet Integrations - 15,625

Custody Platform Integration (Hex Trust Internal Dev Costs) - 78,125

Centralized Exchange Listing Fees - 156,250

Phase 4 - Scaling & Ecosystem Growth (Month 6)

Side Chain Development - 156,250

Marketing & Community Engagement - 31,250

The estimated time for this proposal to be delivered is 6-8 months. The team size for this will include 1 Product Expert and 4 engineers.

Hex Trust has first-hand experience in stablecoin issuance through the issuance of our own stablecoin, USDX, issued in 2024.

We manage the issuance and redemption of our stablecoin by leveraging our own proprietary custody platform. This approach allows us to leverage multi-approval mechanisms for smart contract management and institutional-grade private key management to prioritise security and minimise the risk of unauthorised actions over the smart contract. This system ensures that critical functions require the consensus of multiple parties, mitigating the risk of single points of failure and promoting responsible management of the smart contract.

Our stablecoin is currently deployed on the following blockchains:

• Ethereum - Ethereum presents itself as a prime platform for launching the stablecoin due to its robustness, established developer community and decentralised application ecosystem. Additionally, Ethereum's network effects and smart contract functionality provide a secure and reliable environment for the stablecoin protocol to operate on.
• Flare - Flare is a younger blockchain launched in early 2023 compatible with Ethereum Virtual Machine (EVM). Flare is designed to be the "blockchain for data” as it aims to provide developers with secure and decentralized access to high-integrity data from other blockchains and the internet.
• Songbird - Songbird is Flare’s canary network.

For cross-chain interoperability, we leverage LayerZero's Omnichain Fungible Token (OFT) capabilities to enable native minting and burning of our stablecoin across supported chains. This facilitates seamless cross-chain transfers and enhances liquidity.

We operate our own nodes to ensure reliable and efficient blockchain operations. To enhance redundancy and minimize downtime, we implement the following measures:

• Robust Monitoring: We continuously monitor node health, including block synchronization, transaction processing, and resource utilization (CPU, memory, disk space). Redundancy Mechanisms:
• Backup Nodes: We maintain redundant nodes in geographically diverse locations (e.g., different data centers) or utilize reputable third-party node providers.
• Automated Failover: Automated failover mechanisms are in place to seamlessly transition to backup nodes in the event of primary node failures.
• Regular Maintenance: We conduct regular maintenance and upgrades to ensure optimal node performance and security.

Furthermore, Hex Trust has a strong track record in tokenization across diverse projects and use cases, demonstrating our expertise and adaptability within this evolving field.

2021: Bond Issuance with DLA Piper and TOKO: In this landmark project, we acted as the custodian for a tokenized bond issuance, showcasing our capabilities in managing and securing digital assets within a regulated framework.

2021: Key Holder and Co-signer for Tezos BTC (tzBTC): as a key holder and co-signer for tzBTC, we actively participate in the minting and burning processes, ensuring the security and integrity of this cross-chain asset.

2022: Issuance of Wrapped XRP (wXRP): We facilitated the minting and burning of wXRP for Authorized Merchants, demonstrating our ability to support the creation and management of tokenized assets on decentralized platforms.

2023: HKMA's CBDC Pilot Program with Fubon Bank, Ripple, KodeLab, and TOKO: Our involvement in this pioneering CBDC pilot program with leading industry players provided valuable insights into the practical implementation and operational considerations of central bank digital currencies. The CBDC landscape is rapidly evolving, with numerous pilot programs and initiatives underway globally. This experience positions us at the forefront of this transformative technology.

2024: Key Holder and Co-signer for an Upcoming Licensed Stablecoin in HK: We are a key partner in the development of a licensed stablecoin in Hong Kong, although we are currently unable to disclose further details due to the confidential nature of the project.

In addition to Hex Trust, we will also be contracting Delta DeFi/SIDAN Labs to write the necessary code for this project. They have members on the team that have experience with both Hex Trust’s technical side and experience with developing native Cardano stablecoins (USDA). We will be leveraging their expertise in this area in order to make sure that the back end code is written to an appropriate standard for the Cardano Community.

This proposal will be maintained by Hex Trust.

As part of Intersect’s Stablecoin working group, a research paper conducted by Appold (an independent advisor in the blockchain industry) clearly demonstrates the community’s need for a fiat-backed stablecoin that is compliant with regulatory requirements. Here is the link to the research: https://www.appold.com/news/stablecoinreseach

The main key dependency for this proposal is the development of CIP-113