Flash Minting

Flash minting is an important feature of USDXL that facilitates arbitrage opportunities and liquidations within the HypurrFi ecosystem.

Understanding Flash Loans

Unlike traditional lending markets in HypurrFi where flash loans require available supplied assets, USDXL implements a direct flash loan mechanism through its smart contracts. This allows users to access USDXL liquidity within a single transaction, provided the borrowed amount plus any fees are returned by the end of the transaction.

Key Features

• No prior liquidity required
• Single-transaction execution
• ERC3156 standard compliance
• Automated repayment verification

How Flash Loans Work

Execution Flow

1. Initiation

   • Contract requests flash loan from USDXL
   • Amount validation occurs
   • USDXL is minted temporarily

2. Operation

   • Borrowed USDXL transferred to requesting contract
   • Contract executes intended operations
   • Must approve USDXL contract for repayment

3. Completion

   • Original amount plus fee returned
   • USDXL burned
   • Transaction completes or reverts

Implementation Guide

1. Contract Setup

Your contract must implement the ERC3156 flash loan receiver interface:

interface IERC3156FlashBorrower {
    function onFlashLoan(
        address initiator,
        address token,
        uint256 amount,
        uint256 fee,
        bytes calldata data
    ) external returns (bytes32);
}

2. Flash Loan Request

Three ways to initiate a flash loan:

1. From EOA (External Account)

   function requestFlashLoan(
       address receiver,
       uint256 amount
   ) external;
   

2. From Another Contract

   function flashLoan(
       address receiver,
       uint256 amount,
       bytes calldata params
   ) external;
   

3. From Same Contract

   • Use address(this) as receiver
   • Implement flash loan logic in same contract

3. Completing the Flash Loan

To successfully complete a flash loan:

1. Ensure Repayment

   • Have sufficient USDXL for repayment (amount + fee)
   • Approve USDXL contract to pull funds

2. Return Correct Value

   • Must return keccak256("ERC3156FlashBorrower.onFlashLoan")
   • Validates ERC3156 compliance

Best Practices

1. Security

   • Always verify flash loan initiator
   • Implement reentrancy guards
   • Check return values

2. Gas Optimization

   • Minimize operations within flash loan
   • Pre-calculate required amounts
   • Optimize approval flows

3. Error Handling

   • Implement proper revert conditions
   • Handle edge cases
   • Validate all parameters

Common Use Cases

1. Arbitrage

   • Cross-market price differences
   • DEX opportunities
   • Yield optimization

2. Liquidations

   • Position management
   • Collateral swaps
   • Risk mitigation

3. Debt Refinancing

   • Position restructuring
   • Collateral optimization
   • Rate arbitrage