Hex Trust's USDX Becomes First Stablecoin to Use Flare's Confidential Proof of Reserves

Hex Trust's USDX has become the first stablecoin to use Flare Confidential Compute, allowing its reserves to be verified onchain while keeping restricted reserve balances private.

The new Proof of Reserves system is the first institutional application of Flare Confidential Compute, which has launched on Songbird. The technology is designed for situations where blockchain applications need verifiable information from institutions but the underlying financial data cannot be publicly disclosed. 

For USDX, Hex Trust provides reserve information from two sources: a public reserve amount and a restricted cash reserve amount. Flare Confidential Compute processes both inside a Trusted Execution Environment and checks the combined reserves against the amount of USDX circulating across the ecosystem.

Instead of putting those balances onchain, the system signs and publishes a result showing whether USDX is backed 1:1 or better. The private figures used to reach that conclusion remain undisclosed. 

The result also has a direct role within Flare's ecosystem. USDX is used as collateral in the FAssets system on Songbird, and its feed is moving to the new reserve-based reference. Decentralized exchanges can use the same result as a basis for pricing USDX, while feed metadata indicates whether its reserves meet the required coverage threshold.

The launch demonstrates how confidential computing could solve a broader problem for institutional blockchain adoption: institutions can prove financial facts to smart contracts without being forced to publish commercially sensitive records. Flare says the same model could eventually support private NAV calculations, collateral verification, credit information and compliance data.