How XyloNet Is Building Stablecoin DeFi and Social Tipping on Arc

Stablecoin applications often need more than one primitive to feel complete. A DeFi app needs liquidity, predictable fees, and crosschain access. A consumer payments app needs simple onboarding, fast confirmation, and a way to receive funds without forcing every recipient to become crypto-native first. In practice, builders often have to stitch those pieces together across separate protocols, gas tokens, bridges, and wallet flows.

XyloNet, built by ForgeLabs on Arc Testnet, shows what that stack can look like when it is designed around stablecoins from the start. The protocol brings together stablecoin swaps, liquidity pools, crosschain USDC movement, and ERC-4626 vaults. Alongside it, ForgeLabs has built PayX, a Chrome extension and smart contract protocol that lets users send USDC tips to an X handle before the recipient has connected a wallet or shared an address.

Together, XyloNet and PayX demonstrate two complementary patterns for building on Arc: stablecoin-native DeFi infrastructure and consumer-facing payment UX, both using the same underlying settlement environment. You can also watch the Arc community spotlight session for the team’s walkthrough of both products.

Meet XyloNet and PayX

XyloNet is a DeFi protocol built for USDC and EURC activity on Arc Testnet. Its core modules include a StableSwap AMM for low-slippage stablecoin swaps, liquidity pools with LP tokens, CCTP-enabled USDC bridging, and ERC-4626 vault infrastructure designed for yield-oriented strategies.

The design is intentionally modular. Builders can interact with the pieces independently (e.g., routing swaps, deploying pools, accessing bridge functionality, or composing with vaults) rather than treating the protocol as one closed system.

PayX applies the same stablecoin-native foundation to a different part of the user journey: receiving an onchain payment before a wallet has been connected.

Most crypto payment flows assume the recipient already has a wallet. PayX reverses that assumption. A sender can tip an X handle in USDC, and the funds are held in smart contract escrow on Arc until the recipient verifies control of that X account and claims the funds to a wallet of their choice.

That makes PayX less of a standalone tipping feature and more of a reusable identity-linked payment pattern: send to an offchain identifier first, verify ownership later, and settle the payment onchain once the recipient is ready.

Why Arc

The design choices in XyloNet and PayX map directly to the infrastructure properties Arc is built to provide for stablecoin applications.

• Native USDC as gas simplifies the user and developer experience. On XyloNet, users are already swapping, bridging, or depositing stablecoins, so paying network fees in USDC removes the need to acquire a separate volatile gas asset. The same is true for PayX: claiming a USDC tip does not require the recipient to hold ETH or another token just to complete the transaction.
• Deterministic sub-second finality makes interactions feel closer to familiar financial and consumer experiences. For XyloNet, swaps and vault deposits can settle with deterministic finality. For PayX, applications can be designed around deterministic finality, allowing tips to appear in escrow shortly after transaction confirmation..
• CCTP V2 support gives XyloNet a native path for crosschain USDC movement. Rather than relying on wrapped bridge assets, CCTP burns USDC on the source chain and mints native USDC on the destination chain. XyloNet’s frontend uses Circle App Kit with Fast Transfer mode and forwarding, creating a bridge experience that can complete with one user signature and no separate destination gas requirement.

For builders, the lesson is not simply that these features exist. It is that stablecoin-native infrastructure can change the shape of the application itself: potentially fewer assets to manage, fewer confirmation states to explain, and reduced bridge complexity for users.

How XyloNet and PayX are built

XyloNet core

XyloNet’s core architecture separates routing, pool creation, bridge access, and vault logic into distinct contracts:

‍

This separation lets developers compose with the parts of XyloNet they need without adopting the entire stack.

The AMM uses Curve’s StableSwap invariant, optimized for stable-to-stable pairs like USDC and EURC. LP tokens are ERC-20 compatible, which makes them easier for other applications to compose with downstream.

One important implementation detail is that the bridge contract and the frontend bridge experience are not identical. XyloBridge is available for developers who want programmatic bridge access or standard transfer mode. The XyloNet frontend uses Circle App Kit directly to deliver the simplest end-user flow, including Fast Transfer and forwarding mode.

PayX: escrow mechanics and claim flow

The PayXTipping contract (deployed at 0xA312c384...EF465913 on Arc Testnet) escrows USDC tips by social handle rather than wallet address. A sender installs the Chrome extension, sees a “Tip” button on X, selects an amount, and confirms the transaction. The tip is deposited into escrow, keyed to the recipient’s X handle. The recipient later signs in with X, PayX verifies ownership through an oracle signature, and the recipient can claim the escrowed USDC to a wallet they specify.

The key design decision is when identity is resolved. PayX does not require the recipient’s wallet address at send time. It verifies the recipient’s identity at claim time.

That pattern could extend beyond X. The same model can apply to payments keyed to an email address, username, phone number, merchant account, or other offchain credential.

What builders can reuse

XyloNet and PayX are useful because they surface patterns other teams can adapt.

• Stablecoin liquidity plus native crosschain movement: XyloNet separates its AMM and bridge components, which means builders can compose with swap routing, CCTP-based inflows, or both. A payments app, for example, might not need to build its own AMM, but it may still need clean USDC movement into Arc from other chains.
• ERC-4626 vault composition: By using a standard vault interface, XyloVault gives other applications a familiar way to interact with deposits, withdrawals, redemptions, and total assets. That matters for teams building structured products, yield strategies, or integrations that need predictable vault behavior.
• Handle-based escrow: PayX shows how a payment can be sent to a user before that user has completed wallet onboarding. For consumer apps, merchant flows, payroll tools, creator platforms, or user acquisition campaigns, that can reduce one of the biggest sources of payment friction: requiring the recipient to be fully set up before value can be sent.
• Single-sign crosschain UX: XyloNet’s use of Circle App Kit shows how builders can abstract bridge complexity while still relying on native USDC movement. For multichain applications, that can make Arc feel less like another destination network and more like part of a connected stablecoin application stack.

Developers can explore both the XyloNet contracts and the PayX contracts and adapt the patterns in their own Arc applications.

Try XyloNet and PayX on Arc Testnet

XyloNet and PayX are live on Arc Testnet today. Builders can use XyloNet to swap between stablecoins, provide liquidity, bridge USDC, and explore ERC-4626 vaults, while PayX offers a working example of USDC payments sent to an offchain identity before the recipient has connected a wallet.

Together, they show how the same stablecoin-native infrastructure can support both DeFi primitives and consumer payment experiences. The foundation that powers liquidity, bridging, and vaults can also support flows where users do not need to think about gas tokens, bridge mechanics, or wallet setup before receiving value.

To get started, claim testnet USDC from the Circle faucet, explore XyloNet, and try PayX. Visit the Arc docs to explore the infrastructure XyloNet and PayX are built on.