pathUSD

Abstract

pathUSD is a USD-denominated stablecoin that can be used as a quote token on Tempo's decentralized exchange. It is the first stablecoin deployed to the chain, and is used as a fallback gas token when the user or validator does not specify a gas token. Use of pathUSD is optional.

Motivation

Each USD TIP-20 on Tempo can choose any other USD TIP-20 as its quote token—the token it is paired against on the native decentralized exchange. This guarantees that there is one path between any two tokens, which reduces fragmentation of liquidity and simplifies routing.

While on other chains, most liquidity accrues to a few stablecoins, or even one, Tempo offers a USD-denominated stablecoin, pathUSD, that other stablecoins can choose as their quote token. PathUSD is not meant to compete as a consumer-facing stablecoin. Use of pathUSD is optional, and tokens are able to list any other token as their quote token if they choose.

PathUSD can also be accepted as a fee token by validators.

Specification

Contract

PathUSD is a predeployed TIP-20 at genesis. Note that since it is the first TIP-20 contract deployed, its quote token is the zero address.

Property	Value
address	`0x20c0000000000000000000000000000000000000`
`name()`	"pathUSD"
`symbol()`	"pathUSD"
`currency()`	"USD"
`decimals()`	6
`quoteToken()`	`address(0)`

How It Works

When you create a USD stablecoin on Tempo, you can set pathUSD as its quote token:

TIP20 token = factory.createToken(
  "My Company USD",
  "MCUSD",
  "USD",
  TIP20(0x20c0000000000000000000000000000000000000), // pathUSD
  msg.sender
);

This means:

Your token trades against pathUSD on the decentralized exchange
Users can swap between your token and other USD stablecoins that also use pathUSD, or ones that are connected to it by a multi-hop path

Tree Structure

This creates a tree structure where all USD stablecoins are connected via multi-hop paths.

               USDX
                |
             pathUSD -- USDY -- USDZ
                |
               USDA

The tree structure guarantees that there is a single path between any two USD stablecoins, ensuring simple routing, concentrated liquidity, and efficient pricing, even for thinly-traded pairs.

Example: Cross-Stablecoin Payment

Market makers provide liquidity for USDX/pathUSD and USDY/pathUSD pairs
User wants to send USDX to a merchant who prefers USDY
DEX atomically routes: User's USDX → pathUSD → Merchant's USDY
Single action, no manual swaps

This is critical for payments between parties with different stablecoin preferences. The user and merchant never touch pathUSD; it is used only as a routing mechanism.