diff --git a/Changelog.md b/Changelog.md
index fc61a1b19..d13bc1332 100644
--- a/Changelog.md
+++ b/Changelog.md
@@ -3,6 +3,7 @@
 Language Features:
  * Inheritance: A function that overrides only a single interface function does not require the ``override`` specifier.
  * Type System: Support ``type().min`` and ``type().max`` for enums.
+ * User Defined Value Type: allows creating a zero cost abstraction over a value type with stricter type requirements.
 
 
 Compiler Features:
diff --git a/docs/abi-spec.rst b/docs/abi-spec.rst
index 1b61351fa..6f50c70d9 100644
--- a/docs/abi-spec.rst
+++ b/docs/abi-spec.rst
@@ -113,6 +113,9 @@ them.
 +-------------------------------+-----------------------------------------------------------------------------+
 |:ref:`enum<enums>`             |``uint8``                                                                    |
 +-------------------------------+-----------------------------------------------------------------------------+
+|:ref:`user defined value types |its underlying value type                                                    |
+|<user-defined-value-types>`    |                                                                             |
++-------------------------------+-----------------------------------------------------------------------------+
 |:ref:`struct<structs>`         |``tuple``                                                                    |
 +-------------------------------+-----------------------------------------------------------------------------+
 
diff --git a/docs/types/value-types.rst b/docs/types/value-types.rst
index e3d6ed0d7..c1ac3d264 100644
--- a/docs/types/value-types.rst
+++ b/docs/types/value-types.rst
@@ -628,6 +628,69 @@ smallest and respectively largest value of the given enum.
 .. note::
     Enums can also be declared on the file level, outside of contract or library definitions.
 
+.. index:: ! user defined value type, custom type
+
+.. _user-defined-value-types:
+
+User Defined Value Types
+------------------------
+
+A user defined value type allows creating a zero cost abstraction over an elementary value type.
+This is similar to an alias, but with stricter type requirements.
+
+A user defined value type is defined using ``type C is V``, where ``C`` is the name of the newly
+introduced type and ``V`` has to be a built-in value type (the "underlying type"). The function
+``C.wrap`` is used to convert from the underlying type to the custom type. Similarly, the
+function ``C.unwrap`` is used to convert from the custom type to the underlying type.
+
+The type ``C`` does not have any operators or bound member functions. In particular, even the
+operator ``==`` is not defined. Explicit and implicit conversions to and from other types are
+disallowed.
+
+The data-representation of values of such types are inherited from the underlying type
+and the underlying type is also used in the ABI.
+
+The following example illustrates a custom type ``UFixed256x18`` representing a decimal fixed point
+type with 18 decimals and a minimal library to do arithmetic operations on the type.
+
+
+.. code-block:: solidity
+
+    // SPDX-License-Identifier: GPL-3.0
+    pragma solidity ^0.8.8;
+
+    // Represent a 18 decimal, 256 bit wide fixed point type using a user defined value type.
+    type UFixed256x18 is uint256;
+
+    /// A minimal library to do fixed point operations on UFixed256x18.
+    library FixedMath {
+        uint constant multiplier = 10**18;
+
+        /// Adds two UFixed256x18 numbers. Reverts on overflow, relying on checked
+        /// arithmetic on uint256.
+        function add(UFixed256x18 a, UFixed256x18 b) internal pure returns (UFixed256x18) {
+            return UFixed256x18.wrap(UFixed256x18.unwrap(a) + UFixed256x18.unwrap(b));
+        }
+        /// Multiplies UFixed256x18 and uint256. Reverts on overflow, relying on checked
+        /// arithmetic on uint256.
+        function mul(UFixed256x18 a, uint256 b) internal pure returns (UFixed256x18) {
+            return UFixed256x18.wrap(UFixed256x18.unwrap(a) * b);
+        }
+        /// Truncates UFixed256x18 to the nearest uint256 number.
+        function truncate(UFixed256x18 a) internal pure returns (uint256) {
+            return UFixed256x18.unwrap(a) / multiplier;
+        }
+        /// Turns a uint256 into a UFixed256x18 of the same value.
+        /// Reverts if the integer is too large.
+        function toUFixed256x18(uint256 a) internal pure returns (UFixed256x18) {
+            return UFixed256x18.wrap(a * multiplier);
+        }
+    }
+
+Notice how ``UFixed256x18.wrap`` and ``FixedMath.toUFixed256x18`` have the same signature but
+perform two very different operations: The ``UFixed256x18.wrap`` function returns a ``UFixed256x18``
+that has the same data representation as the input, whereas ``toUFixed256x18`` returns a
+``UFixed256x18`` that has the same numerical value.
 
 .. index:: ! function type, ! type; function