Retrocopy formation and domestication shape genome evolution in sloths and other xenarthrans

Xenarthrans, comprising sloths, anteaters, and armadillos, represent one of the most morphologically and physiologically specialised mammalian clades, yet the genomic basis of their adaptations remains poorly understood. Here, we present chromosome-level genomes for the two-toed sloth (<Choloepus didactylus>) and the southern anteater (<Tamandua tetradactyla>), and investigate how retrotransposon-mediated gene duplications (retrocopies) have shaped xenarthran genome evolution. Comparative analyses revealed that xenarthran genomes harbor the highest number of retrocopies reported among mammals, with lineage-specific insertion dynamics. Anteater and armadillo genomes contain older LINE1 repertoires and species-specific older retrocopy insertions. In contrast, sloths retain both an abundance of young LINE1s and thousands of young retrocopies, alongside a large shared set that originated from an evolutionary burst of retroduplication in the branch leading to their last common ancestor (~30 Mya). In C. didactylus, approximately 50% of retrocopies are expressed, compared with 24% in Dasypus novemcinctus. Evolutionary analyses identified 38 retrocopies with strong hallmarks of domestication in C. didactylus. Many of these retrocopies derive from parental genes involved in mitochondrial and metabolic processes, suggesting a genomic mechanism underlying the physiological specialisations of sloths. Altogether, our findings identify retrotransposition as a major contributor to the genomic architecture of Xenarthra and highlight retrocopy origination as a mechanism for generating lineage-specific novelty and distinctive biological specialisations.