Felix Review: Everything You Need to Know

Felix is a decentralized finance (DeFi) platform that provides 24/7 access to capital markets built on a blockchain network. The platform lets users interact with decentralized financial tools, including borrowing, lending, and earning yield without traditional intermediaries. It is accessible globally and designed for users who connect digital wallets to participate directly in its smart-contract-driven system. Read this Felix Review to know more about the platform.

What is Felix?

Felix is a next-generation DeFi protocol built on Hyperliquid L1, designed to make on-chain borrowing and lending feel clean, capital-efficient, and trader-friendly. Instead of bloated mechanics or opaque risk, Felix focuses on high-LTV leverage, native-asset lending, and friction-free yield, all fully on chain and non-custodial. It’s built for users who want serious liquidity without sacrificing speed, transparency, or control.

Felix currently offers two core primitives:

• CDP Market (feUSD)
  Users deposit collateral to mint feUSD, which can then be swapped into other assets to gain leverage. This is designed for traders who want high loan-to-value ratios and low borrowing costs while keeping everything on chain.
• Vanilla Markets
  Variable-rate lending pools where users can borrow or supply asset-native tokens like HYPE, HUSD, or USDC. These markets are ideal for users who want direct exposure to the asset they lend or borrow, with no redemption queues and fully dynamic interest rates.

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Felic Review: Use Cases

• Margin Trading: Use CDP or Vanilla Markets to take leveraged long or short positions while staying entirely within the Hyperliquid ecosystem.
• HLP Carry Trade: Borrow feUSD at a chosen fixed rate or borrow a fiat stable, convert to USDC, deposit into HLP, and benefit from funding rate differentials.
• Stability Pool Carry Trade: Mint feUSD, deposit it into a Stability Pool, and earn the spread between your borrowing cost and the pool’s yield.
• Spot Trading: Mint feUSD or borrow USDC/HYPE to make immediate spot purchases on Hyperliquid-based DEXs.
• Leverage Looping: Deposit collateral, borrow the same asset via Vanilla Markets, and re-deposit it to increase exposure.
• Stable Yield Strategies: Allocate idle feUSD to Stability Pools or lend HUSD/USDC in Vanilla Markets to generate yield.
• DEX LPing (Volatile Pairs): Provide liquidity to pairs such as HYPE/feUSD or UBTC/feUSD to earn trading fees.
• DEX LPing (Stable-Swap Pairs): Supply liquidity to pools like HUSD/USDC, USDT0/USDC, or USDe/feUSD to earn low-impermanent-loss fees.

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Felix Review: CDP Market (feUSD)

The feUSD CDP Market is a money market that connects feUSD borrowers/minters with Stability Pool (SP) depositors. Built on a Liquity v2–style architecture, it operates as a CDP-based stablecoin system that aligns two core economic participants and balances risk and return between them.

At its core, the protocol functions by matching these two sides:

Side	Role	What they supply	What they earn
Borrowers / Minters	Lock collateral and mint feUSD	Collateral (e.g. HYPE, UBTC, LSTs)	Pay an up-front borrow fee plus a self-selected interest rate
Stability Pool Depositors	Provide passive liquidity to absorb liquidations	feUSD acquired from secondary markets	Earn borrower interest, a share of up-front fees, and potential liquidation gains

Why use the CDP to borrow feUSD?

Custom interest rates: Borrowers choose their own interest rate, enabling real-time price discovery for the lowest cost of capital.

High capital efficiency: The Stability Pool absorbs liquidations directly instead of relying on open-market liquidators. This design allows each additional dollar of SP liquidity to safely support more total system debt, enabling higher loan-to-value (LTV) ratios than many traditional money market models.

Accepted Collateral Types

Collateral	Max LTV	Oracle
HYPE	~59%	Redstone
UBTC	50.00%	Redstone

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Felix Review: Key Components to the Felix Protocol

There are two key challenges involved in maintaining the Felix CDP stablecoin system:

1. Maintaining the $1 feUSD Peg
   • Ensuring that feUSD consistently trades at or very close to $1.00 is crucial
   • Price deviations can undermine both borrowing and saving activity
2. Efficient Processing of Liquidations
   • Swift and fair liquidation processes protect the protocol from accumulating bad debt
   • Efficient liquidations ensure that the protocol maintains its solvency

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Felix Review: Minting / Borrowing feUSD

On mainnet, users can supply HYPE or UBTC as collateral within the Felix protocol to mint and borrow feUSD. Once assets are deposited, they are transferred into Felix’s smart contract system, which enables overcollateralized borrowing in a fully on-chain, non-custodial manner.

Borrowing interest rates are dynamically influenced by on-chain factors such as available liquidity, oracle price feeds, and overall borrow utilization. As assets are supplied, borrowed, repaid, or withdrawn, interest rates automatically adjust to reflect current market conditions.

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Redemptions

Trigger: feUSD trades at or below $0.995. Arbitrageurs purchase discounted feUSD and redeem it for collateral, starting with the lowest-interest-rate positions.

What happens:

• A portion of your debt is repaid, but you lose collateral at face value ($1 per feUSD), without a liquidation penalty.
• Your effective borrow rate increases as lower-rate debt is removed first.
• Positions with aggressively low interest rates are affected first.

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How to mitigate:

• Set your borrow rate in line with prevailing market rates (use the median rate shown in the interface as a reference).
• Monitor the feUSD price and consider increasing your rate if it approaches the redemption threshold.

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How to Borrow feUSD on Felix

Step 1: Connect Your Wallet

Click “Connect Wallet” and select the wallet that holds the tokens you intend to use as collateral.

Step 2: Choose Collateral

Navigate to the Borrow page and locate the New Positions table, which displays supported assets, balances, and parameters. Select your desired collateral and click Borrow.

Step 3: Set Collateral and Borrow Amounts

In the modal, choose how much collateral to deposit and how much feUSD to borrow, ensuring a safe collateralization ratio to avoid liquidation.

Step 4: Set Your Interest Rate

Your position defaults to the median fixed rate. You can customize this by clicking the gear icon and adjusting the slider. Keep in mind that lower rates are redeemed first.

Step 5: Approve Token Transfer

Confirm the approval transaction that allows the Felix smart contract to transfer tokens from your wallet on Hyperliquid L1.

Step 6: Confirm the Supply Transaction

Approve the final transaction to deposit your collateral and mint feUSD. Once confirmed, your position will be live within seconds.

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Felix Review: Managing your borrow position

Users can manage or close their positions at any time. To reduce the risk of liquidations or redemptions, it’s important to maintain both a healthy collateralization ratio and a competitive interest rate.

To manage a position, navigate to the Borrow page, locate your active position, and click the Manage button on the right.

Option 1: Add Collateral

Deposit additional collateral to improve the health of your position or unlock the ability to borrow more feUSD.

Option 2: Withdraw Collateral

Withdraw collateral for use elsewhere, as long as the position remains above the minimum required collateralization ratio.

Option 3: Adjust Interest Rate

Click the gear icon in the modal and adjust the slider to set a new fixed interest rate.

• Lower rate: Reduces interest costs but places your position earlier in the redemption queue.
• Higher rate: Improves protection from redemptions but increases borrowing costs.

Option 4: Borrow More

Borrow additional feUSD to deploy into other strategies, provided the minimum collateralization ratio is maintained.

Option 5: Repay Borrowed feUSD

Repay feUSD to reduce outstanding debt and improve position health. All active positions must maintain a minimum outstanding balance of 2,000 feUSD. To fully repay and exit, close the position instead.

Option 6: Close Position (Trove)

Close your position to repay all outstanding feUSD debt, including accrued interest, and withdraw your collateral. Select Close Trove to fully exit the protocol.

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Felic Review: Earning feUSD yield

Felix users can generate stablecoin yield on feUSD through borrower interest payments and liquidation proceeds. To earn this yield, users deposit feUSD into a Felix Stability Pool, which acts as the system’s liquidation backstop.

Step 1: Connect Wallet

Click “Connect Wallet” and choose the wallet that holds the feUSD you plan to deposit.

Step 2: Navigate to the Supply Page

Go to the Supply page to view available Stability Pools. Here you can see total deposits, current APY, and other pool metrics. Stability Pools absorb liquidations for outstanding feUSD debt, with depositors earning compensation through interest and liquidation proceeds in return for taking on risk.

Step 3: Select Deposit Amount

In the modal on the right, enter the amount of feUSD you want to supply to the Stability Pool.

Step 4: Approve Token Transfer

Confirm the approval transaction that allows the Felix smart contract to transfer feUSD from your wallet on Hyperliquid L1.

Step 5: Confirm Deposit Transaction

Approve the final transaction to deposit feUSD into the selected Stability Pool. Once confirmed, your funds will be active within seconds.

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Felix Review: Vanilla Market

Vanilla Markets connect asset suppliers (lenders) with overcollateralized borrowers in real time. Unlike the feUSD CDP system, there are no redemptions or borrower-defined fixed rates. Instead, all pricing is dynamically determined by the pool’s utilisation curve.

Borrowers lock collateral such as HYPE, UBTC, or ETH and borrow the asset they want, for example USDC or HYPE. Lenders supply these same assets and earn yield whenever borrowing demand exists.

Interest rates adjust block by block based on utilisation. As utilisation rises, borrowing APR increases and lender APY improves. All loans remain fully overcollateralized to reduce lender exposure to default risk.

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Variable-Rate Mechanics

Metric	Formula	Impact
Utilisation	Total Borrows ÷ Total Supply	Determines both borrow APR and lender APY
Borrow APR	Piecewise linear curve (e.g. 7% base → 25% at 90% utilisation → 100% at 99%)	Rises sharply when liquidity becomes scarce
Lender APY	Borrow APR × Utilisation, minus protocol spread	Declines when utilisation drops or loans are repaid

Conclusion

Felix positions itself as a capital-efficient, on-chain borrowing and lending protocol purpose-built for Hyperliquid L1. Through its CDP Market (feUSD) and Vanilla Markets, Felix gives users two distinct ways to unlock liquidity or earn yield, depending on whether they prefer fixed-rate, CDP-style leverage or fully floating, utilisation-driven money markets. The protocol’s design emphasizes transparency, real-time pricing, and high capital efficiency, while keeping all activity non-custodial and on chain.

That said, Felix is clearly geared toward active and risk-aware users. Liquidations, redemptions, rate volatility, and bad-debt socialisation are all real considerations that require monitoring and disciplined position management.

For traders and DeFi-native users who understand these dynamics, Felix offers a powerful toolkit to deploy leverage, capture yield, and stay entirely within the Hyperliquid ecosystem. For more passive users, Stability Pools and Vanilla lending provide yield opportunities, but with risks that should be weighed carefully against returns.

Frequently Asked Questions