Felix Protocol

Felix Protocol

Alen

1/ Introducing Felix Protocol: The Future of Borrowing on Hyperliquid L1 

Felix is a decentralized borrowing protocol built on Hyperliquid L1, allowing users to mint feUSD, a stablecoin pegged to $1, by using crypto assets as collateral.

Let’s explore its mechanics & advantages in this article.

2/ How Felix Works - A Risk Optimized Borrowing Model

Felix uses a 40% Loan-to-Value (LTV) ratio on testnet—lower than major DeFi lending protocols like Aave, MakerDAO, or Liquity.

📌 Why does this matter?

  • Lower liquidation risk ⚠️
  • More stability in volatile markets 🌊
  • Security-first borrowing model 🔒

While some protocols allow higher LTV for more capital efficiency, Felix prioritizes sustainability & user protection—a strategy rooted in its founder's background at Anthias.xyz, a top-tier DeFi risk management firm.

Felix ensures safety-first lending, drawing from industry-leading risk models that have secured major DeFi protocols & ecosystems.

3/ Borrowing feUSD: Step-by-Step Guide 💡

To borrow feUSD, follow these steps:

1. Connect Wallet → Visit Felix & link your preferred wallet.

2. Select Collateral → Choose $BTC, $ETH, $SOL, or $HYPE.

3. Set Borrowing Amount → Maintain a safe collateralization ratio to avoid liquidation.

4. Customize Interest Rate → Felix allows user-set borrowing rates for efficient debt management.

5. Approve & Borrow → Confirm the transaction & receive feUSD instantly.

💰 Once borrowed, feUSD can be used for:

  • 📊 Trading → Execute leverage & carry trades.
  • 🏦 Yield Generation → Deposit feUSD into Stability Pools for passive rewards.
  • 💰 Asset Liquidity → Use feUSD without selling core holdings.

4/ Managing Borrow Positions 📉

Felix users can actively adjust borrow positions for risk management:

  • Add More Collateral → Strengthen loan health & avoid liquidation.
  • Withdraw Collateral → Retrieve unused collateral (while maintaining safety margins).
  • Borrow More feUSD → Expand liquidity as long as the collateral ratio is healthy.
  • Repay Debt → Reduce feUSD debt & optimize interest costs.
  • Close Position (Trove) → Fully settle debt & withdraw collateral.

Proper position management is crucial to avoiding forced liquidations while maximizing the benefits of leverage.

5/ Earn Yield with feUSD 

Passive income in DeFi? Felix offers yield-earning opportunities via its Stability Pools.

How it works:

  • Deposit feUSD into the Stability Pool.
  • Earn from borrower interest payments & liquidations.
  • Withdraw anytime without penalties.

💡 The Stability Pool serves as a liquidation backstop, ensuring protocol solvency while rewarding depositors.

6/ Security & Smart Contract Audits – A Safer Fork of Liquity V2 🔐

Felix is built on Liquity V2, but with critical security enhancements.

📌 What’s New in Felix’s Smart Contracts?

  •  Mint Caps: Prevents over-leveraging risks.
  •  Admin Parameter Controls: Enables controlled, safe adjustments.
  • Emergency Pausing: A safeguard against potential exploits.

🚨 Addressing Liquity V2’s Stability Pool Issue

Recently, Liquity V2 faced a Stability Pool vulnerability that led to a necessary contract redeployment (https://x.com/LiquityProtocol/status/1890091102239408544?t=XsKvc22-ku7m8qs4BAgLOQ&s=19 ).

🛠️ Felix has audited and improved upon Liquity V2’s contracts to ensure:

  • Stronger Stability Pool safeguards 🏦
  • Additional risk mitigation measures 🔍
  • Security-first liquidations ✅

Audits & Verifications

Felix’s enhancements are being independently audited by:

🔹 Dedaub

🔹 Coinspect (Special focus on risk-adjusted borrowing models)

7/ Risk Management & Market Protection ⚠️

Felix actively manages risks through a collaboration with Anthias Labs, employing:

📊 On-Chain Monitoring → Tracks borrowing trends & collateral health.📉 Stress Testing & Risk Simulations → Predicts worst-case liquidation scenarios.🔄 Dynamic Interest Rate Adjustments → Stabilizes feUSD demand & protocol sustainability.

Users are advised to:

  • Maintain healthy collateral ratios to avoid forced liquidations.
  • Be aware of market volatility & liquidity risks.
  • Understand redemption mechanics & Stability Pool rewards.

8/ Technical Overview: Smart Contracts & Testnet Access 💻

Felix’s smart contracts are deployed on Hyperliquid L1, with public access planned post-audit.

Testnet Deployment Contracts:

  • Collateral Registry: 0xb5822166c6243bac8b2dc0ad530275b1d54aa414
  • feUSD Token: 0x9bf3f4267acb12cd4a8286064e8f66a9336132bc
  • Stability Pool: 0x002b0a43f87cc09cce1479f0aac4d09d77014ace
  • Trove Manager: 0x477fdbafa75d269307bcf368f3ac5695949025d9

📍 Full Deployment Details: Felix’s contracts will be open-source on GitHub post-audit completion.

9/ Felix’s Role in the Hyperliquid Ecosystem 🌍

Felix is more than just a borrowing protocol—it’s a key financial layer for Hyperliquid L1.

💰 Use Cases for Traders & Investors:✅ Leverage Looping → Borrow feUSD, buy more collateral, repeat.✅ Carry Trades → Hedge against funding rate fluctuations.✅ Hyperliquid Yield Strategies → Maximize returns via Stability Pools & redemption mechanisms.

🔥 With Felix, users can execute complex strategies with decentralized stability & optimized borrowing costs.

10/ Why Choose Felix? Final Thoughts 💡

  • Borrow without selling assets
  • Low fees, user-controlled interest rates
  • Deep liquidity & optimized Stability Pool mechanics
  • Security-first approach with audited smart contracts
  • Hyperliquid L1 integration for a seamless DeFi experience

Felix is shaping the future of decentralized borrowing & yield generation.

💻 Explore Felix Today: usefelix.xyz