Felix: CDPs, feUSD, and Stablecoin Credit on Hyperliquid
How Felix lets users borrow feUSD against overcollateralized positions and uses redemptions and stability pools to manage solvency.
Felix is a DeFi credit protocol whose products include collateralized borrowing and the feUSD stablecoin system. A borrower deposits supported collateral and mints feUSD against it, creating an overcollateralized debt position.
DefiLlama lists about $114.6 million of Felix TVL on Hyperliquid L1 as of August 31, 2026.
feUSD is created through debt
Unlike a fiat-backed stablecoin, feUSD does not depend on a bank account holding one dollar for every token. It is minted when users borrow against more than one dollar of eligible crypto collateral.
Overcollateralization provides a buffer. If a position becomes too risky as collateral falls or debt grows, it can be liquidated.
The stability pool is a liquidation backstop
Users can deposit feUSD into stability pools. During qualifying liquidations, deposited feUSD can be burned to cancel debt, while the pool receives the liquidated collateral.
That means a stability-pool depositor is not merely earning passive interest. The depositor is providing system backstop capital and may end up holding volatile collateral after liquidations.
Redemptions help anchor the peg
Felix also uses redemptions. A holder can redeem feUSD against collateral under protocol rules, which creates an arbitrage path when feUSD trades away from its target value.
Positions can be ordered partly by borrower-selected interest rates, so the borrowing market also influences which debt is exposed to redemptions first.
Felix teaches a different credit model
HyperLend and Morpho primarily teach lending pools and collateralized borrowing. Felix adds stablecoin issuance as the central primitive. The system must manage both borrower solvency and the market value of its issued liability.
For institutional readers, that means analyzing assets and liabilities together: collateral quality, liquidations, redemption behavior, stablecoin liquidity, oracle assumptions, and concentration can all affect the same system.