# Canonical: https://www.uddalak.xyz/hyperliquid-academy/article/45-felix
# Author: Uddalak Das
# Last source: https://www.uddalak.xyz/hyperliquid-academy/article/45-felix

---
title: "Felix: CDPs, feUSD, and Stablecoin Credit on Hyperliquid"
description: "How Felix lets users borrow feUSD against overcollateralized positions and uses redemptions and stability pools to manage solvency."
track: "Ecosystem"
level: "Advanced"
primary_icp: ["DeFi-native user", "institutional decision-maker"]
secondary_icp: ["trader"]
reading_time: "3 min"
last_reviewed: "2026-09-07"
protocol_url: "https://usefelix.xyz/"
snapshot_tvl: "$114.6M on Hyperliquid L1"
---

# Felix: CDPs, feUSD, and Stablecoin Credit on Hyperliquid

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.

```mermaid
flowchart LR
    A[Borrower collateral] --> B[Felix CDP]
    B --> C[Mint feUSD]
    C --> D[Borrower uses feUSD]
    E[Stability Pool] -->|absorbs liquidation debt| B
    B -->|collateral from liquidations| E
```

## 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.

## Sources

- https://usefelix.gitbook.io/docs/lending-products/quickstart/how-it-works
- https://usefelix.gitbook.io/docs/lending-products/quickstart/quickstart
- https://usefelix.gitbook.io/docs/lending-products/quickstart/earning-feusd-yield
- https://defillama.com/chain/hyperliquid-l1