Question 1

What is the Felix Protocol?

Accepted Answer

Felix is a decentralised, over-collateralised debt position protocol deployed on Hyperliquid’s Layer-1 blockchain, known as HyperEVM. It is based on a permitted fork of Liquity V2 and designed to enable users to mint a stablecoin, feUSD, by locking crypto assets as collateral. The system incorporates a fixed-interest borrowing model, stability pool mechanisms, and various risk mitigation parameters. Felix introduces added controls to suit the throughput and constraints of HyperEVM and operates without discretionary governance over rate-setting.

The protocol is built around a non-custodial architecture with smart contracts that manage vaults (Troves), collateral ratios, liquidations, and redemptions. Felix's structure emphasises deterministic behaviour, collateral solvency, and predictable borrowing costs. Risk controls include hard caps on minting rates, per-asset limits, and global mint ceilings to avoid overexposure. Felix is designed to function as a stable debt primitive within the HyperEVM DeFi ecosystem.

Question 2

What is feUSD (FEUSD) used for?

Accepted Answer

feUSD is a USD-pegged stablecoin minted on HyperEVM via the Felix protocol. It is issued when users deposit eligible collateral into Troves and borrow against it under a fixed-rate model. The token is fully backed by over-collateralised crypto assets managed by smart contracts.

feUSD is used within the Felix system for several functions:

- **Debt issuance**: Users mint feUSD as debt against crypto collateral.
- **Stability pool participation**: Holders can deposit feUSD to absorb undercollateralised debt and receive liquidated collateral.
- **DeFi integrations**: feUSD is designed to be composable within Hyperliquid-native DeFi protocols, including decentralised exchanges and money markets.
- **Redemptions**: Mint Users may redeem feUSD for collateral subject to protocol-defined constraints and compliance requirements.

All uses are enforced by smart contract logic and subject to predefined caps and security parameters.

Question 3

Who created the Felix Protocol?

Accepted Answer

Felix was developed by a team building on top of the Hyperliquid ecosystem. It uses the Liquity V2 protocol under an authorised fork agreement, adapting the architecture to HyperEVM. While the team behind Felix has not been publicly named, the protocol is structured with administrative rights held via multisig wallets and includes plans for progressive decentralisation.

Question 4

# Fixed-Rate Borrowing

Accepted Answer

- Users select an interest rate at the time of opening a Trove.
- The rate remains fixed for the life of the loan.
- Repayment includes principal and accumulated interest, tracked per-second.

Question 5

# Stability Pool

Accepted Answer

- Acts as the first line of defence during liquidation events.
- feUSD deposited into the pool is used to cancel out undercollateralised debt.
- In return, depositors receive a proportional share of the liquidated collateral.

Question 6

# Risk Parameters

Accepted Answer

- Per-asset caps limit the total feUSD minted against each type of collateral.
- A global mint cap enforces a ceiling across all collateral types.
- Liquidation thresholds are enforced based on individual collateral ratios.

Question 7

# Mint Controls and Safeguards

Accepted Answer

- Troves cannot be opened below minimum collateral ratios.
- Transactions involving minting or redemption are bounded by block-level caps.
- Smart contracts implement safeguards to mitigate price manipulation and front-running risks.

Question 8

# HyperEVM Compatibility

Accepted Answer

- All protocol functions operate on Hyperliquid Layer-1 infrastructure.
- Felix integrates with EVM tooling and contract standards.
- Interoperability with HyperEVM-native protocols enables secondary use of feUSD.