Earning feUSD yield

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Introduction

Felix users can earn stablecoin yield on their feUSD, coming in the form of borrower interest and liquidation proceeds. To earn this yield, users must deposit feUSD into a Felix stability pool.

Key Risks to be Aware Of

Risk	What Triggers It	What Happens	How to Mitigate
Liquidation Exposure	A borrower’s account / position health falls below its liquidation threshold.	Your deposited feUSD is burned to cancel the debt; you receive the borrower’s collateral at face value. If that collateral keeps falling, its value may be less than the feUSD you lost.	Monitor market conditions and CDP health metrics; be ready to swap received collateral back to stable assets promptly.
Bad-Debt Shortfall	Extreme market crash where seized collateral cannot fully cover the borrower’s debt.	The Stability Pool absorbs the deficit, causing a net loss to depositors.	Track overall system health (aggregate position collateralization, utilisation); diversify across pools and avoid overexposure.

Step 1: Connect Wallet

To begin, press ‘Connect Wallet’ and select your preferred wallet provider corresponding to the wallet holding tokens intended to deposit as collateral.

Step 2: Select Supply Page

Once connected, navigate to the ‘Supply’ page, which lists the possible Stability Pools that users can deposit into. You will be able to see the total deposited amount, the earn APY, and more.

The purpose of the stability pool serves as a liquidation backstop for outstanding feUSD debt. Users take on bad debt risk and are compensated in the form of borrower interest and liquidation proceeds.

Step 3: Select amount to collateralize and feUSD borrow amount

In the modal that pops up on the right, select the amount of feUSD that you want to deposit.

Step 4: Approve Token Transfer

After clicking the confirm button, a modal will appear which will prompt a transaction or message signature request in the connected wallet. In order to transfer tokens on the Hyperliquid L1 network, the Felix smart contract must be granted an allowance to transfer tokens from the connected wallet address. Approvals can be performed through transaction.

Step 5: Perform Deposit Transaction

After the approval transaction, there will be one more transaction to confirm the transaction of depositing your feUSD into a Felix Stability Pool. Once you click confirm, you should be good to go in a few seconds!