Minting / Borrowing feUSD
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Introduction
On mainnet, users can deposit HYPE and UBTC as collateral within the Felix protocol and borrow feUSD. When tokens are supplied, they are transferred to the Felix Protocol, a system of smart contracts that facilitates overcollateralized borrowing of tokens.
Borrower interest rates are influenced by on-chain inputs such as token balances, oracle prices, and the borrow utilization ratio. As liquidity is supplied, borrowed, repaid, or withdrawn from the pool, the interest rates are updated accordingly.
Key Risks to be Aware Of
Liquidations
Your account / position health falls below 1.
• The protocol cancels your debt by burning feUSD from the Stability Pool. • Your collateral (plus a small penalty) is transferred to Stability-Pool depositors. • You keep any feUSD you previously borrowed, but your position is closed.
• Keep account / position health comfortably above the threshold (1.25–1.50 is common). • Set up on-chain alerts or use Felix’s health-check notifications. • Add collateral or repay feUSD when health drifts lower.
Redemptions
The market price of feUSD trades ≤ $0.995. Arbitrageurs buy cheap feUSD and invoke redeem() to swap it for collateral. The system cancels debt starting with the lowest-interest-rate positions first.
• Part of your debt is repaid (good), but you lose collateral at face value ($1 per feUSD) without the liquidation penalty. • Your effective borrow rate rises because only higher-rate debt remains. • If you set an aggressively low rate, your position will be tapped first.
• Price your borrow rate in line with market (look at the median shown in the UI). • Track feUSD price; if it slips toward $0.995, consider adjusting your rate upward.
Step 1: Connect Wallet
To begin, press ‘Connect Wallet’ and select your preferred wallet provider corresponding to the wallet holding tokens you intend to deposit as collateral.
Step 2: Select Token To Collateralize
Once connected, navigate to the ‘Borrow’ page where you’ll find the ‘New Positions’ table, which lists supported collateral, current token balances, and asset parameters. Find the collateral that you want to deposit into Felix, and click the borrow button on the right.
Step 3: Select amount to collateralize and feUSD borrow amount
In the modal that pops up on the right, select the amount that you want to deposit as collateral, and the amount of feUSD that you want to borrow. Ensure that you maintain a safe collateralization ratio to avoid liquidation.
Step 4: Set your interest rate
You will default receive the median fixed interest rate for your borrow position. On Felix, you can choose your own interest rate by clicking the gear icon on the modal and then shifting the circle on the bar to your interest rate of choice. Lower interest rates are redeemed first (See more about feUSD redemptions in this section of the Felix docs).
Step 5: Approve Token Transfer
After clicking the confirm button, a modal will appear that 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 6: Perform Supply Transaction
After the approval transaction, there will be one more request to confirm the transaction of depositing your collateral into the protocol and borrowing feUSD. Once you click confirm, you should be good to go in a few seconds!
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